• HP announced plans to restructure its Enterprise Services business in Germany. Under the proposal presented to the German Supervisory Board, the planned changes in Germany will affect approximately 1,100 positions and the company will close its site in Rüsselsheim, Germany, by the end of October. As part of the closure of the Rüsselsheim site, approximately 850 positions will be eliminated due to efficiency gains, local partner outsourcing and consolidation with other HP global service delivery hubs.

• In the latest annual ranking of the top 100 global outsourcing destinations by Tholons, a services globalisation and investment advisory firm, Manila claimed the number three slot, following Indian cities Bangalore and Mumbai. Manila, ranked number four in 2012 has overtaken Delhi, India. Cebu, formerly number nine also went up one rank and pushed Dublin Ireland from the eighth spot. Read more about it here.

• Congrats to @LinkedIn for reaching 200M+ members! http://linkedin.com/200million

• Sitel  continues to expand its fooprint in the Philippines  by opening its 9^th BPO centre in the region.

• Bank West signs 3 year RPO with Talent 2. The deal covers end to end recruitment and is a blended onsite/ off site model.

• Aegis Australia launces ‘Aegis Pi’ which provides easy access to key business intelligence any time, any where! Aegis claims that the technology is a game changing business intelligence tool that is user friendly.

Leading Customer Care Provider Opens Ninth Customer Care Facility in the Region

Sitel announced the opening of a new call centre in Eton, Manila in the Philippines. The new location is Sitel’s ninth customer care centre in the Philippines, where the company already has 13,000 active skilled employees.

Sitel continues to expand its footprint in the Philippines, where the nation’s BPO industry is expected to grow at an annual rate of 15 per cent through 2015. Sitel chose Eton due to its prime location at the crossroads of a major transportation hub in Pasig City, offering ease of access for Sitel employees. The new centre will initially provide support for a major online computer gaming company and a leading telecom service provider but has capacity for further expansion.

Sitel and its clients continue to be impressed with the quality of the Philippines workforce. Sitel’s Philippine agents are over 90 per cent college educated, with degrees in IT, communications, business and the sciences. This enables Sitel clients to outsource services from basic customer care to skilled technical services.

“There is a strong affinity between the Philippines and Australia and New Zealand with many ANZ companies in the Telecommunications, Travel, Information and Collections industries choosing to benefit from the Philippines vast English language pool and the significantly lower cost of service” said Trevor Friesen, General Manager Philippines, Australia and New Zealand, Sitel.

“But it’s not all about cost. Our ANZ clients can achieve higher customer satisfaction scores from their Philippines contact centres than their competitors using on-shore services” continues Friesen.

The Eton facility is designed to operate continuously through the use of a redundant centralised uninterruptable power supply (UPS) and power generators capable of providing long-term interim power. The facility also features state-of-the-art security measures, with extensive CCTV recording capacity and an anti-pass back access system.

To learn more, visit www.sitel.com/info/philippines.

Manila-based offshoring and outsourcing solutions provider MicroSourcing announced last the opening of its first Australia based office, which marks yet another milestone for the company as it continues to experience near record growth in 2012. To support the growing demands of a bustling Australian economic climate, MicroSourcing has also launched http://www.microsourcing.com.au.

The goal is to satisfy Australia’s growing interest and need to include offshore and outsourced teams to their company structures and delivery strategies.

“We have observed a substantial increase in the number of Australian clients we are acquiring and feel that a home-turf presence inspires more confidence in the services we provide, “ stated Philip Kooijman, CEO at MicroSourcing. “Small and medium sized businesses are now realising the positive benefits of utilising off-shore teams, including increases in productivity, operational efficiencies and access to skilled labour that would be otherwise difficult to attract locally.”

The Sydney office is the first for MicroSourcing outside of the Philippines. The purpose of this high-powered physical integration is to serve the Australian business community efficiently and effectively through hands-on transition management and providing on-going service support.

The Philippines has emerged as a premier choice for offshoring and outsourcing for Australasian companies because the cultural, economical and geographical integration is virtually seamless. With the new office in Sydney, MicroSourcing has bridged the geographic gap between the two countries and is able to offer Australians easy access to a highly skilled, cost-effective workforce in the Philippines.

Heralds the creation of a formidable top-tier player with 2012 revenues that will reach in excess of USD 1 Billion KEY HIGHLIGHTS OF THE NEW BPO DIVISION: Successfully transitions acquisitions including Intelenet Global Services in India, The Listening Company in UK and Excelior in Australia to fold into a larger BPO capability Potentially amongst the top 10 BPO players globally, top 5 BPO players in Europe, top 4 India based BPO players and the largest supplier of services in the domestic India BPO market. Now has one of the strongest on-shore capabilities amongst Indian BPO players To engage new markets like Africa, China, Latin and South America.

Serco, the international service company, announced the launch of a new global BPO division that will improve the services Serco provides to its customers and enable it to target global opportunities both in the public and private sector. Also referred to as the Global Services division within Serco, it heralds the emergence of a formidable top-tier BPO player, both within the international and Indian markets, with revenues in excess of $1 billion by the end of this year. Serco’s new BPO division reflects scale, depth of capabilities and the creation of a larger global delivery platform.

Incorporated as one of four business divisions within Serco, it brings together a number of BPO related operations and capabilities currently reported and managed in different Serco divisions. Thus it is an amalgamation of the contracts and companies that deliver business process services globally within Serco including Intelenet Global Services in India – a leading provider of business process outsourcing (BPO) services to the private sector around the world and a predominant player in the domestic Indian market; The Listening Company in UK; and Excelior in Australia – all leading providers of outsourced contact centre services in their respective domestic BPO markets.

The Global Services division has a workforce of around 50,000, over 150 clients, and a diversified footprint with a presence in 10 countries, 98 locations. The business will focus on five vertical markets – namely Banking, Financial Services & Insurance; Travel, Hospitality & Transportation; Healthcare, Utility, Retail & Manufacturing; Telecom, Technology & Online Services; and Media, Education & Government.

Tom Riall, CEO Designate, Global Services, Serco, said, “The evolution of the Global Services division supports Serco’s vision to create a leading international Business Process Outsourcing Company. We will now be reckoned as an end to end service provider offering the complete spectrum of business services to customers in the public and private sector around the world, by combining Serco’s front end service capabilities along with world class middle and back-office capabilities. Furthermore, the Global Services division will work alongside other regional divisions in order for Serco to deliver fully integrated services for our customers, thereby making us a one-stop destination for existing & potential clients.”

By Anjoo Narayan

Globalisation of economies has triggered massive changes in the way trade and businesses are carried out in the new era supported by advanced technology and innovation in the field of information exchange. Business outfits are redefining their strategies to accommodate benefits of advanced technology in search of cost advantage and efficient management of work processes.

Outsourcing has been defined as “an arrangement whereby a third party provider assumes responsibility for performing information systems functions at a pre-determined price and according to pre-determined performance criteria” (Northfield, 1992). The outsourcing trend has gained rapid momentum over the past few years. Organizations are rapidly adopting the concept of transferring work processes to external parties in pursuit of low cost of operations and efficient handling of resources. The essential advantage that this strategic concept provides is the opportunity to cut costs and boost productivity. The primary benefit of outsourcing is realized in terms of reduced cost of operations owing to comparative lower wages, increased productivity, expertise in specified work process, and improved focus on business operations.

Expanding business units and multinational companies have specialized work departments to handle each segment of work. These units ensure the flow of information establishing well-defined channels of workflow that focuses on increasing productivity and enhancing the work quality.

The channelisation of work processes ensures better quality of work and helps in minimizing errors and risks. Moreover, the staffs get attuned to specific work processes that enable them to improvise and innovate on the existing work techniques. Outsourcing IT operations to third party vendors has become a common strategy for most companies. This involves outsourcing of the company’s computer operations, network operations or any other IT function to an external service provider for a specified period of time.

These external parties perform the same function that the IT department will perform in-house. Increasing volumes of work and expanding client base is one of the primary reasons for outsourcing work processes in the IT sector.

Multinational banks like HSBC, Citibank, American Express Bank and others outsource their process like credit card billing, collection, follow-ups and client build-up through various outsourcing agencies located in developing countries like India and China.

The outsourcing debate has been centred on the fact that employment opportunities are being shifted to emerging economies that provide low wages to similarly qualified people. There are pros and cons attached to this debate since it is a reality that globalisation has extended opportunities and focus to the developing and under-developed economies. This has not only improved the lives of the people in these countries due to increased employment opportunities, better pay packages resulting in higher standards of living.

But in reality the growing outsourcing industry has made it highly competitive and companies are offering attractive salaries to retain their workforce. A high rate of attrition is a challenging issue with most companies who are forced to raise the salary levels as a result. Hence it turns out that it is no longer cheaper to outsource to some locations and outsourcers need to re-think their business strategies to maintain their profit margins.

Source: Ground Report

Salmat has launched a company-wide program aimed at bridging the gap between indigenous and non-indigenous Australians. The Reconciliation Action Plan (RAP) will see the implementation of a range of activities supporting indigenous Australians over the next 12 months and is one of the ways in which Salmat is contributing to the reconciliation process in Australia.

‘Our Vision for Reconciliation is based on compassion, respect, commitment to diversity and acknowledging the significant role of Aboriginal and Torres Strait Islander people play in Australian society. As an organization we are committed to closing the gap between indigenous and non-indigenous Australians, by breaking down barriers, establishing relationships with local Aboriginal and Torres Strait Islander communities, creating opportunities, celebrating and welcoming all Australians and most of all promoting inclusion throughout our workplace,’ said Grant Harrod, Chief Executive Officer of Salmat.

‘During the next year we will be recruiting more Aboriginal and Torres Strait Islander employees and helping indigenous business from around the country take advantage of our business experience and expertise,’ he said.

The Australian Government has thrown its support behind the initiative with the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP, commending Salmat for taking the initiative to prepare a Reconciliation Action Plan.

Salmat’s RAP program builds on the company’s strong commitment to local indigenous communities. Initiatives in place include supporting indigenous businesses, increasing employment of indigenous Australians and volunteer programs for staff.

Salmat hopes to employ 30 Aboriginal and Torres Strait Islander people across the business and rollout an indigenous work experience program by August 2012. Other initiatives include developing an Indigenous procurement policy to engage Aboriginal and Torres Strait Islander businesses, provide staff with secondment opportunities to work with indigenous communities and widespread cultural education programs.

By Eli Greenblat – Sydney Morning Herald

Myer chief Bernie Brookes.

Myer will nearly double its direct outsourcing of fashion, homewares and merchandise from China to $200 million.

MYER will nearly double its direct outsourcing of fashion, homewares and merchandise from China to $200 million a year by 2016 to help support its aggressive store roll-out program and profit from the growing proportion of sales generated by its Myer exclusive brands.

The MYER group already administered $70 million in outsourcing from the region with a $50 million contract with Li & Fung, the world’s biggest manufacturing-outsourcing company.

Mr. Brookes said Myer would soon open an office in Shanghai and a second in Hong Kong to co-ordinate the increase in outsourcing by Australia’s biggest department store with 40 staff in each location to be led by Myer’s general manager of sourcing, John Amm, who has recently relocated to China with his family.

A labourer at a textile mill in China, where wages and conditions for factory workers are surging, putting pressure on prices.

Much of the outsourced product will find itself in Myer’s exclusive in-house brands, which last financial year contributed more than 17 per cent of sales and are earmarked to keep growing as they deliver premium margins for the business.

China has long been a prime destination for retailers seeking cheap products to fill their shelves and aisles; however, Mr. Brookes warned that inflationary pressures in the burgeoning world power due to higher wages, evolving labour conditions and rising commodity prices could soon flow through to steeper prices at the checkout.

“They [factories] are all looking for price increases later in the year, for the next summer stock, and I think depending on how much cotton goes into a garment and depending on where the factory is [in China], we are going to see some inflationary pressure out towards the end of the year out of China,” Mr. Brookes said.

“When the new stock arrives, October, November, for summer, as that arrives it will be repriced at a higher level.”

Mr. Brookes, who has been travelling to China up to three times a year for the past 25 years, said on his recent visit with other Myer directors that he noticed a shift in labour costs and general working conditions.

“The biggest change I saw now is in labour laws, and you are now seeing people work 44 hours a week as the sort of mandatory hours, seeing people earn rates that have double and triple time when they work over the 44 hours and have Sunday shifts where they get double and triple time.

“So Western world labour laws have caught up with China, and we are seeing therefore an increase in labour costs, and increases in electricity, and that is what is putting the pressure on prices.”

William Fung, co-founder and head of Li & Fung, said recently that wages and conditions for factory workers were surging and he has predicted China’s overall wages bill would lift by 80 per cent over the next five years.

Apart from supplying Myer, Li & Fung does billions of dollars a year in work directly and indirectly for other retailers including US supermarket giant Wal-Mart and, locally, Coles and Woolworths.

Mr. Brookes and his board met with 65 suppliers in Shanghai, holding a conference and dinner at the Four Seasons hotel where discussions were held on moving $50 million in outsourcing currently undertaken done by Li & Fung to direct control by Myer, then on to new suppliers.

It was only the second time Myer had held a board meeting outside Australia, with the first held last year in Hong Kong.

The initial five-year contract with Li & Fung was signed in 2006 as Myer was cut away from the Coles Myer group and restructured by its private equity owners.

In Shanghai, Mr. Brookes and his team updated the 65 suppliers about Myer’s progress, retail conditions in Australia and the details surrounding the expiry of the Li & Fung deal.

Mr. Brookes said higher input costs for outsourcing manufacturers in China was a key theme of his meetings.

“[Factories] are having to pay more for labour, with overtime rates and minimum hours and standard rates, paying healthcare, and so an average employee would pay 44 per cent on costs to the government for pensions and sick pay and illness pay; a lot of those have gone up,” he said.

“Pressure on costs and entitlements, pressure on the base wage – and rightly so – seeing an increased standard of living of the factory worker in China, which I think is not only much needed but also quite exciting.”

Mr. Brookes said some outsourcing was moving geographically within China to keep a lid on rising labour and raw material costs.

“The cycle [in China] is enormous, changes every couple of years, and the changes I have seen is a move away from the Pearl River delta area, which is the south China area, and everybody is moving north where the electricity prices are cheaper, where the cost of resources and labour is significantly cheaper and there are a number of incentives by some of the local governments to relocate factories.”

Sri Lanka’s information technology and business process outsourcing firms have started to expand out of Columbo, to lower costs and also be closer to the residents of potential workers, officials said.

Dinesh Saparamadu, head of HSenid, a software developer said his firm had set up a research and development unit and gone to Kandy in central Sri Lanka where Peradeniya, a national university was located. “We had a lot of students boarding here (in Colombo) who go home for the weekend,” Saparamadu told an economic forum organized by the Ceylon Chamber of Commerce, Sri Lanka’s largest business association.

“We need to go and set up satellite operations. ” Saparamadu who is also chairman of Sri Lanka Association of Software and Service Companies (SLASSCOM ), an industry body, said IFS, another software developer had set up offices in Kandy.

Niranjan Tavarayen, senior vice president, WNS Global Services said his firm was planning to set up an outsourcing unit about 30 kilometres away from the capital.

One of the problems of setting up offices outside Colombo was that senior officials did not want to reside in the regions due to lack of facilities and infrastructure such as schools for their children.

Tavarayen says international clients want to locate their outsourcing centres in cities that look modern and have up to date facilities. But there were clients who were willing to outsource work to ‘tier two’ cities, he said.

Rohan Samarajiva, head of Lirne Asia, a regional policy research unit says the government in particular has an opportunity to locate call centres outside the capital.

Reshan Dewapura, head of Sri Lanka’s ICT Agency says the government’s ’1919′ call centre could move parts out when it expand. The government was also planning to set up an IT park outside the capital.

Source: Lanka Business Online

Stellar Global will open a new site at Eastwood City in Libis, with at least 1,200 seats. This under pins growing interest by Australian companies in the Philippines. Stellar has been operating a 1,500-seat contact center in Cubao for over three years.

Stellar’s Philippine operations support clients in Australia, the United Kingdom, the United States, and Canada. Stellar Global has operations in all four countries.

Telstra, Australia’s largest telecommunications company, also “confirmed it will continue to grow its outsourcing business in the Philippines.”

Telstra Group Managing Director Robert Nason also expressed interest in, “helping support the development of the industry through training and education initiatives.”

BPO operations in the Philippines have grown to 600,000 seats this year from just 5,000 a decade ago, and it is expected that there will be an additional 80,000 to 100,000 seats this year according to figures from BPAP.

Based on estimates by the Business Processing Association of the Philippines, the share of the Australian market in the total revenue generated by the industry has grown to 6% in 2010 from 1.5% in 2008. The US remains the top market with 70% share, followed by the UK and Japan.

The Philippines has moved ahead of the more traditional offshore-outsourced destination of India, with at least 18% of functionality across Customer Interaction, Back Office Processing, IT and Finance being based in the Philippines.

THE Australian government has committed to further strengthen its business linkages with the Philippines, especially by way of projects included in the public-private partnership program list and those in the mining and business process outsourcing sectors.

China’s position in market is similar to where India was 10 years ago

By Patrick Thibodeau

The top 10 Chinese outsourcing providers employ a total of 85,000 people. That may sound like a lot, but it’s a small number in the world of global outsourcing.

India has a number of outsourcing companies far larger than the combined total of China’s 10 leading outsourcing firms. India’s Tata Consultancy Services, for instance, employs 187,000 people alone.

But China’s IT outsourcing firms are in a good position to grow, according to outsourcing consultancy TPI.

“What’s interesting, and perhaps coincidental, is that the size of the leading Chinese providers today by employee and revenue [counts] is roughly equivalent to the size of the leading providers in India a decade ago,” said Michael Rehkopf, a partner and director at TPI during a conference call about the outsourcing market.

A decade ago, Indian providers accounted for less than 1% of the outsourcing market; today they have about 20% of the market by contract value. Contracts were $1.5 billion 10 years ago and about $18 billion today, which represents a 32% annual growth rate, said Rehkopf.

Many of the major Indian providers count on business from U.S. customers for more than 50% of their revenue, a path that China-based firms may not need to follow.

John Keppel, TPI president, believes the Chinese firms won’t need to rely as much on the U.S. for work. They have a substantial domestic market to tap, and the large economies of nearby countries, Japan and Korea, to do business in as well.

But what could hurt China’s outsourcing growth is increasing competition from other nations and intellectual property protection issues, said Rehkopf.

Caveats aside, Rehkopf said he won’t be surprised to see “Chinese service providers take off quickly and dramatically in the decade ahead.”

China’s outsourcing firms have been turning to Wall Street to raise cash.

For instance, ISoftStone Holdings, a company with about 10,000 employees, held an initial public offering (IPO) in December. Last year, two other Chinese firms went public as well. They are HiSoft Technology International and Camelot Information Systems. All three are on TPI’s list of top 10 outsourcers.

The Chinese employment market is influenced by the country’s vast number of engineering graduates, more than 300,000 annually. One company, Bleum Inc., seeks to hire new Chinese graduates who score an IQ of 140 on the company’s test.

Patrick Thibodeau covers outsourcing issues for Computerworld.

Sweden’s Medius has established operations in Australia, completing a period of rapid international growth for the paperless workflow specialist.

The new Australian subsidiary is headed up by former ReadSoft employee Robert Bruhn, who is looking to hire technical and sales staff to tackle the local Purchase to pay (P2P) and invoice automation software market.

Bruhn points out that Medius MediusFlow offers more than just P2P automation as it offers a broad platform for workflow design, “MediusFlow is able to be configured as an on-premise, outsourced or SaaS solution, or any combination of the above, with scanning outsourced to a BPO if required,” said Bruhn.

“My target for Australia is to grow with the same rate or better than Medius AB. This requires hiring both technical and sales staff rapidly. The required staff must have first-hand knowledge of or certification in PMBOK/BABOK.”

Senior staff will be brought in from Sweden to install and configure MediusFlow’s first customers in Australia.

Medius Australia is also looking for OCR and ERP partners. Readsoft and Microsoft are existing global partners.

MediusFlow offers a web-based procure-to-pay workflow that can be integrated with any OCR system, purchasing system, and ERP platform. The platform is sold on a per transaction basis, rather than per user, and the only desktop software required is an Outlook plug-in that allows for invoice authorisation from within the email client.
An iPhone app has been launched and other smartphones are soon to follow, providing the ability to manage workflow on the go.

Medius has out-of-the-box integration with 40 ERP systems and 20 purchasing systems and it is currently in use at over 500 customers globally. Norwegian supermarket giant NorgesGruppen processes more than 4.5 million invoices annually with MediusFlow.