The number of businesses outsourcing traditional marketing functions is expected to jump over the next 12 to 24 months from 9% currently to 21%, according to IBM’s ‘Australian Business Process Outsourcing (BPO) Research 2012’.

The report, built from a survey of 216 businesses, rates traditional marketing as the fourth most outsourced business process, ahead of digital marketing, which is currently outsourced by a surprisingly low 6% of businesses. Intention to outsource online marketing over the next year or two is also lower than for traditional, with only 17% anticipating that they will seek external providers.

The greatest share of business for traditional marketing service providers came from the telecommunications and transport industries, with 33% and 31% of businesses in these sectors outsourcing at least one marketing process. In the future, suppliers should look to government and education sectors as their primary sources of outsource business in the future.

Adoption and future adoption of traditional marketing outsourcing across sectors

When it comes to online marketing, telecommunications and transport businesses are the highest current adopters of outsourcing, while, looking forward, telecommunications and banking, financial services and insurance (BFSI) will increase their outsourcing the most.

Adoption and future adoption of online marketing outsourcing across sectors

The BPO report goes on to break down a number of sub-processes for both traditional and online marketing. Market research is the most commonly outsourced traditional sub-process, with 74% outsourcing this function, and also ranks as the sub-process most likely to be outsourced in the future.

Currently 32% outsource content development and 16% outsource campaign management; both of which are expected to be outsourced by more than one in ten who are yet to do so. Customer service is outsourced by 11% of business currently, but a further 21% intend to in the next 12 to 24 months.

Adoption and future adoption of traditional marketing outsourcing by sub-process

Digital marketing is an area where businesses are looking for support due the volume, velocity and variety of data that comes with the territory according to BPO CRM Leader for Growth Markets at IBM Australia, Peter Monk. “The data complexities around it are not something that organisations can or want to get their head into,” Monk says. “They’re saying it’s simply not why they’re in business.”

Social media has been a great influence in driving usage outsourcing of online marketing according to the report. However, the online marketing sub-processes most commonly outsourced currently include multi-channel management at 50%, analytics at 29% and content management at 29%. In the future additional businesses are most likely to outsource content management (21%) and reporting (21%).

Adoption and future adoption of online marketing outsourcing by sub-process

The research also examined online marketing strategies, discovering that most organisations (59%) outsourcing the function have some sort of online marketing strategy. However, these still appear to be in their infancy, with only 7% of organisations that currently outsource online marketing having a constant engagement strategy, and 14% having an active use strategy. One in five do not have a strategy in place and a further 21% have a passive online presence.

Get your copy of the Australian BPO research study now.

Go to – http://thesauce.net.au/sauce-research

By Martin Conboy of The Sauce

Most Australian companies don’t want to send business functions offshore, but many intend to outsource a lot more roles in the next two years and the primary aim isn’t to reduce costs, according to our recent survey.
The survey found 83 per cent of companies would prefer not to send work offshore.

However, increases in outsourcing were expected across a range of areas including finance and accounting, HR, marketing, reporting and analytics and print and document management.

In Australia, there are many businesses both large & small that have outsourced or are about to outsource a number of business processes. There is no doubt that the outsourcing market has burst out of the shadows in the last two years.

Outsourcing has become a valuable tool for businesses to deploy in a hyper competitive market. The drivers of change, from a lift & shift approach to a more considered business expansion opportunity means that organisations are beginning to see that by outsourcing their non-core business processes, they have a lot more time to spend on a core competencies; the work they know best.

Up to now outsourcing has received a bad rap. As a result, most Australian businesses, possibly out of fear of the unknown, have not properly explored the opportunities that it presents. Often mistaken for ‘offshoring’ it is only now that outsourcing and offshoring are having their day in the Sun.

As Ken Henry (Australian Secretary of the Department of the Treasury) noted as far back 2006: “Australia has much to gain from off-shoring – most obviously through a lowing of costs to business and ultimately consumers. Opposition to ‘offshoring’ is based on the same protectionist nostrums that were once used to support the high tariff wall that a generation of Australian policy makers has been busy dismantling. It may be dressed in a different garb, but it is no more respectable.”

Being apposed to importing services through offshoring is like being opposed to imports. It would mean if we followed it to its logical conclusion that Australians would be unable to have iPhones (Heaven forbid) travel overseas (Say its isn’t so) or drive well made Japanese or sexy European cars. (Wouldn’t happen!)

Australians don’t bat an eyelid by taking advantage of our high foreign exchange rate and grabbing a bargain on line, so how is that any different from buying a service online (via the internet).

Asia’s surging growth – including high demand for our commodities – has placed us close to the engines of global wealth creation. Prices for the commodities Australia sells to the world have never been higher, providing an unprecedented opportunity. So apart from reaping the benefits of outsourcing be it locally (In Country) or off shoring we should be spreading the love around to our Pacific neighbours.

Having said that there are some challenges as well, a recent report conducted for Deloitte Consulting by the Economist magazine indicated that across the Asia-Pacific region one of the major risks facing corporations was staff attrition and lack of human capital .in fact on average 25% of companies across the Asia Pacific region indicate this is a major area of risk.

Its no secret that we have a skills shortage in Australia and many BPO service providers have perpetual ‘Want’ adverts on all of the job boards. It follows that many companies are being pushed down the path of outsourcing and off shoring just to access available staff with the right skill sets.

Our own recent BPO Research report (The Australian BPO Report 2012) http://thesauce.net.au/sauce-research supported by IBM and Fuji Xerox Australia has revealed some interesting insights from the buy side of major Australian organisations. “ The report reflects the rapid pace of change and maturity that the Australian BPO industry has undergone over the last decade. It has evolved from pure cost cutting, to improved efficiency, to strategic transformation and an important part of business strategy,” said Russell Ives, Director, Global Process Services, IBM Growth Markets.

“The report highlights that Australia’s senior business community are aware of the benefits of outsourcing and decision makers are looking towards higher order benefits such as improving financial flexibility, driving free cash flow, strengthening customer satisfaction, increasing market penetration, expanding into emerging markets and taking advantage of the opportunities with a global economy,” said Ives.

Most outsourced business processes
The report highlights that while outsourcing decisions in the contact centre and customer service functions were by far the most widely reported, usually in a negative way, customer service functions are actually not among the top three of most outsourced activities. Human Resources, and Printing/Document Management were found to be the most outsourced functions (15 and 18 percent), followed by Finance and Accounting (13 percent). In the next 12 to 24 months, HR outsourcing is expected to grow to 23 percent.

Marketing and customer relationship management
Outsourcing of marketing processes including CRM (Customer Relationship Management) is predicted to grow by 21 percent within organisations that already outsource elements of this function. Of particular note is that online marketing is expected to nearly triple, growing from 6 percent to 17 percent, signaling major opportunities for organisations offering these kinds of services.

Cloud computing and outsourcing
Another trend emerging in the outsourcing sector is the increased use of cloud services. A large number of organisations are now considering cloud computing (35 percent) when making the decision to outsource; yet a marginal proportion (15 percent) of organisations have adopted cloud computing at an enterprise level as part of their outsourcing strategy.

The report highlights that increased mobility and Cloud will create a ‘free agent’ revolution in service outsourcing as the ability to work from almost anywhere in Australia becomes possible using remote mechanisms. This is particularly relevant for the mining industry, which operates over vast distances. In these scenarios, the value of Cloud services is even greater when it can be tailored to accommodate the unique elements of a particular industry.

So in conclusion we believe that Australia has moved past BPO 1.0 (Lift & Shift) and is sitting somewhere between BPO 2.0 & BPO 3.0 with its foot on the accelerator.

Get your copy of the Australian BPO research study now.
Go to – http://thesauce.net.au/sauce-research

By Shaun Drummond

Most Australian companies don’t want to send business functions offshore, but many intend to outsource a lot more roles in the next two years and the primary aim isn’t to reduce costs, according to a recent survey.

The survey produced by The Sauce and endorsed by the Australian Business Process Outsourcing Association and two large outsource providers, IBM and Fuji-Xerox Australia , found 83 per cent of companies didn’t intend to send work offshore.

However, increases in outsourcing were expected across a range of areas including finance and accounting, HR, marketing, reporting and analytics and print and document management.

The smallest growth was in finance and accounting, with 13 per cent of organisations outsourcing now compared with 17 per cent within one to two years.

The biggest growth was in marketing, jumping to 24 per cent from 9 per cent, supply chain management going to 16 per cent from 6 per cent and reporting and analytics rising to 18 per cent from 6 per cent.

Seventy-one per cent said the main reason for outsourcing was global expansion, followed by “scalability” and “going green”, with 83 per cent of companies in manufacturing seeing it as a way to reduce their environmental impact. Reducing cost was one of the least cited to outsource at 21 per cent.

At a forum in Sydney on last week, participants from the ABPOA, KPMG, IBM and Fuji-Xerox said the increases were off a low base, turning around a slow uptake of outsourcing in Australia.

“One of the reasons Australia has been fairly slow moving is that most Australian companies sit in he middle of the bell curve, they are fairly comfortable,” said Peter Monk, the director of global process services at IBM Australia & NZ.

“I think we have seen a few companies who are laggards who have been forced to do something because business as usual won’t work.”

KPMG’s head of shared services and outsourcing, Michael Smart, said Australia was a long way behind the rest of the world in its uptake of BPO.

Part of the reason is that it is “inherently more difficult than IT because a business process has a lot more tentacles in an organisation – even finance and accounting, even though there are many providers that can deliver that more effectively and cheaply through global delivery models”.

Martin Conboy, president of the ABPOA, said there were four stages of outsourcing: 1.0, 2.0, 3.0 and 4.0.

The first stage is “lift and shift” of transactional functions which has been done over the past decade.

The next stage is “process re-engineering”, 3.0 is moving expenses from a capital expenditure model to an operational expenditure model, and cloud computing is part of that shift. 4.0 involves the outsourcing of data and analysis.

“From this research we have found [Australia] has just passed BPO 2.0, we are not quite at BPO 3.0,” he said.

Current and future trends in Business Process Outsourcing

Source: The Australian BPO Report 2012

The Australian Financial Review
Get your copy of the report HERE

Huge week last week, I attended the extremely well organized SSON conference in Melbourne which was very well attended and there were a lot of very interesting conversations taking place during the three day annual event.

For me the thing that stuck out is how many new players are coming into the space looking for information and support. The audience in my view was broadly speaking, broken into three sections:

1. The very sophisticated and very knowleable players who are looking for the latest trends and ideas;
2. The middle ground who are on the Shared Services / Outsourcing journey and are reinforcing what they all ready know and looking for what is ahead; and
3. The ‘newbies’ who don’t know what they don’t know but know that they need to catch up.

This last group is particularly interesting as they are hungry for knowledge and are almost pre market in terms of BPO 1.0.

Another trend that came through was the need to get good professional advice from seasoned players, there were a few horror stories about BPO projects that fell over because the ‘buy side’ team did not know as much as they thought they knew when the project was being negotiated and instead of seeking outside help they batted on, and eventually paid the price.

Interestingly the Sauce’s new BPO research (http://thesauce.net.au/sauce-research/australian-bpo-research-report-2012-overview) that was supported by IBM and Fuji Xerox Australia indicated that about 15 percent of major companies in Australia are dissatisfied with their out sourcing experience and that seems to suggest that a small number of projects were not set up properly and correctly project managed from the get go- Hopefully next year we be able to report a decline in that statistic.

A number of senior people on the buy side spoke about having a ‘buffer’ of spare people and resources to pick up the slack when things do not always go according to plan.

Best speech for me was Tommy Hafey the legendary AFL Footy coach who addressed the gathering – when he finished speaking I was looking for somewhere to do my pushups – If you have no idea what I am talking about – suffice to say it’s a Melbourne thing.

The Sauce launched its new BPO study and I have to say it has every thing that you wanted to know about The Australian BPO buy side but were afraid to ask – don’t forget there is a market place event on May the 2nd in Sydney please go to http://outsourcingreporting2012.eventbrite.com/ it’s a great networking opportunity and chance to hear what’s happening in the market.

If you are a twitter fan and you want to join the conversation – please visit https://twitter.com/#!/BPOResearch

Keep those stories coming in.

Cheers,
Martin Conboy

By Sameer Murdeshwar

Last week’s Oscars had all the usual drama with the unforeseen winners and the expected list of movies winning the golden statuette. In the hours leading to the award ceremony, the Twitter-verse was abuzz with predictions and expectations from the event. And, all this time, a team from IBM was monitoring all activity on Twitter using a tool called the Senti-meter, developed in collaboration with the Los Angeles Times and the University of Southern California’s Annenberg Innovation Lab.

The Senti-meter tool tracked all the sentiments from Twitter before, during and after the Oscars to predict the winners and losers. This tool has been designed to crunch large amounts of real time data in seconds and predict public preferences. With more than 150 million tweets a day, this application has the capability to analyse public tweets and create real time dashboards of public sentiment. This technology was used for other major events as well including the Grammys, the World Series and the Super Bowl. 
 


Evolving nature of analytics


Analytics, as a technology, has evolved from sifting through existing data that has been lying around in servers for years, to a more proactive version which encompasses collecting data from various sources and producing up-to-the-second reports, analysis and trends. Services providers in this space must take a page from IBM and build capabilities which will allow them to churn out data using real time analysis.

Apart from Twitter, there are other platforms such as other micro blogging sites, social networks, blogs and forums to tap into, for social media driven online insights. Next generation analytics will be able to ignore online “noise” and focus on impactful online feedback. This service relies heavily on linguistic and semantic analysis to identify varying shades of sentiments (positive, neutral and negative) and identify sentiments which carry value. These include posts which have been retweeted / shared often, online clout of the user, the number of followers and other such parameters.



What’s in store in the future?


Social media driven analytics has far-reaching applications beyond the world of sports and entertainment. Fields such as news publications, retailers, electronics manufacturers, automotive manufacturers and brand experts can benefit from services to identify key issues that frame everything from marketing strategies to customer segmentation and brand sentiment. Social media driven predictive analytics represents a significant paradigm shift in how businesses interact, understand and discover actionable customer insights. Experts have predicted a 30-times fold increase in online data over the next decade, and this is the right moment for service providers to draw raw online data to provide real time decision support for their clients, and for the clients to harness this emerging technology to understand their customers better.

Sameer Murdeshwar, Analyst, ValueNotes Sourcing Practice
http://www.sourcingnotes.com/content/view/812/1/

Today, The Sauce published the landmark Australian BPO Report 2012 (ABPO Report), which investigates the current state of business process outsourcing in Australia and points to future trends. Global expansion is seen to be the key driver and benefit of outsourcing decisions amongst 71 percent of organisations surveyed. The report also showed significant anticipated growth in business process outsourcing activity among large organisations with between 500 to 5,000 employees (this constituted one-third of all respondents). This group of Australian organisations is expecting an increase of 20 percent over the next two years. The report was sponsored by IBM and Fuji Xerox Australia.

“The report reflects the rapid pace of change and maturity that the BPO industry has undergone over the last decade. It has evolved from pure cost cutting, to improved efficiency, to strategic transformation and an important part of business strategy,” said Russell Ives, Director, Global Process Services, IBM Growth Markets.

“The report highlights that Australia’s senior business community are aware of the benefits of outsourcing and decision-makers are looking towards higher order benefits, such as improving financial flexibility, driving free cash flow, strengthening customer satisfaction, increasing market penetration, expanding into emerging markets and taking advantage of the opportunities with a global economy,” said Ives.

Most outsourced business processes
The report highlights that while outsourcing decisions in the contact centre and customer service functions were by far the most widely reported, customer service functions are actually not among the top three of most outsourced activities. Human Resources, and Printing/Document Management were found to be the most outsourced functions (15 and 18 percent), followed by Finance and Accounting (13 percent). In the next 12 to 24 months, HR outsourcing is expected to grow to 23 percent.

Marketing and customer relationship management
Outsourcing of marketing processes including CRM (Customer Relationship Management) is predicted to grow by 21 percent within organisations that already outsource elements of this function. Of particular note is that online marketing is expected to nearly triple, growing from 6 percent to 17 percent, signalling major opportunities for organisations offering these kinds of services.

“CRM outsourcing services enables organisations to solve their complex customer-facing challenges by applying analytics-driven methodologies with measurable outcomes. In some instances, implementing multi-channel support models that enable real-time monitoring of customer interactions can result in 15 percent improvement in customer satisfaction,” said Peter Monk, Partner and BPO Solution Leader, IBM.

Cloud computing and outsourcing
Another trend emerging in the outsourcing sector is the increased use of cloud services. A large number of organisations are now considering cloud computing (35 percent) when making the decision to outsource, yet a marginal proportion (15 percent) of organisations have adopted cloud computing at an enterprise level as part of their outsourcing strategy.

The report highlights that increased mobility and Cloud will create a ‘free agent’ revolution in service outsourcing as the ability to work from almost anywhere in Australia becomes possible using remote mechanisms. This is particularly relevant for the mining industry which operates over vast distances. In these scenarios, the value of Cloud services is even greater when it can be tailored to accommodate the unique elements of a particular industry.

Martin Conboy, President of the Australian Business Process Association and editor of The Sauce, comments: “There is tremendous pressure on companies from shareholders to reposition their capital in their business, change the make-up of their balance sheets and move to an operating expense environment. Interestingly, we are seeing different types of outsourcing opportunities being requested by Australian organisations particularly for non-voice back office projects. By and large they want access to skills not readily available in Australia and this allows them to focus on their core competencies and support their specialist higher level employees in Australia.”

About the Report
This Australian-first report jointly sponsored by IBM and Fuji Xerox Australia was produced by The Sauce and endorsed by the Australian Business Process Outsourcing Association. The purpose of the report is to deliver intelligence around outsourcing in Australia in order to better understand the drivers, economic realities and why so many organisations in today’s business environment are choosing to outsource their non core business processes.

To download a full analysis of the BPO Research 2012 results visit: http://thesauce.net.au/sauce-research/australian-bpo-research-report-2012-overview/

The Australian BPO Association (ABPOA) is delighted to be hosting a marketplace breakfast with KPMG on May the second in Sydney. The Sauce, sponsored by IBM and Fuji Xerox, will be showcasing the landmark research report, “The Australian BPO Study 2912’ which the ABPOA endorsed.

This is the first time anybody has gone to the trouble to find out what’s really happening on the buy side in Australia and – let me tell you, there is a fascinating tale to tell.

There are only limited seats available so jump in quick if you would like to attend and find out what’s really going on in BPO in Australia.
 Please visit http://outsourcingreporting2012.eventbrite.com to book your spot.

The ABPOA is also hosting a trade delegation from the Philippines (BPA/P) later in the month of May. If you are interested in meeting our friends form the Philippines please write and let me know mconboy@abpoa.com.au

By Martin Conboy, President – ABPOA

As we all know we are moving away from needing to actually talk to a human being when we are doing our day-to-day transactions. There is no doubt that as consumers we are using our smart phones, web chat, email, SMS and social media channels to get what we need to get done. Now it turns out we are falling out of love with cash.

I read the other day that Australians withdrew cash from ATMs 64.7 million times in January, well down on 65.6 million withdrawals made the previous January.

December was even worse. Australians took out cash 71.9 million times compared to 73.6 million the year before.

Mobile phones, EFTPOS, internet transfers and cards that merely need to be waved in front of Point of Sale machines are taking the place of cash, but credit cards aren’t.

Cash is losing its position as the primary method for making purchases.

Reserve Bank figures released last week show the average credit card limit climbed just 0.7 per cent over the year to January, the smallest annual growth on record. The outrageous interest rates charged on credit cards would no doubt feed into that.

Internet transfers jumped 7.5 per cent, making 60 million transactions in January, up from 55 million. Debt card transactions jumped 12 per cent.

So it will follow that as we move too ever more convenient ways to transact our transactional business the less and less we need to actually talk to humans either in person or on the phone. It’s no secret that internet shopping is growing and growing although that may come off the boil a bit as the Australian dollar slips back to parity

Rising uncertainty about China’s growth rate coupled with healthier readings on the US economy are likely to weigh on the Australian dollar, analysts say.

There is no point wringing our hands and be in denial of the evidence that we can see with our own eyes we need to start to make plans to stay ahead of the curve.