Aegis, a global outsourcing services company and part of the Essar Group, announced that it has been ranked fourth amongst top business process outsourcing (BPO) players in India, in a recent survey by Dataquest.

The group has recently announced its acquisition plans in the Middle East, Europe, Latin America and Africa for the next two years.

Included in this is the recent acquisition of US student loan provider SLM Corp.’s call centre in Texas.

Furthermore, Aegis may close its US $45m purchase of 59% stake in Indian communications services company AGC Networks as early as this week. Earlier this year Essar acquired Avaya’s entire 59.13% stake in AGC Networks earlier known as Avaya Global Connect Ltd., a converged communication solution provider focused on the Indian and Australian markets.

The company sees this as a strategy to get into the systems integration business and offer their customers unified communication and experience management.

Commenting on the key trends to shape the Australian BPO industry over the next 2-3 years, local chief Denice Pitt, President of Aegis Australia said,” The macro-economic environment is getting tougher and there are strong indications the U.S. is heading back into recession. If that occurs the impact will be felt globally and Australia won’t feel the same level of insulation as we did first time around.”

Considering the current state of flux in the Australian political scene she remarked, “Governments can’t continue to provide stimulus so in order for private enterprise to maintain their earnings, cost reduction and cost management, not growth, is likely to become the primary focus for affected organisations. Domestically this will mean some key sectors that have been traditionally reticent to include outsourcing as part of their strategy, may begin to embrace it. Companies will get smarter with their sourcing mix and more will move work to where it’s best serviced for the lowest cost.”

Reflecting upon this change in emphasis of taking layers of expense out of the operating costs for Australian business Ms. Pitt remarked, “Companies are going to keep moving their customers to the web and self help channels in order to service their needs. We may even see other sectors adopt the travel industry approach of charging their customers a premium for using higher cost channels such as voice.”

Looking ahead at the shape of the Australian industry she commented, “In future, sustainably competitive organisations are unlikely to be locked into the old paradigm of outsourcing discrete pieces of work wrapped up in SLAs. Whilst everyone talks about innovation, unfortunately this model leaves little room for it. Organisations will realise a quantum leap in value when they allow themselves to partner with a provider in the development of their overall customer service and operational strategies. The service provider model is very mature now. The next paradigm shift is for vendors like Aegis to become a one-stop solution provider for clients, and we are already working with some key companies on this very model.”

Aegis is certainly growing quickly to the point where it has fast become one of the biggest players in the Australian BPO scene. With this rapid growth comes some pain. Needless to say one of the challenges is find people to man the pumps in a full employment economy. We asked Ms. Pitt about the companies recruitment strategies and what they do make themselves an attractive proposition to a labour pool that is currently spoilt for choice.

“Overall there’s no question that recruitment and talent management is a constant challenge”, she went on to say “One of the many strategies we have in play to address issues like retention is the decentralisation of our operations.”

“Bringing our centres closer to where our employees live has delivered considerable improvements in this area and is also impacting positively on engagement and performance.

Job opportunities in Victoria’s information and communications technology sector received a timely boost this week with global technology and business services giant Vertex deciding to establish its Asia Pacific Headquarters in Metropolitan Melbourne and expand its operations, creating another 400 jobs. Vertex is a leader in BPO, Customer Management Outsourcing and IT Services.

Victorian state Premier John Brumby announced that Vertex had chosen East Bentleigh for its Asia Pacific headquarters, bringing the number of full-time jobs created in Victoria with support from the Victorian Government to 2400.

“Victoria is the job-creating capital of Australia, generating more than 118,000 jobs since the start of the Global Financial Crisis two years ago,” Mr Brumby said.

Vertex’s jobs boost comes on top of the 600 jobs announced at the company’s new Ballarat (Rural Victoria and 1 1/2 hours from Melbourne) office in June – one of the largest-ever single job creating ventures in Ballarat’s history. Vertex supports 45 million consumers globally and operates across a wide range of market sectors and geographies delivering customer management and client based services.

Phil Allan, CEO of Vertex’s Asia Pacific operations, formerly known as Peripheral Computer Industries (PCI) said the company was confident in the long-term marketing potential that the Asia Pacific region had to offer. “Vertex is in an excellent position to capitalise on the opportunities offered in the Asia Pacific market and this investment in our new facility will enable us to recruit the talented people we need take advantage of this opportunity and further extend the company’s global reach,” Mr Allan said.

The Asia Pacific headquarters will provide IT and business services to multinational companies in addition to a variety of services from IT technical support, sales and marketing campaigns, project management and customer service.

Gartner forecasts India’s revenue from domestic BPO services will reach US$1.6 billion in roughly four years. Based on the industry’s growth percentage in 2009 and 2010, it will reach US$683 million this year, from last year’s US$521 million, and will maintain its growth rate until 2014.

According to the report, high economic growth, competitive pressure, agility, time to market, innovation and adoption across verticals and breadth of services will be driving the high growth rate in domestic BPO.

Arup Roy, senior research analyst at Gartner, shares, “IT services spending will continue to shift from discrete spending to outsourcing in 2010. New avenues of growth will open in the mid-market and in up-selling. The entry of new hybrid providers will blur the lines between product and IT services and the new offerings will be on a pay-per-use model.”

Also from the report, it is possible that verticals such as government, healthcare, retail, and utilities will soon take advantage of business process outsourcing services. Similar to the banking, finance, and telecommunications industries, said verticals also involve a great amount of transaction processing, which can be outsourced.

Majority of India’s domestic market is still made up of voice-based services, but BPO is on the rise. When more industries take advantage of BPO, the service lines within the sector will certainly grow.

The performance of the global outsourcing industry seems to be looking up, but when it comes to IT outsourcing, it’s quite a different matter. According to the most recent study by Everest Research, IT outsourcing contracts for the second quarter of this year fell to 46 per cent. The total value of contracts fell to $1.5 billion for June 2010 from $2.8 billion in March 2010.

Amneet Singh, Everest Group vice president, says, “IT outsourcing is more dependent on discretionary spending by companies; for example, to expand their operations. But BPO tends to be more basic. The growth in BPO outsourcing can be linked directly to the needs of companies to cut costs during the economic turmoil of the last two years. If you want to show an immediate reduction in costs, in two quarters or so, it is easier to do it by outsourcing business processes.”

New contracts in a quarter are used to predict revenue growth in the following quarters. According to the report, while the number of IT outsourcing contracts dropped in June quarter, the value of contracts for marketing-related BPO and HRO grew steadily.

The report identifies the drop of European contracts as a major cause for the declining revenue of the IT outsourcing industry. Many European countries are in serious economic trouble and this is being reflected in many markets not just IT Outsourcing. Compared to the second quarter of 2009, 41 per cent of European deals for both IT outsourcing and BPO dropped in the second quarter of this year.

The IT Enabled Services Secretariat (ITES) of Ghana is hosting its first major regional business process outsourcing summit, to be held at the La Palm Royal Beach Hotel in Accra.

The event is called Ghana Outsourcing Leadership Summit 2010, and it is scheduled for the 20th to the 21st of September. It is the first conference on outsourcing in the country and throughout the West African region.

With the theme, “Optimising Business Processes Through Outsourcing,” the conference will focus on recognising and how to realise objectives and goals to improve business operations with the help of outsourcing.

The summit will cover several topics such as current engagement models, global trends, best business outsourcing practices, the benefits of outsourcing, and emerging standards and capabilities.

Among the delegates will be top management and business leaders from different industries like banking, finance, telecommunications, oil and mining, airlines and international travel, and healthcare. Senior government sector officers throughout the region will also be in attendance.

An additional feature of the summit is an exhibition of outsourcing solutions, where BPO service providers, call centre and telecoms operators, and software developers and resellers will participate.

The Ghana government recognises the undeniable potential for jobs that the outsourcing industry has, and hosting the BPO summit is one of the ways of edging out their competitors to be the industry leader in the region.

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The Universal Queue Comes of Age

People started talking the Universal Queue (UQ), as a method for integrating multiple communication channels, as far back as 2004. However, the challenges in implementing such a system have prevented widespread adoption across the outsourcing and contact centre industries. With the evolution of web based telephony technology and Cloud computing the concept is gaining momentum, and becoming more practical for organisations to implement…more

New Everest report shows Global outsourcing activity growth

Outsourcing contracts signed by banking, financial services and insurance firms (BFSI sector) in the second quarter this year represented the highest volume of activity since the fourth quarter of 2008 and significantly contributed to a third consecutive quarter of increased transaction volumes in the outsourcing industry, according to Everest, a global consulting and research firm…more

BPO Global Leaders Brainstorm the Way Forward

The third annual World BPO/ITO Forum was held in New York last month. The event has now successfully established itself as the top forum for knowledge sharing about off shoring and strategic sourcing…more

Philippines BPO Sector: A Double-Edged Sword

When you’re young, educated, and have a good paying job, you’ll probably part of your city’s nightlife. For workers in the outsourcing industry, more specifically those who work the night shift, day becomes night and night becomes day. Everything is all mixed up…more

There is another 800-pound gorilla in the room.

China, keen to end India’s dominance in the outsourcing industry announced it would not levy operating taxes on offshore service outsourcing businesses in 21 of its key cities until 2013 to promote growth of the industry…more

South Africa Runs Its Colours Up the BPO Pole

After its stunning success of the Soccer world cup South Africa is maximising its time in the spotlight. The world cup showcased that SA is open for business and ready to really participate in the BPO market…more

Outsourcing contracts signed by banking, financial services and insurance firms (BFSI sector) in the second quarter this year represented the highest volume of activity since the fourth quarter of 2008 and significantly contributed to a third consecutive quarter of increased transaction volumes in the outsourcing industry, according to Everest, a global consulting and research firm

Other second quarter 2010 findings include:

BPO market activity increased by 15 and 33 percent in transaction volumes and Annual Contract Value (ACV) respectively. IT Outsourcing (ITO) registered a decline in ACV by 22 percent.

The BFSI vertical saw a 41 percent increase in transactions. Most contracts were signed in the banking vertical; volume was double the previous quarter.

The MDR (manufacturing, distribution, retail) vertical experienced decreased activity but increases were found in the healthcare, technology and telecommunications sectors.

A healthy captive market experienced a fourth consecutive quarter of robust growth with 38 new announcements and no divestments, signalling the captive model remains an important component of sourcing portfolios.

Offshore activity saw 32 delivery new centres established in the second quarter, the majority were in Asia followed by Eastern Europe and Latin America.

Interestingly China moved into the category of “mature location,” an elite group previously comprised of only India and the Philippines.

Consolidated revenues increased across offshore-centric suppliers whereas traditional global suppliers saw revenues drop during the quarter. Operating margins dropped for both classes of suppliers.

Mergers & Acquisition (M&A) activity increased with 12 acquisitions compared to nine in the first quarter as well as 61 alliances compared to 52 in the previous quarter.

“The overall services sourcing market remains on a slow and steady growth path marked by indicators such as sustained transaction activity, captive activity, delivery centre growth, and renewals and restructuring of contracts,” said Eric Simonson, managing partner of Everest. “Now, there exists a sizeable number of mature, large buyers who are focused on evolving and optimising hybrid sourcing strategies that leverage offshore, onshore and captive models with less emphasis on mega deals.” The figures also revealed that centre delivery in Eastern Europe fell to nearly half the levels observed during the first half of 2009. This was mostly owed to the impact the recession and economic crises in Greece, Spain and Portugal have had on demand.

While activity in Asia has slowed down, the region appears to be recovering faster than other emerging markets locations. 
China appears to be slowly establishing itself as an outsourcing hotspot, although currently its capability renders it an attractive offshore destination regionally (i.e. Japan, Korea and Southeast Asia).

However, according to Everest’s research, China still lacks the right characteristics to attract European and Northern American off shoring business.   (i.e. English language skills) At the top of the list, sufficient numbers of experienced project managers able to deal with North American and European clients.

www.everestgrp.com

The third annual World BPO/ITO Forum was held in New York last month. The event has now successfully established itself as the top forum for knowledge sharing about off shoring and strategic sourcing.

Over 250 senior delegates attended and travelled to New York from as far a field as Hungary, Poland, and Northern Ireland. There was considerable interest in discussions about the strategic implications of offshore countries, near shoring countries, and emerging offshore sites.

Despite the negative media driven sentiment concerning American jobs being outsourced to off shoring destinations, the strong and consistent views of the forum’s keynote speakers leaned toward the positive aspects of outsourcing, and that savvy companies will outsource according to their needs and that this will help to drive improved efficiency, productivity and innovation.

Kartik Kilachand, World BPO Forum’s CEO and co-founder, said, “Our delegate list is a clear indication that global delivery centres are rapidly becoming the norm. With a strong roster of speakers, practitioners and service providers participating in World BPO/ITO Summit 2010, I believe we are well on our way to our goal of becoming ‘The Davos’ for strategic sourcing.”

iRise CEO and co-founder, Emmet B. Keeffe III, commented, “The World BPO/ITO Forum has become the leading venue for C level executives to share best practices and lessons learned. When leveraged correctly from a people, process and technology point of view, global sourcing can be a powerful way to both cut cost and accelerate delivery of new revenue generating innovation for US companies.”

When you’re young, educated, and have a good paying job, you’ll probably part of your city’s nightlife. For workers in the outsourcing industry, more specifically those who work the night shift, day becomes night and night becomes day. Everything is all mixed up.

The Filipino BPO industry’s 500,000 employees are an economic force to be reckoned with.

The industry’s revenues, which already account for 5 percent of the country’s gross domestic product, are growing at double-digit rates annually, according to the Business Processing Association of the Philippines. Industry workers have a lot of spending clout.

Jobs are plentiful and can come with generous perks, such as 13^th and 14th-month pay, performance bonuses and free medical insurance.

Entry-level jobs bring salaries that are very good compared to other types of work and carry the promise of triple pay after a few years’ experience – good wages in a country where a third of the population live on the equivalent of P45 ($1) a day is most welcome.

Companies are constantly coming up with ever more inventive ways to attract and hold on to their precious human commodity.

The economic ripple effect is borne out by the wholesale explosion of 24/7 service industries – including convenience stores, bars and fast food restaurants that have sprung up around the new office towers to serve the needs of the booming sector.

However, it’s not all zoom and boom. There is a dark under belly to all of the good news. In exactly the same way that India had to face up to its demons, so to will the Philippines. Both societies have very strong moral codes of behavior. The Philippines is deeply Christian and very conservative compared to first world Christian countries.

The arrival of the BPO industry brought other things besides economic prosperity. It brought changes in values, diets, and sexual practices, according to Josefina Natividad, a professor with the University of the Philippines’ Population Institute.

“What shocked us most was that for both call center and non-call center workers the level of premarital sex was very high,” she said, citing a health and lifestyle survey on young Filipinos completed by the university.

Heavy drinking and smoking, a disproportional number of unmarried mothers, and high consumption of junk food also stood out.

The study revealed a higher percentage of BPO employees engaged in pre-marital sex at 75% compared to non-call center workers at 66.6%.

The study also showed that more call center agents had sex before the age of 18 compared to non-call center employees (25% vs. 16%), had more than one sexual partner (25% vs. 20%), and have paid or were paid for sex (20% vs. 12.5%).

Moreover, the study said there were more males and females in call centers that engaged in casual sex than those who work for different industries (50% vs. 35% for males, 11.1% vs. 7% for females).

It had to happen. India so dominant for so long finally has to share the limelight with a competitor who brings serious hitting power to the table.

China, keen to end India’s dominance in the outsourcing industry announced it would not levy operating taxes on offshore service outsourcing businesses in 21 of its key cities until 2013 to promote growth of the industry.

The number of service-outsourcing companies in China topped 8,000 in 2009. Despite the GFC Chinese service-outsourcing companies still managed a 152 percent rise in the value of their contracts, which exceeded 10 billion U.S. dollars

The sector employed 700,000 people last year.  500,000 jobs were taken by college graduates, accounting for about 12 percent of the total number of jobs taken by graduates that year. Another 1,105 service outsourcing companies were set up in the first half of 2010, providing jobs to 182,000 people, of which 124,000 were new college graduates.

According to the website of China’s Finance Ministry, there will be an exemption from business tax from 1^st July to the end of 2013 for outsourcing companies to help them grow and eventually expand.

Now that China has knocked the Philippines off its perch as the world’s second largest outsourcing destination, the Chinese government is really stepping up its efforts in competing in the global outsourcing market. Currently, it will not be in India’s shadow as the largest outsourcing destination for to long.

According to a joint statement released by the Ministry of Finance, the State Administration of Taxation and Ministry of Commerce, offshore service outsourcing income refers to service revenue arising from contracts signed with offshore entities for providing information technology outsourcing (ITO), business processing outsourcing (BPO) and knowledge processing outsourcing (KPO) services.

The tax exemption policy includes companies that specialise in IT outsourcing, business process outsourcing, and knowledge process outsourcing in more than 20 cities in China. Beijing, Dalian, Shanghai, and Shenzhen are among these 20 cities.

China’s service outsourcing industry posted a 21 per cent year-on-year increase to USD 23.6 billion in 2009, according to a recent report by Deloitte. Last month, accounting firm KPMG had said China had overtaken India as the primary destination of outsourcing and shared services for Asia-Pacific companies after netting business to the tune of USD 20 billion.

The KPMG survey, which covered 280 senior company executives across Asia, showed that China’s outsourcing and shared services are rapidly expanding, winning a substantial market share over India and other regional destinations.

“Though, at the moment, the country has still not reached the level of maturity seen in India, the growth of China’s outsourcing market is significant. Many Western companies may still see India as their location of choice, but for executives within Asia Pacific the message is clear — China is now leading the way,” Edge Zarrella, global head, IT Advisory, KPMG China, was quoted as saying.

After its stunning success of the Soccer world cup South Africa is maximising its time in the spotlight. The world cup showcased that SA is open for business and ready to really participate in the BPO market.

South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors; a stock exchange that is 18th largest in the world; and modern infrastructure supporting an efficient distribution of goods to major urban centers throughout the region.

South Africa reaped the benefits of macroeconomic stability and a global commodities boom, but began to slow in the second half of 2008 due to the global financial crisis’ impact on commodity prices and demand.

The economy is made up of mining (world’s largest producer of platinum, gold, chromium), automobile assembly, metalworking, machinery, textiles, iron and steel, chemicals, fertilizer, foodstuffs, commercial ship repair. The government is very interested in broadening its base into more white-collar occupations to leverage off its English speaking population.

South Africa has relied on the BPO industry to create more jobs for its citizens and to contribute to its revenues and investments.

According to a recent report released by the Business Trust and DTI, the total job created within the last six years is 87,000 and investments total to R1.5 billion. Compared to its targeted total job creation of 100,000 and R1.75 billion in investments, it can still be considered a success taking the global economic crisis into consideration. Though companies that depended on telesales work from the UK did not survive, the rest of the BPO industry is more or less stable.

With regard to South Africa’s training of BPO employees, the target of 35,000 workers both entry-level and supervisory was met. This resulted in the country being one of the best sites for inbound voice services.

Bulelwa Koyana, interim CEO of Business Process enabling South Africa (BpeSA), said, “We need to play by our strengths in the global market. Voice is our strength; for example, we don’t need to do extensive accent neutralisation.”