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SMEs use offshoring to get started

By Mark Atterby

Founder and MD of Renovator store, Scott Pendlebury, is one of a number of start-up entrepreneurs utilising offshore talent to launch on shore businesses. It has allowed Scott to start his online business at the beginning of 2013 and turn it into a multi—million dollar business by 2014.

Renovator Store is a one-stop online shop for the home renovator market, providing economical and reliable solutions for the home renovation market (  Renovator Store operate a warehouse in Laverton, shipping fixtures, fittings and other material to builders and renovators across the country.

Being an online business, there is a significant amount of backend administration and support required for the site.  Scott comments, “Being a website we don’t have to have people in Australia to build or maintain it. We saw the opportunity to build a support team remotely for a lot less than it would cost to have that here.”

To keep costs down so he could focus resources on sales and marketing, he used the services of MicroSourcing in the Philippines to help recruit a back office team in the Philippines.

The first person Scott hired was Gino, his web developer. He hired Charlotte, his Customer Service Manager, a few months later.

“I have Gino and Charlotte on Skype all day and talk to them constantly. In fact, it is easier than if they were in the office next door,” Pendlebury says. Gino and Charlotte save Pendlebury about 70% of the cost of employing the equivalent people in Australia. With those savings he puts more money into sales and promotion to grow the business.

In response to concerns about quality and reliability, Scott advises, “That comes down to the people you hire. You can make a mistake in hiring the wrong people in Australia. We were very careful and spent quite a bit of time in finding the right people to work for us.”

“Rather than with most outsourcing where it’s project based and people are employed who are task orientated. We wanted people who were entrepreneurial and creative and could grow and develop with the business.”

Gino and Charlotte are fully fledged employees to the business, who are paid incentives and encouraged to make recommendations on how to improve the business and its operations.

Renovator Store is one of about 80 Australian small and medium-sized businesses that are using the offshore services of Phillipines-based company, Salmat MicroSourcing.

Posted in Business, Growth, Offshoring, OutsourcingComments (1)

Choosing the right technology partner for your shared services centre

To enable your shared services centre (SSC) to deliver upper-quartile levels of customer service and cost effectiveness when managing transactions, you need to invest in the right technologies and infrastructure support.

For new SSCs the opportunity may exist to adopt a new solution such as an ERP application, cloud-based infrastructure and a new BI platform. For existing SSCs they may take the decision to keep their existing technology hoping to achieve improvements by applying incremental changes or upgrades overtime.

Over the past six years, I have been helping public and private organisations to develop their SSC organisations and take full advantage of their ERP platforms. The majority of these organisations have indeed implemented some form of shared service organisation and many have multiple tenants meaning they operate in the same ERP instance.

The research I have undertaken with support from my network of colleagues in shared services and the contract project managers community highlights the need for SSCs enabled by ERP to carefully consider their options in ensuring their SSC can expand to take on new clients, offer more service towers, create more capacity and flexibility in their technology platforms going forward.

To read more

Posted in TechnologyComments (0)

Telecom New Zealand changes its name to Spark

Telecom New Zealand is to change its name to Spark, with chief executive Simon Moutter saying the new name better reflects the company’s new direction. “As a company we’ve moved far beyond the home telephone. Spark better represents what we are today – it is all about digital services, fibre, mobile, data, cloud, entertainment, apps, or whatever new technology is around the corner,” he said on Friday.

The name change will take place later this year.

Telecom was formed as a state-owned enterprise from the breakup of the New Zealand Post Office in 1987 and was privatised in 1990.

For years it was the largest listed company in New Zealand and business commentator Brian Gaynor reflected in 2006 that Telecom’s poor share price performance was dragging the market down because it had a big weighting in the NZX 50 Index. It had an index weighting of 25.1 per cent at the time.

The network arm was later separated to form Chorus.

Telecom on Friday announced that net profit increased to $NZ167 million ($A155.07 million), or eight NZ cents per share, in the six months ended December 31 from $NZ163m, or nine NZ cents, a year earlier. That’s just short of the $NZ172m profit forecast by First NZ Capital.

Earnings before interest, tax, depreciation and amortisation from continuing operations fell 5.8 per cent to $NZ452m, while operating revenue from its remaining business slipped three per cent to $NZ1.85 billion.

From AAP

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Is $25 Billion BPO growth in the Philippines realistic?

By Jason Thurwanger.

The BPO industry in the Philippines has experienced what can easily be termed as meteoric growth over the past 10+ years.  With close to 1 million Filipinos now employed within the industry it is very easy to understand the major economic and societal impacts that BPO has imprinted on the local landscape here.

High English literacy rates abound, a large portion of the workforce has a college degree in hand, and large programs/centres are staffed up very quickly with regularity in order to meet the call/chat/email customer volumes that clients forecast.

A few months ago, estimates were released and published that show the BPO industry in the Philippines is on track to continue to build to $25 billion in the year 2016 (up from an estimated $16 billion in 2013).  It is easy to see where the persistently spoken of bright outlook for the industry in the Philippines is coming from based on that level of growth.

I have been a very vocal supporter of the BPO industry in the Philippines for several years now, and I have worked closely with a number of clients in order to ease their concerns with offshoring and to ultimately place a number of programs here.

With that being said, however, the fundamentals that determine the long-term health/viability of the industry to continue to experience such robust growth are not singing a chorus that is in sync with all of the “pie in the sky” prognostications for the industry’s outlook here in the Philippines.

The truth is that without a “hard turn” taking place within the industry in the Philippines, the $25 billion projected for revenue in 2016 will never be more than an estimate.

Since the earlier days of the BPO boom here in the Philippines, the investment in the industry’s infrastructure has regressively waned rather than having progressively grown.  Communication & Cultural Training (CCT) periods have been cut in half in many instances (i.e. many CCT programs that used to run 4 weeks now run 1-2 weeks).

The “old days” of only 4-5 applicants out of every 100 being approved are long gone as the quality focus that used to be so prevalent in the intensive vetting an on-boarding processes have given way to recruiting/on-boarding approaches that more closely resemble quantitative “cattle calls”.

With regularity when staffing discussions are held within the industry, there are few references to the type of candidates being sought.  Instead the focus is on needing “x” number of “heads”.  The prevailing wisdom states that once there are enough “heads” to handle the volumes, then a more concerted effort can go into training, coaching, and development.

The ignorance of such “wisdom” is manifested in rising attrition rates fuelled in part by people “washing out” that were ill-equipped to perform the roles for which they were hired, that fuel the persistent need for more training classes that are also filled by the right number of “heads” with the wrong set of credentials.  Investments in technology, HR, WFM, and Reporting continue to be vibrant while the very Operations those support units are intended to strengthen continue to receive minimal to no material investment.

Clients that have up to this point been willing to be satisfied with the cost savings of having their customers serviced in the Philippines are under increasing pressure from their customer bases to improve the customer experience.  While English literacy has remained high in the Philippines, the same strength is not evident in the arena of conversational coherency, to say nothing of cultural misunderstandings.

Those clients that have become more discerning/sceptical are beginning to ask BPO’s headquartered in the West why they are expected to have faith in the offshore operations that the executives of the BPO’s themselves do not possess.  For example, a regular refrain in many sales pitches to try and encourage clients to have their customers serviced offshore is that they should be comforted by knowing that the offshoring location is led closely by the on-shore apparatus within the originating country.

In other words, on one hand clients are being sold on the capabilities of the offshore locations, while on the other hand, the sales pitch is indirectly telling them that the real operational strength of the organization lies in the West.

The goal is to assuage the clients’ concerns by reassuring them that the West will be leading all the “important/strategic” decisions and moves, thereby inadvertently insinuating that the offshore resources are insufficient to handle such “important & strategic” matters.

Having worked with organizations/teams/individuals in the Philippines extensively for many years, I can tell you that this location in many ways can be the ideal spot for the BPO industry.  The workforce is talented and driven.

At the same time, however, while I would say that the Philippines “can” be the ideal spot, I have to also acknowledge that presently a thorough and critical assessment of the industry’s fundamentals highlights the truth that this amazing nation is not presently the ideal spot for servicing customers around the globe.  The workforce being talented and driven is only a resounding positive if that same workforce is adequately developed, and that is largely not the case here.

The good news is that if the industry experiences a strong “correction” resulting in the aforementioned need areas (among others) being addressed, the Philippines can set itself apart as being firmly entrenched as the contact centre capital of the world.  That would make the projected $25 billion in revenue in 2016 a challenging but achievable reality.

Anything short of that type of correction, however, will quite possibly lead to 2014 being the plateau year for the industry prior to a very sharp regression being experienced.  If you doubt that, I would invite you to become a student of the history of the BPO industry.  Start with India and work your way backwards.  While India maintains a significant BPO presence, it pales in comparison to what it would have been on track for before the contact centre bubble burst there.

Revenue will only be robust for so long without the presence of corresponding performance.  Ultimately, when performance lags over the long-term revenue has nowhere to go but downwards in order to correlate with the performance being achieved.  The patience of clients to continually invest in an underperforming proposition becomes exhausted when the Voice of the Customer (VOC) begins to express its dissonance with the customer experience with unmistakable clarity further accentuate by decreasing % of wallet share combined with increased customer churn.

The BPO industry needs to sustain its “boom” through significant and sustained investment in the industry’s fundamentals before it experiences an historic “bust” brought on by a lack of investment made in its own future.  2014 will reveal the probability of whether the Philippines will truly be the long-term player in the BPO industry that it has been presented time and again to be.

Jason Thurwanger is a freelance Operations Consultant with 20 years of experience in the contact centre/BPO workspace, including extensive experience in customer care/CRM, customer intelligence/market research, and sales (both inbound & outbound).  Driving the customer experience and improving operational efficiency make up the centrepiece of Jason’s consulting engagements.

Posted in Business, DestinationsComments (5)

No cash please

By Carlos Pietera and Jonathon McFarlane.

The global payments industry continued its impressive record throughout 2013 and all signs point to bigger and better things to come. This success is fueled by a number of key drivers, namely the continued and unabated expansion of e-commerce, mobile internet delivering an omnipresent infrastructure and the emergence of group buying and virtual currencies.

Even with all the excitement and some impressive numbers this is still an industry clearly in its infancy, where diversity and fragmentation are the dominant features and where significant opportunities continue to present themselves for new entrants with the right products and services.

Non cash transactions have been growing globally at a CAGR between 8% and 9% for the past few years, with 333 billion transactions processed in 2012.

The two fastest growing regions are the Continental Europe, Middle East and Africa (CEMEA) at 20% and Latin America at 14.4%.

Debit cards still largely dominate the non-cash global landscape, accounting for 124 billion transactions and growing at 15.8% annually, followed by credit cards with 57 billion transactions and growing at 12.3%.

Notwithstanding all the hype, e-payments and m-payments still account for a small percentage of total non cash payments but they are catching up at a rapid rate. E-payments are growing globally at 18% and will reach 35 billion transactions in 2014. E-payments value toped $1 trillion for the first time in 2012 and is expected to surpass $1.4 trillion in 2014.

(Note: All amounts in this report are in US dollars unless otherwise stated).

M-payments are growing globally at 58.5% and will reach 29 billion transactions in 2014. The value of m-payments processed is expected to increase threefold from $256 billion in 2012 to $796 billion in 2014.

If the global payments industry is to be defined in one word that word is diversity. While some forms of payments are common across the globe, namely credit and debit cards, there are regions where alternative methods prevail. No company or group of companies has clear widespread domination and usually a number of local players share the biggest share of their respective markets.

This is still an industry presenting great opportunities and growth potential in technology, geography and services and with a large number of new players constantly entering the market.

 Carlos Pietera and Jonathon McFarlane work for QuayPay. QuayPay is an Australian Payment Services Provider. 

Posted in Business, News ArchiveComments (0)

New video conferencing tool from Google

Google has launched a new video conferencing tool that aims to compete against Polycom and Cisco. For organisations that rely on global teams and workforces in remote locations, there may be significant interest in the new service. For BPO staff training and client meetings it could be a huge benefit.

The system is able to connect people in up to 15 different locations. And is designed to be much cheaper than comparable services currently on the market. For the first year the service costs about $US 1,000 and for following years $US 280 per annum, for those who require ongoing support.

Cromebox for Meetings went on Sale on the 10th February in the US. Over the next few weeks, the new service will be available in Australia, New Zealand, Canada, the UK, Japan, France and Spain.

Chromebox For Meetings is being sold by Dell, Hewlett-Packard and Asus, all of which already sell an assortment of gear to corporate customers and government agencies.

The video-conferencing kit relies on several existing Google products: the Chrome operating system based on the eponymous web browser; the technology running Google’s free Hangouts video chat system; and a suite of applications the company has been selling to businesses for several years.

Ease of setup is one of Google’s main selling points, and it should be particularly easy for companies already using Google Apps for mail and calendaring. Google said the system eliminates “complex dial-in codes, passcodes, or leader PINs,” with the exception of participants who join using UberConference.

Laptop screens can be shared wirelessly, and “integration with Google Apps makes it easy to invite others and add rooms to video meetings, directly from Google Calendar,” the company said. Businesses will be able to set up and manage conference rooms from a Web-based console.

Posted in E-Collaboration, TechnologyComments (0)

Westpac to accelerate Asian expansion

Westpac Banking Corporation expects Asian revenues to grow at a similar pace to last year’s 33 per cent gain and plans to add 100 employees in the region annually over the next three years.

The lender will have more than 400 people in the region by the end of September, said Bala Swaminathan, the head of its Asian business. Westpac wants to increase its share of growing Australia-China trade flows, he added.

Westpac and its competitors are expanding in Asia as lending at home grew by 3.9 per cent in the year to December 31, according to the Reserve Bank of Australia, less than half the average 8.6 per cent growth over the past 10 years. The value of exports and imports between Australia and its largest trading partner, China, climbed 21 per cent to a record A$141.8 billion in 2013 as iron-ore exports surged.

”Australia-China trade is growing quite significantly,” Singapore-based Swaminathan, who joined Westpac in July 2012 from Bank of America Corporation, said. ”We believe we will get more than our share.”

Read more:

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HCL and CSC alliance targets the cloud

Computer Sciences Corporation (CSC). Nasdaq listed IT services firm and HCL Technologies, Indian based IT outsourcer, have formed a strategic alliance to broaden and deepen the level of services they can offer enterprises transitioning to a cloud computer environment.

The alliance aims to build a global delivery network to standardise the delivery and modernisation of applications via a cloud-enabled platform. The first delivery centres will be launched in Bangalore and Chennai.

“We are pleased to partner with CSC. The company’s strong technology portfolio and client base coupled with HCL’s robust system integration capabilities will be a formidable combination in the application modernisation market,” said Anant Gupta, President and Chief Executive Officer of HCL Technologies.

Eric Simonson, managing partner, research at Everest Group, considers this to be a bold move by both companies. Simonson comments, “Very strong move by both companies. It is rare to see such a bold move, particularly by CSC who still has substantial investment in legacy data centres and application delivery. Both companies are making a huge bet on the future of cloud and their ability to compete in that space”.

CSC is leveraging HCL’s offshore delivery capabilities, particularly in terms of infrastructure management services. According to Simonson, “CSC is raising the white flag on traditional, asset-heavy IT infrastructure outsourcing. They can’t sell the business, so this alliance  lowers their costs and raises margins as they look to sunset the business. They end up with less stranded assets as they then focus on their cloud business.”

“Our strategic partnership with HCL is a new and innovative approach to delivering next- generation IT services which enable enterprises to achieve greater operational agility and significant reductions to operating costs,” said Mike Lawrie, CSC’s President and Chief Executive Officer. “It is a recognition that IT service providers and delivery models must evolve from traditional tools and processes to more rapid application innovation, enabling businesses to compete in an ever-changing world.”

Posted in BPaaS, Business, Cloud Computing, Growth, IaaS, Partnership, SaaSComments (0)

Aegis buys Malaysian BPO

Aegis, the business process outsourcing arm of the $39 billion Essar Group, is acquiring Malaysia-based BPO Symphony House Berhad for around Rs 41.3 crore. Symphony, one of Asia’s leading BPO outfits, provides HR/payroll, contact management and financial solutions to over 3,000 firms across the Asia Pacific region.

Sudhir Agarwal, president, global M&A and strategic initiatives at Aegis, confirmed the transaction. “New locations such as, Philippines and Malaysia are offering better cost-benefit ratios than India,” he said.

For the last two years, Aegis has been on the lookout to buy companies in South America and Asia to beef up its offerings and develop its skills portfolio. By acquiring Symphony, it has now increased the number of its total acquisitions to 19. Rising attrition rates, end of tax benefits and the appreciation of the rupee are being cited as reasons for India’s BPO industry looking overseas for growth.

To read more:

Posted in Acquisitions, Business, Growth, MergersComments (0)

Clients not getting what they want from outsourcing relationships

There are some serious issues emerging in the way outsourcing relationships are being contracted and how the associated services are delivered, according to Mood’s recent

International’s State of Relations in Outsourcing report.

The study questioned 201 senior managers and directors, highlighting issues such as transparency, understanding the business model and being trustworthy and innovative in the “large gap” between what clients want and expect and what suppliers are delivering.

The research found that on average, clients score their relationships with outsourcers as seven out of 10. This drops to six out of 10 among board members.

Some 60 per cent think outsourcing providers should have the authority to make decisions but only a third are authorised to do so. Just over 60 per cent think that relaxing controls on decision-making would increase commercial benefits.

“There is a real need to rebuild trust so that clients are prepared to empower their partners to make more decisions,” said George Davies, MooD International CEO. “There needs to be a greater transparency at all levels. Addressing the structure of the SLA (Service Level Agreement) so it reflects business outcomes is a necessity.”

Consistent information is important to almost 90 per cent of respondents but suppliers only scored six out of 10 for providing this.

Almost three quarters of those questioned said they evaluate success entirely or mainly on service levels as opposed to business impact. However, half of them also said “business transformation” or “strategic alignment” is the most critical way they use outsourcing partners.

To read more

Posted in Contracts, OutsourcingComments (1)

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