Some of the major BPO companies in Australia assembled last week in Sydney to give their imprimatur to the establishment of the BPOAA.

“Australia is in the midst of dramatic growth for outsourcing, making this an opportune time to establish a Business Processing Outsourcing Association. I believe some of the major benefits of this organisation will be to expand business consciousness of the advantages of outsourcing,” remarked Richard Switzky, Managing Partner of Publicis Solutions.

There are many issues facing the nascent industry, including the government drafting new regulations to require ISP’s to store browsing histories for law-enforcement agencies to be able to access. Given that we will see a bigger uptake of customer contact via electronic means including social media into businesses, this is a worrying development for the industry especially so close on the heels of the Do Not Call legislation.

Barry Cottrill, CEO of Customers 1 to 1, one of Australia’s leading 24/7 BPO operations said, “I welcome the formation of the BPOAA and envisage that it has the potential to make a valid contribution towards our industry and over time provide that all important universal and consistent voice on relevant issues for mutual benefit.”

Up until this point in time the $2 Billion plus industry has had no centralised and specific body to look after its interests. The BPO space is very broad it ranges from outsourced customer service and all aspects of voice services to back office processes, which may include all of the different areas of accounting processes, debt collection to medical, and legal reporting and transcriptions. In the future, the BPOAA will have members who work in outsourced printing, software and application development, architecture and engineering, graphic design, animation, HR  (RPO) payroll outsourcing, and Carbon Management Outsourcing (CMO) to name but a few sectors that it will eventually touch.

Scott McCorkell, MD of McCorkell & Associates, is strongly behind the concept and agrees with Cottrill, “It is long overdue for the BPO sector to have a voice and a forum through which shared issues, opportunities and challenges can be addressed.  We applaud the advent of the BPOAA; it is a valuable, intelligent initiative.”

The fledgling association has already received informal pledges of support and affiliation from BPO industry bodies in Europe, and the USA.

The main reason that the association is being formed is to promote industry growth in Australia.

The Association will move to improve BPO performance standards (via the establishment of a voluntary Code of Conduct detailing acceptable behaviors and practices and developing an accredited training and development programme for industry participants). According to Richard Switzky, “It’s important to establish standards of acceptable behaviors and practices, and ensure favorable legislation is passed to further the interests of both providers and users of outsourcing.”

The Association will reject unlawful and unacceptable commercial practices and will work to forestall unwelcome legislative regulations that impede productivity and growth through ignorance or poor communication.

The analysts tell us that the BPO industry in Australia across the board is now worth around $1.5 to $6B (depending on which analyst you follow) – the point is that thousands of Australians are relying upon the industry for their livelihood. As a point of comparison, the BPO sector in the Philippines is currently worth US$10 – 12 B and already employs over ½ million people. India’s BPO industry currently employs 1 million people, while also providing indirect employment to 3.5 million people. Customers 1 to 1’s Cottrill believes ‘That the new association will provide a universal voice for our industry, allow us to network with our peers and generate business growth for mutual benefit – long overdue.”

The Sauce weekly newsletter will act as the first voice of the association until such time as it builds its own online presence.

Some Industry issues raised in the initial meeting include:

• Breakfast briefings to keep members abreast of market developments and to network;
• Input to ‘Do Not Call Register’ issues, including B2B calling, B2B faxes and B2B SMS;
• The storage of browsing histories for law-enforcement agencies to be able to access;
• Helping the industry to understand how to leverage off social media;
• Introduction of professional standards and accreditation;
• Regular events and a yearly conference.

There was overwhelming support for the foundation of the BPOAA, and an initial ‘steering’ committee of Martin Conboy, Bill Lyons of FooBoo and Richard Switzky of Publicis Solutions agreed to take all necessary initial steps to breathe life into the BPOAA. It is expected that a general meeting will be held within 3 months to ratify the operating rules and objectives. It is anticipated that there will be a call to start a Melbourne chapter as soon as possible. At the upcoming general meeting there will be a call for nominations of an initial advisory board and other office bearers. This expanded committee would then consult on a wider membership and business Agenda for the association.

The Association has already received some financial pledges in order to get it established from its supporters.

Anybody interested in joining the BPOAA should contact Peter Springett at pspringett@foobooonline.com or call on 0416 212 199.

Any company with a business registered to operate in Australia may join.

Membership is open to companies that use BPO services or supply the BPO vendors, Academics, and interested government departments.

According to a recent research report from Datamonitor, Trends in Knowledge Process Outsourcing, Knowledge Process Outsourcing KPO may offer BPO vendors significant opportunities as the market matures[1].

“KPO is the movement of core business processes requiring a high level of domain expertise out to third parties,” said Datamonitor analyst and report author Ed Thomas. As KPO involves the outsourcing of core business functions, providers are able to establish access the core of a client’s business, making the supplier indispensable to the client organisation.

A number of years ago Knowledge process outsourcing (KPO) was heralded as the next big thing of the outsourcing market. But it failed to take off. Clients were reluctant to relinquish control over such areas, with quality and security being the major areas of concern.

So what’s changed? Ed Thomas highlights that since 2006 more and more BPO players have become interested in KPO and as a result the market has started to develop and matures.

Mark Kobayashi-Hillary, co-author of the book Global Services: Moving to a Level Playing Field, says that KPO is merely a continuation of BPO. The defining difference is that KPO is usually focused on knowledge-intensive business processes that require significant domain expertise.

“KPO delivers higher value to organisations that offshore their domain-based processes, thereby enhancing the traditional cost versus quality paradigm of BPO. The central theme of KPO is to create value for the client by providing business expertise rather than process expertise.”

Martin Conboy, President of the BPO Association of Australia, says, “KPO involves high-value work done by highly skilled workers in a different company or by a subsidiary of the same organisation, which may have the same location or be situated offshore to save cost. The main benefits derive from efficiency gains and better utilisation of more expensive resources.”

Even though the market is maturing and significant opportunities are emerging, Martin Conboy warns, “There will be resistance to change and senior leadership needs to get behind the initiative to overcome the resistance. The role of cultural change management cannot be over-emphasised.”

There are still a large number of fairly small, boutique KPO providers, in what is quite a fragmented market. “Companies should completely map the processes to ensure adequate knowledge transfer to prevent impacting negatively on the customer experience,” advises Conboy.

National Receivables Group (NRG), an Australian collection firm, outsources its back office processes to the Philippines as an expansion of their services.

NRG started to outsource with a 5-seat contact centre in August 2008 at a BPO facility in Manila. This year, the company opens a 150-seat contact centre in Eastwood, Quezon City, to better serve its clients in the banking, financial services, and telecommunications industries.

According to NRG, they established a facility in the Philippines because of its business environment, incentives, and special economic zones. NRG Chairman Lawrence Barlow adds, “We also want to capitalise on the abundant talent pool and redundant infrastructure available in the Philippines.”

NRG chief executive, Michelle Bubke, attests that NRG and its customers are impressed with the Philippines’ voice-based talent, saying that they are highly educated and only needed training in NRG processes.

Upon evaluation and comparison by consulting firm Frost & Sullivan against other business process outsourcing service providers across the Asia Pacific region, IBM Daksh has been given the 2010 Contact Center Outsourcing Service Provider of the Year in Asia Pacific.

The company was conferred this recognition for showing exemplary growth and performance in 2009 in the Asia Pacific region.

The Contact Centre Outsourcing Service Provider of the Year Award is given to the service provider that passes strict evaluation by independent analysts and industry experts based on the following criteria:

• Customer acquisitions
• Customer diversification
• Breadth of service offerings
• Financial performance

IBM Daksh CEO Pavan Vaish said, “This award reinforces our market leadership and is testimony to the sustained competitive advantage we provide to clients through innovative offerings and a global delivery footprint. It is indeed an honor to be recognized by Frost & Sullivan for having consistently added value to our customers and helping us enhance our growth and leadership position.”

The Contact Centre Outsourcing Service Provider of the Year Award is recognition of IBM Daksh’s wide range of service offerings that attract businesses as they make their business processes more cost efficient and at the same time improve their services.

NAB and Infosys are awarded the 2010 Best New Services Delivery from Shared Services Outsourcing Network. The recognition is for the two companies’ collaboration to deliver HR and Payroll support services to NAB’s 30,000 employees in Australia.

Shared Services Outsourcing Network, with the help of independent industry experts, appraised NAB and Infosys’ strategy implementation, management, innovation and automation, customer relationship and service, quality control, and future direction.

Not only is the award proof of NAB’s improvements in various categories, but NAB itself says that its employee satisfaction with their HR services has a 98% improvement since launching the program with Infosys.

NAB’s Executive General Manager of People and Culture, Jim Young, says, “Our internal people have been freed up so that they can concentrate on other, important strategic areas. Quality and turnaround times have significantly improved. And, not least, there has been a significant benefit to us in overall cost management. Infosys is a real collaborative, trusted business partner.”

Infosys BPO’s AVP Asheesh Mehra says, “This award recognises the transformational power of a new generation of business process outsourcing engagements. Working in a genuine partnership with NAB, Infosys was able to deliver major game-changing improvement to the bank’s internal customers, while still reducing costs.”

There is no question that the past few reporting periods have been choppy for the outsourcing industry. In spite of this, as they say, what does not kill you will only make you stronger and the shake up will act as a spur for positive change. We can expect a more mature, efficient, dynamic, and ultimately more resilient industry. The first wave is now over and the second wave will bring with it a different type of BPO firm who will be more prudent about the type of work that they take on and the margins that they will accept.

It is widely reported in the industry that the global economic downturn will lead to increased outsourcing in healthcare, HR, education, retail, telecom and legal process outsourcing (LPO) to say nothing of the opportunities presented by the uptake of social media. Many players in Australia are blind to the opportunities presented by the paradigm shift that is occurring all around us and are stuck in the voice world and only working daytime shifts.

The value of outsourcing will be different to each company and each will have their own risk-reward profile.  There is always some degree of risk in outsourcing related to loss of control, miscommunication, mismanagement, disconnects on communication, etc. so a company has to make an assessment for each process on whether the savings and potential improvements in quality will make up for not having it done in-house.

A lot of Australian BPO service providers are already feeling the pinch and the effects of decreased margins and employee downsizing, while buyers are reducing budget allocations for outsourcing engagements. This in turn has caused a cascading effect across the industry which is evidenced by drying sales pipelines, project delays, scope creep and margin squeeze.

Another area where the Australian industry lets itself down is marketing. From the outside, the industry appears to not have many standards, be fragmented and uncoordinated and it’s easy for the buying side to play both ends against the middle. The second wave will bring a more structured and coordinated marketing approach and a lot more collaboration between firms as they bring their respective individual strengths to bear.

Isn’t it about time that the outsourcing sector across all of its fronts got together and coordinated and collaborated to make the Australian BPO industry better?

Remember the ‘Do Not Call’ disaster? The industry really missed its chance to defend itself against a biased and populist political campaign, because it had nobody through which it could organise its defence. The upshot was that nobody is willing to take on outbound telemarketing for fear of running foul of the legislation.

Martin Conboy has been working with the call centre and BPO industries since 1995 and is one of the leading industry commentators.

Written by Rob O’Malley

One of the largest UK based Outsourcers has just had administrators appointed. Leading BPO commentator Rob O’Malley, The Sauces’ affiliate in Europe, examines what went wrong:

I’ve always been a keen observer of call center outsourcing businesses having spent my entire career working for them and even owning one.  For a long time, Garlands was one of those companies that I really admired.   Garlands are claiming that their demise was due to low-cost competition from Asia.  I have to dispute that!  Despite the rapid growth in offshore, many UK vendors continue to prosper and the majority are in a far stronger position than they were three years ago.  My personal belief is that Garlands simply stopped doing the things that had made it successful in the first place.

There are common traits in all of the successful outsourcers and for a sustained period of time, Garlands had those qualities.  In many industries, a successful organisation can flourish for a long time without appearing to change much.  However, the call centre outsourcing business is different for a number of reasons:

There is no secret sauce.

Firstly, and most importantly, call centre outsourcers have no inventions.  They are a business that sells itself by the hour and has more efficient business processes than in-house call centres. Of course, many will talk about their superior technology, low attrition or how they have packaged their procedures to ensure superior performance.  In reality, even those things that a company might claim as intellectual property really aren’t what they think.  Many don’t really understand their own value proposition.

Low Barriers to entry

Secondly, there are almost zero barriers to entry to this business.  Even with a very limited budget, it is possible to start up some kind of call centre outsourcing business.  The challenge, of course, will be to convince clients to use it.

Margins are skinny.

These limited barriers to entry make the whole industry incredibly cutthroat.  All of these factors combined make the old saying “you’re only as good as the last call you made or received” very true.

So what are these common traits among successful outsourcers which don’t exist in the unsuccessful ones?  Well, there are a number.

Passion

The first is the figurehead who would either be the CEO or owner depending upon the size and structure of the organisation.  Many of the entrepreneurial-run outsourcers can go downhill very quickly after that entrepreneur leaves via buy-out or when they become “financially independent” of the company.  It is the passion of this entrepreneur that drives the desire for quality that cascades through their middle management and on to those handling the calls.  This was even truer for Garlands as they are one of very few outsourcers who bear the name of their founder.  Chey Garland was instrumental in the reputation for quality that Garlands used to be known for.  I’ve had very limited dealings with Garlands over recent years but I assume that Chey’s input to the organisation or her desire for it to continue to succeed has waned.   

Flexibility and responding to change

The second common trait is the desire and the ability to respond to change.  The past 10 years have seen enormous use of the Internet, self-service and offshoring.  We’ve also seen paradigm shifts in many all of the key sectors which use call centre outsourcers, especially financial services, Telco and utilities.  With all of this happening, any outsourcing business that is trying to operate in the same way they did at the turn of the century is probably struggling.  Offshoring in all probability had the most dramatic impact on UK based firms, but the successful outsourcers did the following six things:

Strategic alliances & Partnerships

Firstly, they created their own offshore offering either by establishing their own company-owned facility or partnered with a suitable offshore provider. 

Meeting the market

Secondly, they tailored their UK offering. Sometimes, this did not mean reduced margins but generally meant a greater focus on the area where they could differentiate against offshore. 

Diversification

Thirdly, they set up a European presence.  Another common trend is that companies want to be able to service multiple European languages, which really isn’t feasible in Asia.  There were a number of outsourcers who really wanted to stand up and be counted by stating that the UK was the best place for call centres and that they wouldn’t venture to Asia.  Not only do I admire them, I actually agree with them but also no company can ignore what is going on around them and continue to be successful. 

Packaging

The fourth common trait among successful outsourcers is how they sell their services.  With a few notable exceptions, most of the Asian outsourcers are very bad at selling their services in the UK and they can be seen as how not to prosper here.  However, the successful organisations are the ones who take the risk and adopt aggressive sales campaigns.  By this, I mean employing people who can really sell your services.  Many of the outsourcers still employ unconnected sales people with limited knowledge of or passion for the industry.  Some of the Asian vendors even bring in teams of people to sell (or not to sell) their services for them.  I have not seen one example of where this has been successful.  It appears that Garlands had become so confident in their ability that they had moved away from sales teams selling their services.  I can tell you that people who dealt with Garlands over the years were very impressed.  In the last few years, they were rarely pitching for call centre work being outsourced or if they were, they were not prominent.

A broader Client base

The next area is to ensure that you are not too reliant on a limited number of clients.  This is often easier said than done, but it is something, which should always be part of the forward planning of a BPO vendor.  Many British buyers of outsourced services won’t use a vendor where there is a dominant client (typically a client with 30%+ of the vendor’s turnover) as the vendor ends up focusing too much effort and resource on that one client.   From the vendor’s point of view, the large client is also a huge risk.  If that client goes, experiences trading difficulties, or can’t pay their bills, the BPO vendor’s entire business can be at risk.  In reality, these things are not as common as the significant client “abusing” their dominant position by squeezing margins.  Of course, if the client does decide that they can get a better deal and take their business away, this can potentially ruin an entire company. 

Unique Selling Proposition (USP)

An outsourcer needs to be able to differentiate themselves with their “company story” or “offering.”  To the untrained eye, call centre outsourcing services can be viewed as homogenous and vanilla flavoured with nothing to differentiate them from the competition. They all say the same things! If this really is the case, then the client will simply go for the lowest-cost option which presumably is somewhere in rural Asia.  Vendors need to have a clear definition of what they are as an organisation and to be able to project that to potential clients.  This isn’t just a marketing message.  This is an entire company philosophy that flows through the business and influences how they operate.  Without this, a BPO vendor has little chance of success.

Conclusion

I sincerely hope that Garlands doesn’t become the first in a string of UK based outsourcers to go to the wall.  There are others who have made the mistakes of Garlands, believing that it is possible to rest on your laurels without adapting to changing market forces.  Trading conditions are tough and margins are slim, but it’s simply not acceptable to blame this on low-cost offshore vendors or the economic difficulties.  Vendors who ensure that there is a culture of passion and quality in their organisation and whose management instill these ideals every day will find that the next 5-10 years are very successful for them.  It’s also worth noting that generally speaking, the UK vendors are actually in fairly strong positions.  The boom in offshoring slowed down capital expenditure and company borrowings.  Many were forced into restructures which has led to those which remain having fairly high occupancy rates and therefore profitability.  Many of the larger offshore-only vendors had planned their expansion based on triple digit growth forecasts and as such now have low occupancy and profitability rates.  The multinational (predominantly American-owned global vendors) are in a different position.  Many of them have very high debts which they built up restructuring their domestic locations in addition to investments and acquisitions offshore.  Although low interest rates make servicing this debt cheaper than originally thought, many are now finding it difficult to find new lenders to take on this debt unless they can point to strong balance sheets.  Therefore, it’s likely that the next bankruptcy we will see will be a large offshore vendor, but it’s not unfeasible to think that one of the multinational vendors will also go the same way as Garlands.

Rob O’Malley has worked in the outsourcing industry for the past 17 years. He can be contacted at rob.omalley@call-centres.com

In 2008, the worldwide Recruitment Process Outsourcing (RPO) market was estimated at US$2.1 billion, with industry analyst Nelson Hall predicting that it would reach US$3.2 billion by 2013.

RPO is a form of business process outsourcing (BPO) where an employer transfers all or part of its recruitment processes to an external service provider. An RPO provider can provide its own or may assume the company’s staff, technology, methodologies and reporting. In all cases, RPO differs greatly from providers such as staffing companies and contingent/retained search providers in that it assumes ownership of the design and management of the recruitment process and the responsibility of results.

Consider how a travel agent works. Even in today’s environment where you can book your own hotel, airline, car, etc. many people still turn to a travel agent to make their overall holiday or business travel plans.  Why?  Because the travel agent makes things easy by evaluating options and helping select the best service provider to use (airline, hotel, car rental company, cruise line, etc.) that meets the traveller’s requirements.

The travel agent is not an employee of the company but rather acts as an intermediary.  Typically, the travel agent will bring their knowledge and experience (they do this for a living) about the travel industry to find the best airlines, hotels, etc. (based on such factors as price, service quality, etc.) so will likely steer their clients towards specific service providers who have delivered in the past. So in a similar fashion RPO does the same thing except with people.

RPO is well-established and mature market in the United States and Europe; however it is a relatively new concept to Asia.

Most Asian based organizations usually manage their own recruitment needs, or engage recruitment firms to do so on an ad hoc basis.

Cost is a main element swaying firms towards outsourcing their recruitment.

Kumar Bhaya, director of RPO at Kelly Outsourcing and Consulting Group, said that his clients make savings because they can tap into Kelly’s Recruitment infrastructure without having to make the long-term investment in such resources themselves.

Besides having frontline recruiters based at clients’ premises to interact with hiring managers and candidates, Kelly provides specialist recruiters located offsite at regional sourcing hubs to support clients’ specific talent-sourcing needs.

But RPO is not heralded as an HR cure-all and is not recommended as a solution for every organization.

It should be noted that before outsourcing anything, a company has to be ready to outsource in that its processes must be well defined and have already gone through a process of centralization and documentation so that outsourcing can be done effectively.  Businesses that outsource but do not understand their process or who are not yet ready, often have major problems when they outsource, as do the outsourcers who are trying to support them.

Said Bhaya: “RPO is for any company as long as it has bulk hiring needs, regular ongoing recruiting. But RPO is not for every company.”