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The Philippines BPO Industry’s resilience in the face of disaster

By Martin Conboy

If you can help financially please visit there is no doubt that the lovely people of the Philippines need all of our support.

The extent of the recent disaster in the Philippines and its impact on so many people is too difficult to put into words. It was heart breaking to see what these poor unfortunate people have had to go through especially as this was the same area that recently was affected by a major earthquake. Typhoon Haiyan, with wind speeds of over 195 miles per hour (310 + kms), left a path of devastation across the Philippines archipelago, it was the strongest storm ever to make landfall. According to German-based CEDIM Forensic Disaster Analysis, the destruction is estimated to be between $US 8 – 19 billion, though the full extent of the damage is unlikely to be known for weeks or even months. Even now some survivors are only just seeing the first signs of aid that is pouring in from all over the world.

There is an interesting part of the character of the Filipino people and that is their eternal optimism and they will pull through this and be stronger as a result. The country has been preparing to protect the industries it relies on for its economy for a long time and disaster recovery planning is a well-established management practice, as Typhoons are an inevitable fact of life in the Philippines. On average the Philippines is hit by over 20 heavy to severe storms per year. The most recent disaster has certainly affected some parts of the BPO industry, but the level of impact it has had on the industry has been kept to a minimum due to a range of effective forward thinking disaster recovery procedures.

Global buyers and service providers have built a strong presence in the Philippines, and typhoon threat is a geographical risk trade-off that companies have made in return for a high-grade good-quality English-speaking talent pool. The industry is well organised in terms of disaster recovery, although this storm was on a scale not seen before. The main BPO markets of Manila was not really affected as it was well to the north of the storm and emerging centres like Davao City were well to the south of the epicentre. Cebu and Iloilo in the central Philippines were not as fortunate.

In a statement given about Typhoon Haiyan’s effect on its Philippines operations in Manila and Cebu, US-based, Sykes Enterprises commented that “the impact from the typhoon has been immaterial, given the company’s disaster recovery planning and built-in redundant support infrastructure.” The company has been “operating in the Philippines since 1997 and the number of typhoons and storms the archipelago experiences on average is roughly 20 on an annual basis.”

Work was suspended in the cities of Cebu, Iloilo and Dumaguete, in preparation for the typhoon. Temporary power outages and disruption to telecommunications led to higher absenteeism. Many BPO organisations shifted their operations and call flows to other centres in the country in preparation of the storm.

emily-brocoyEmily Brocoy, Senior Business Development Manager, Taking You Forward Inc. (TYF) a major BPO enterprise in Cebu, “ Every time there is a forecast of a strong typhoon to hit the country we always prioritize the safety and welfare of our employees first. On this occasion given the severity of the warnings we suspended our operations for one day, as we did not want our staff moving about getting to and from work.”

She went on to say, ”Of course we cannot just stop working, as that would disadvantage our customers, so in terms of business continuity planning and allowing for outages beyond our control, we have a partner in another geographical location that we can seamlessly divert telephony traffic to. Because of our prudence we were lucky that most of our employees were safe and got back to work the day after the storm had blown through and now our call centre operation is back to normal.”

The Philippine BPO industry will be playing a major role in helping to rebuild the infrastructure, prosperity, and lives for the people of the Philippines. With a growth of 6.6 percent last year, the Philippines is only second to China in the region. The impact of the storm to the national GDP is estimated to have shaved around one percent according to the IMF and economist in the country, with little impact to inflation, which the central bank has targeted between 3 and 5 percent for 2014.

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Strong growth predicated for Philippines

The Philippines’ outsourcing industry is expected to strengthen in coming years, with adequate government support, according to industry players. “It’s the largest growing in the services sector and it has pretty good prospects in the coming years,” Socio-Economic Planning Secretary Arsenio Balisacan said in a recent interview.

The industry contributed 5.5 percent to gross domestic product of the Philippines in 2012 with $13.2 billion in revenue and employing 770,000 people. Gigi Virata, senior executive director of the Information Technology and Business Process Association of the Philippines, said in an interview that the outsourcing industry targets $25 billion in revenue with 1.3 million direct employees by 2016.

She said the industry is expanding with more and more outsourcing and BPO centres being set up outside of Manila.”We think we still have room to grow. We just have to improve the quality of our (college) graduates and applicants, and tell the people that you can have a real, professional career in outsourcing. And we also have to educate politicians on the requirements of this globally competitive industry, that they need some flexibility,” she said.

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BPO firm faces software piracy charges

John Ernest Connecting Continents (JECC), based in San Juan in the Philippines, was caught using 96 counterfeit copies of Microsoft Windows XP and 48 counterfeit copies of Microsoft Office 2007, which were estimated to cost P16 million in total.

The Pilipinas Anti-Piracy Team said in a statement that, National Bureau of Investigation (NBI) agents discovered the priacy, through a search warrant granted by the Regional Trial Court of Manila.

JECC, according to its Web site, caters to businesses in the United States — based businesses in different sectors such as healthcare, pharmaceutical, real estate, and banking.

“Business operators such as JECC should know that use of unauthorized software or misappropriating information technology in its business operations is already a crime. Especially in the BPO industry where they handle a lot of sensitive data for their clients, they are exposing users to serious malware and virus attacks that can compromise privacy and security,” said Dante C. Jacinto, chief of Intellectual Property Rights Division of the NBI.

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We should make an example of dumb racists

Sadly in Australia we still have a small element of racists  in our society as is shown by this recent episode – see story below.

FooBoo’s Cross Cultural Training program has a module in it that helps non Australian agents deal with callers that may be racist. Editor

One of the less pleasant aspects of hosting a show called Dumb, Drunk and Racist is that every time someone exhibits any of those characteristics it is immediately brought to my attention. After a while this can give you a fairly depressing world view.

Sadly these are now the faces of Australia…

Sadly, a video now doing the rounds which shows a vile and incomprehensible display of ugliness on a Melbourne bus has scored off the charts in all three categories.

If you’re reading this you have probably already seen it but in short the video shows at least two men variously screaming at a woman to “speak English or die” and threatening to “fillet these c—-s” with a fishing knife. One of the men later smashes a window near where the woman is sitting. Her crime had been to sing a song in French.

This is the sort of behaviour that we witnessed while making the show and that I struggled to explain to just about every media outlet in the country when they tried to insist that Australia didn’t have a racist problem.

I do not believe racism is institutionalised in Australia, nor that it is endemic at all levels of society and nor that it is quietly and sinisterly inherent in the human condition.

In fact I recently argued as much in a speech to the Diversity Council – a tough crowd to convince of that.

However just because something foul is only perpetrated by a minority does not mean that we should accept it or dismiss it. Only a minority of people murder or rape but nobody suggests we should tolerate that.

The truly troubling thing that in this case the analogy is no stretch. One of the thugs is caught on camera threatening to kill the woman and run a knife through her.

The incident took place on a bus route to Frankston, a bayside suburb not far from where I grew up in Dandenong. While Dandenong is possibly the most ethnically diverse place in Australia, Frankston has more of a bogan waspish quality. Both suburbs contain large socio-economically depressed areas and have a high rate of violent crime.

This means that at a guess some will seek to explain this kind of behaviour in terms of poverty or disadvantage. This insults decent poor people everywhere. Besides, I grew up on a sole parent’s pension just a few kilometres away and I didn’t end up threatening to kill women on buses.

Likewise no doubt some – perhaps the eventual defendants themselves – will blame their behaviour on the booze and/or drugs they appear to be affected by. If we’re going to swallow this argument then God help us as a civilisation.

If we’re going to tell ourselves we’re all just a few drinks away from turning into violent abusive thugs then we might as well pack up the whole operation and crawl back to the swamp.

Because that is really what’s on display here: Human beings are simply animals, it’s just that some of us have evolved further down the line than others.

When you look into the dumbly furious faces of the abusers in that video they carry no more thought or humanity than the black eyes of a reptile.

In truth these people are not even people, not by any definition we should care to employ. They are not human in either of the senses that word means. They are subhuman, they are dumb beasts.

Ironically this is the sort of blunt categorisation that would appeal to such dull creatures, who are so low-functioning they are incapable of processing any thought that goes beyond base physical appearances or the sound of one’s voice. The only difference is that this is a categorisation based purely on reason and rationality.

Perhaps the most disturbing part about any of this is that one of the men was pushing a stroller, meaning that he is at best in the regular company of children and at worst has reproduced. Pity the child, until it too becomes a monster.

These men must be found, and if Victoria Police are the remotest bit sincere when they say they take this behaviour seriously then they will leave no stone unturned until they find the one these insects live under.

Then they should be imprisoned for 20 years – maybe 25. We could invent something new called “exemplary sentencing”. Their jail term should be so heavy and so absolute that it scares the living shit out of other racist lowlifes so moronic that it’s the only message they could possibly understand. Hell, they should even release a few bank robbers if they have to, to make room for this kind of scum – their brand of violence is far more toxic.

Then, just to be on the safe side, upon release they should be permanently sterilised and perhaps – just for the hell of it – chemically castrated as well, just to make sure there is no chance on God’s earth that they can ever infect a child with their subhuman regressive genes.

If these types of animals want to talk about preserving racial purity, that’s fine by me. Let’s talk about preserving the purity of the human race, and that can only be achieved by removing these primordial throwbacks from it.

It is not an insurmountable problem and it may not even be a problem any worse than other countries but it is one we need to eradicate if we are to have any real and worthy sense of national pride.

Source: The Punch 

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Asia has so much more to offer

By Martin Conboy

I was reading an article in the Sydney Morning Herald by Tim Soutphommasane of Monash University about how each Australian generation seems to discover Asia as though the region were revealed to it for the first time. He wrote about how former Prime Minister Paul Keating spoke of ‘engaging’ with Asia twenty years ago and although we have made progress in that time, we still have a warped view of Asia. The current Prime Minister put it: it’s about ensuring the economy can exploit the relentless rise of Asia’s middle class and positioning the nation to be “a winner in the Asian century”.

These days our economic activity is orientated towards Asia. Our largest trading partners are there. As once unknown destinations like Laos, Vietnam and Cambodia open up, we are traveling into to the region in greater numbers than ever. In my day, it was the European backpacker experience. These days it’s the full moon party in Koh Phangan, Thailand. All of these activities play their part in breaking down cultural barriers. On the inbound side of the immigration ledger last year, for the first time, more permanent migrants arrived from China than from any other country.

There are enormous markets in Asia and we must remember that in relative terms, we are a tiny nation of 22 million and that there are over 3 billion people in Asia. Asia may geographically be to our near north, as it always has been, but for many Australians it remains culturally the ‘far’ east. There is no question that we must get rid of this jingoistic mindset that somehow coolies populate Asia. The intellectual horsepower in Asia is immense and its workforces are highly educated. To say nothing of the age of some of their societies, that alone should command respect.

Tim Soutphommasane argues that we don’t always recognise this cultural chasm. Without noticing it, we’ve fallen into the habit of making a monetary fetish out of our relationships with Asia, seeing its value only in terms of dollar signs. Thus, even when pointed criticisms are made of our failure to develop Asian literacy, critics frequently lapse into arguments about maximising the “returns” from our “investment” in Asia.

He points out that, if Australia is truly to be part of an Asian century, we must be prepared to learn from the dynamism and diverse traditions of the region. At the same time, we mustn’t think only about what we can extract from Asia. We must also think about what we can offer to our neighbours. We need to consider what we can give, not just what we can get.

We struggle to get our young people to take up Asian Languages in the way that European students can easily speak 2 or 3 different languages. We only have to look at what a big hit our former PM Kevin Rudd was in the region – was when it was revealed that he spoke fluent Mandarin.

One really good positive that is coming out of the outsourcing to Asia story is the number of Australians who now travel there and not only establish commercial friendships but personal friendships as well.

One of my pet hates is the ludicrous notion that we are a nation of WASPs (White Anglo Saxon Protestants) when in fact according to the Australian bureau of Statistics, 10% of our current population was born in Asia and 14% are from Europe (excluding UK).

Many people overseas regard our multicultural experience as a stunning example of nation building. Our society is diverse but cohesive. We seem to have elections and transfer power without social upheaval and we have welcomed and absorbed successive waves of immigrants as citizens. With this in mind, I always find it odd that we feel that some people feel that we must have our call centres staffed by people with ‘Australian’ accents – whatever ‘Australian’ means, when in fact our country is a microcosm of all the nationalities of the world. As we approach the 100th anniversary of Gallipoli, a new report out suggests that some are now questioning that relevance of such a commemoration because of its potential to cause divisiveness due to the multicultural nation of our society given that a large chunk of our population cannot not relate to it, given their origins.

The big picture, though, is this: if we accept that we are living in an Asian century, we must stop thinking of Asia as just a market, an investment or an exotic holiday destination – a place close to our shores but not too close for comfort.

To borrow the words used by Horne almost 50 years ago, we shouldn’t play an “aristocratic role in the society of Asia – rich, self-centered, frivolous, blind”. That’s not the kind of behaviour expected of a good neighbour.

Read more: Sydney Morning Herald

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Everything old is new again

By Martin Conboy, President – Australian BPO Association

The ‘invisible hand of the market’ is the term economists use to describe the self-regulating nature of the marketplace. The invisible hand concept was created to explain the conjunction of the forces of self-interest, competition, and supply and demand. There is always the temptation for governments to intercede with protectionist policies, but the prevailing wisdom is that the allocation of resources should be left to the markets to decide.

It’s clear that we are at an inflexion point in our society and yes it’s true that as we change from a manufacturing to a services economy, there will be real people causalities. After all it’s not very easy to turn from being a low skilled factory worker (demand declining), to a health worker i.e. a nurse (demand accelerating) overnight. It was exactly the same when we transitioned society in the 19th century when everything was being made by hand to most things being made in factories, as a result of the industrial Revolution.

There was massive social dislocation, starting in the later part of the 18th century. There began a transition, Great Britain’s previously manual labour and draft-animal–based economy moved towards machine-based manufacturing. It started with the mechanisation of the textile industries, the development of iron-making techniques and the increased use of refined coal. Trade expansion was enabled by the introduction of improved roads, canals, and railways.

The Industrial Revolution was a period in time where major changes in farming, manufacturing, mining, transportation, and technology had a deep effect on the socioeconomic and traditional way of life. It began in the UK, and then subsequently spread throughout Europe, North America, and eventually the world.

The Industrial Revolution marks a major turning point in human history; almost every aspect of daily life was affected in some way.

So fast forward to today; the roads, canals and railroads of yesteryear have become the information super highway along with incredible technological developments and the totally interconnected social media instant world of today.

According to a white paper by IBM – ‘A new way of working’, Work is no longer bounded by co-worker proximity or time zone. It also involves a much broader set of ‘workers’ – not just employees, suppliers and partners, but customers, freelancers and an increasingly capable network of smart devices and interconnected systems, all tied together by business processes that span organisations, time and distance.

Society adjusted after the industrial revolution (eventually) and people will adjust now (eventually). The 20th century’s factory worker has adjusted to become today’s online eBay merchant or they have re-skilled to become a knowledge worker and sell their skills via platforms like

From a historical perspective, we are in the middle of another structural shift. Look what’s happening with unemployment; first world companies do not need the same number of workers because of globalisation and the Internet. Australia has a 5% unemployment rate, which is considered to be full employment, whereas the US has an unemployment rate of 9.1%. The US has a skills / worker mismatch. The lower people are on the education curve and their relative socio economic status the more likely they are to be unemployed. Thus we see African American and Hispanics with an employment rate of double the national average.

Companies are looking for skills that reflect the new types of work spawned out of the age of Infotronics (the merging of information and electronics) Look at the names of the companies that now dominate the most powerful corporations on earth, Google, Facebook, Microsoft, Apple, the skills that these types of companies need are in short supply. Graduates are not belting headlong into the professions any more, they are looking for the new and exciting and well paid jobs in the new economy and they want to work on their terms.
People who do not have the required skills are marginalised and thus we have a mismatch in the demand for and the supply of skilled labour.

Throw in the availability of highly skilled and available knowledge workers from Asia who can telecommute via the Internet and it’s easy to understand that society has got some serious thinking to do. Adding to the conundrum is that productivity from robots and Asian workers out strips US workers ability to produce.

As they say ‘there but for the grace of God go I’, and if Australia did not have the mining industry to fall back on we would have an unemployment rate similar to the US.

Transfer of knowledge

During the industrial revolution knowledge of modernisation was spread by several means. Workers who were trained and had the knowledge might move to another employer or might be poached. A common method to spread the word was conducting study tours, gathering information where one could. During the whole of the Industrial Revolution and for the century before, all European countries and America engaged in study-touring; some nations, like Sweden and France, even trained civil servants or technicians to undertake it as a matter of state policy.

In other countries, notably Britain and America, this practice was carried out by individual manufacturers anxious to improve their own methods. Study tours were common then, as they are now. So history is repeating itself, call centre agents and knowledge workers with skills are being poached and this feeds into the 60% staff turnover in BPO vendors. Asian trade delegations are coming down to Australia for study tours and major corporations are sending their executives into the new markets as evangelists of BPO. The new ground is not the serving of first world markets but the internal markets in China and India.

Australia’s strength is our knowledge of contact centres and customer service and we are blessed to be in such close proximity to the fast growing Asian markets and by and large, uncoupled from the tarnished and under performing markets of the US and Europe. The Asian markets have plenty of highly educated and highly motivated knowledge workers but lack the managerial and creative know how. That of course will change very quickly, the Asian markets have had ten years to develop their skills and get their house in order. There are 3 billion people to the north of Australia and within this enormous group is a huge middle class, who are hungry for all of the goods and services that one would expect, are characteristic of the demands of the middle class.

Australia’s opportunity is to sell its knowledge of innovation and expertise as China and India start to refocus on their own internal markets.

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The Freelance Surge Is the Industrial Revolution of Our Time

By Sara Horowitz

Welcome to the Gig Life. The boom in independent work is changing the way we think about jobs and careers. Does Washington get it?

It’s been called the Gig Economy, Freelance Nation, the Rise of the Creative Class, and the e-conomy, with the “e” standing for electronic, entrepreneurial, or perhaps eclectic. Everywhere we look, we can see the U.S. workforce undergoing a massive change. No longer do we work at the same company for 25 years, waiting for the gold watch, expecting the benefits and security that come with full-time employment. We’re no longer simply lawyers, or photographers, or writers. Instead, we’re part-time lawyers-cum- amateur photographers who write on the side.

Today, careers consist of piecing together various types of work, juggling multiple clients, learning to be marketing and accounting experts, and creating offices in bedrooms/coffee shops/co-working spaces.

Independent workers abound. We call them freelancers, contractors, sole proprietors, consultants, temps, and the self-employed.

And, perhaps most surprisingly, many of them love it.

This transition is nothing less than a revolution. We haven’t seen a shift in the workforce this significant in almost 100 years when we transitioned from an agricultural to an industrial economy. Now, employees are leaving the traditional workplace and opting to piece together a professional life on their own.

As of 2005, one-third of our workforce participated in this “freelance economy.” Data show that number has only increased over the past six years. Entrepreneurial activity in 2009 was at its highest level in 14 years, online freelance job postings skyrocketed in 2010, and companies are increasingly outsourcing work. While the economy has unwillingly pushed some people into independent work, many have chosen it because of greater flexibility that lets them skip the dreary office environment and focus on more personally fulfilling projects.

Over the coming weeks, I will be writing about this profound shift and the three major trends that are central to it. These trends will have an enormous impact on our economy and our society:

  1. 1) We don’t actually know the true composition of the new workforce. After 2005, the government stopped counting independent workers in a meaningful and accurate way. Studies have shown that the independent workforce has grown and changed significantly since then, but the government hasn’t substantiated those results with a new, official count. Washington can’t fix what it can’t count. Since policies and budget decisions are based on data, freelancers are not being taken into account as a viable, critical component of the U.S. workforce. We’re not acknowledging their prevalence and economic contributions, let alone addressing the myriad challenges they face.
  2. 2) Jobs no longer provide the protections and security that workers used to expect. The basics ­ such as health insurance, protection from unpaid wages, a retirement plan, and unemployment insurance ­ are out of reach for one-third of working Americans. Independent workers are forced to seek them elsewhere, and if they can’t find or afford them, then they go without. Our current support system is based on a traditional employment model, where one worker must be tethered to one employer to receive those benefits. Given that fewer and fewer of us are working this way, it’s time to build a new support system that allows for the flexible and mobile way that people are working.
  3. 3) This new, changing workforce needs to build economic security in profoundly new ways. For the new workforce, the New Deal is irrelevant. When it was passed in the 1930s, the New Deal provided workers with important protections and benefits ­ but those securities were built for a traditional employer-employee relationship. The New Deal has not evolved to include independent workers: no unemployment during lean times; no protections from age, race, and gender discrimination; no enforcement from the Department of Labor when employers don’t pay; and the list goes on.

The solution will rest with our ability to form networks for exchange and to create political power. I call this “new mutualism.” You will be reading more about this idea in subsequent articles from me next week, as I believe that new mutualism will be at the core of the new social support system that we need to build for the new workforce.

Source: The Atlantic

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Outsourcing education: The rise of virtual schools

By Nancy Hanover

There are a growing number of American young people for whom “going to school” is now logging in at the family computer.

Virtual schools—those conducting all lessons via the Internet, as opposed to “brick and mortar” traditional schools—are now entrusted with the education of children as young as kindergarten and pre-kindergarten. An estimated 1.5 million American youth participate in online education today.

While a slash-and-burn campaign is destroying public education, the Internet revolution has been seized upon to force children to teach themselves—sometimes partially and sometimes entirely.

These initiatives have been given a green light by the Obama Administration’s Race To The Top, which rewards those districts which embrace charter schools, virtual schools, online learning, merit pay and destruction of teacher rights. All of these elements are, in fact, tied together. The 2012 federal budget has specially allocated $26.8 billion for such “reform-oriented competitive initiatives” including $372 million for charters.

These “reforms” take place as the administration spearheads unprecedented cuts to federal, state and local funding for education. Twenty-three states have enacted draconian changes in state funding this year alone. For example: Illinois is cutting overall aid to schools 11 percent, Kansas 6 percent, New York 6.1 percent, Ohio 7.5 percent, Pennsylvania 7.3 percent and Wisconsin 8 percent.

Obama’s Education Secretary Arne Duncan has made no secret of the relationship between cuts and “reforms,” urging school districts to “do more with less.”

In a speech last November 2010 Duncan hailed the example of virtual school Utah Open High School. He stated, “Technology can play a huge role in increasing educational productivity,” adding, “the military calls it a force multiplier.” Urging “better use of online learning, virtual schools, and other smart uses of technology,” he said that educational success requires schools to reduce “wasted time, energy, and money.”

Doing more with less—at least the latter is true. A survey on 20 virtual charters in 14 states indicates the cost of online learning is “roughly half that of traditional public schools” or about $4300, according to a Brookings Institute study.

There is less social interaction, less collective learning, less peer engagement and less individual attention and certainly less teachers—and teachers with less benefits, less job security and less resources. But there is more profit for the education industry. In fact, simple math would indicate a $4300 per child cost would translate into $2,000 or more per student profit, depending on the state’s allocation from taxpayer funds. Without the hard costs of buildings, maintenance or transportation, virtual schools clearly can entice districts facing extreme budgetary pressures.

Some virtual charters require a parent or adult to sign a contract as an “education coach,” some employ “facilitators,” and some house groups of certified teachers in cubicles who respond to questions and check homework. To the producers of the Brookings report, this kind of warehouse teaching means “virtual charter schools offer the promise of increasing the productivity of the education system.” Clearly the potential increase in the ratio of students to teachers dramatically impacts what is considered productivity.

While not all online students attend full-fledged virtual schools, many of those part-timers take a significant segment of their coursework—including core classes—in computers labs, doing packaged programs while the teacher/facilitator functions as a room monitor.

There is no doubt that the Internet and the information revolution represent a huge educational and communications advance for society and should be thoroughly incorporated within education. These initiatives, however, are motivated not from the standpoint of expanding education, but from restricting it. The technology has become another vehicle to justify the shuttering of schools and programs and starve the public education system of funds.

Since most virtual schools are run by for-profit charters, the operating funds come from taxpayer coffers and are then funneled into various corporations. The fact is that virtual and online education is becoming a new source of huge profits.

The nation’s largest single provider of virtual schools is K12, a for-profit Education Management Organization founded and substantially owned by Michael R. Milken, the notorious “junk-bond king” and securities fraud felon (initially sentenced to 10 years, serving 22 months), together with former Goldman Sachs banker Ron Packard. This publicly traded firm now has about 81,000 students in 27 states, earning $1.5 million in profits last year. As of this year, its stock valuation has doubled. Three-quarters of K12 schools failed to show sufficient progress, according to a December 2010 study of companies running for-profit charter schools by researchers at the University of Colorado at Boulder and Western Michigan University in Kalamazoo. This number compared with 45 percent of the physical charter schools in the study.

The biggest beneficiaries of this process, however, appear to be the investment firms behind the scenes. For example, in July of this year Providence Equity Partners purchased Blackboard, Inc. Blackboard, well known to parents and students across the country, is a learning management software company, through which thousands of students, teachers and parents communicate and download educational content. The company, only founded in 1997, was sold for $1.64 billion to Wall Street investors at substantially above its stock valuation, indicating confidence in future profits.

Wireless Generation, a testing and software online education program, was purchased for $2.3 billion in November 2010 by Rupert Murdoch’s News Corp., which was currently embroiled in the cellphone hacking scandal.

Last April, Pearson, the owner of the Financial Times and book publisher Penguin, purchased SchoolNet, another software content and management firm, for $230 million. Pearson stated as motivation for the investment, “Barack Obama’s administration has allocated about $17bn to states and districts to support school improvement, through programmes such as Race to the Top, to use data and technology to help prepare students for college.”

Connections Academies is a private for-profit with virtual schools in 18 states.

It is primarily owned by Apollo Global Management LLC, a private equity investment firm founded in 1990 by Leon Black (#310 in Forbes billionaire list, son of Eli Black of United Brands who committed suicide after being caught bribing the president of Honduras.) The firm is one of the world’s largest private equity firms controlling over $70 billion in investments.


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When your offshoring fails: A guide to suing the outsourcer – The six questions to ask before calling in a lawyer on an offshore deal gone bad

By Stephanie Overby

Dispute resolution is always an important consideration when outsourcing IT. If that fails, however, you can always sue if your provider has breached the contract. “But you probably shouldn’t,” says Edward Hansen, a partner with the law firm Baker & McKenzie.

Outsourcing lawsuits are notoriously difficult to prosecute, can create such a distraction that it puts the organization at operational risk, and rarely benefits either party in the long term. Offshore outsourcing litigation is even more complicated.

“Sometimes, however, litigation is necessary to resolve outsourcing disputes when all other reasonable or contractually obligated means of solving the problems in the business relationship have been exhausted,” says Shawn C. Helms, an attorney in the technology transactions and outsourcing practice at Jones Day.
How do you know if it’s time to take your offshore outsourcing provider to court? Ask these six questions first.

1. What is the nature of the dispute? “There is a huge difference between discussing litigation in the context of a vendor that is underperforming versus one that has been negligent or violated a trust,” says Hansen. “For example, breaching the privacy provisions of an agreement is very different from failing to deliver on transformational savings.”

A well-drafted contract contains remedies for a privacy violation. But underperformance can be murkier. There may be something about the underlying economics of the deal that encourage bad performance, says Hansen, or you may have chosen the wrong partner. In either case, litigation is unlikely to solve your problems.

2. Do you have informal dispute resolution processes at your disposal? “A good contract will provide many alternatives to a suit,” says Brad Peterson, a partner in the business and technology sourcing practice of Mayer Brown. Look for dispute resolution provisions in your deal’s project management or governance mechanisms.

In addition, most contracts lay out “mandatory, mandatory, detailed, multilayered, and gradually escalating dispute resolution processes,” says Shawn C. Helms, an associate at Jones Day, starting with informal dispute resolution procedures and going all the way through litigation. “Most outsourcing disputes are resolved confidentially through out-of-court settlements so that service providers can protect their business interests and customers can maintain an ongoing relationship with the service provider.”

3. Can you withhold payment? Customers may seek to use financial leverage to right a wrong. Some contracts contain a provision call “Right of Set-Off” or “Right to Withhold Disputed Payments” that allow the customer to deduct from payments otherwise owed to the service provider amounts of money representing damages that the customer claims the service provider caused as a result of failing to perform its obligations under the contract.

“If the service provider disputes the amount of the deduction, it may be required by a forum-selection clause in the contract to file a lawsuit in the U.S. to have a court resolve the dispute, or it may be required by an arbitration provision to arbitrate the dispute in the U.S.,” explains Robert Kriss, a partner and litigator at Mayer Brown. “In the meantime, the customer holds onto the disputed amount or deposits it in an escrow account, depending on the terms of the contract.”

4. Do you have a binding arbitration clause in your contract? A well-written deal contains a provision obligating parties to arbitrate any disagreements through a neutral arbitration body such as the American Arbitration Association or the International Chamber of Commerce. That becomes especially important with offshore outsourcing, says Helms, “because foreign courts are often more likely to enforce an arbitration ruling against a local provider than a ruling by a U.S. court.”

Many countries have agreed by treaty to enforce arbitrated judgments. Just make sure the arbitrating organization is one whose awards are enforceable in the country where the outsourcer’s assets are located.
5. Where is your offshore provider based? “You have to determine first how you would enforce a judgment,” says Kriss. “If the offshore outsourcer’s assets are located in a country that will not enforce judgments rendered by U.S. courts, then you will have to bring suit in the country where the assets are located.” Indian courts, for example, will not directly enforce the U.S. judgments because the U.S. is not a “reciprocating territory” under Indian law. And pursuing litigation in India can be painful. “The Indian court system is infamously slow,” says Helms. And bringing a suit against a vendor in its own country may not be worth it anyway. “The outsourcer may have a home court advantage,” adds Peterson.

6. Is there money to collect? Should you decide to sue your provider, a court may decide in your favor, but you remain responsible for collecting your judgment. And there may be little money to chase. “Offshore outsourcing companies often have few assets. They may be leasing their facilities and equipment and paying out cash to the owners as soon as it is received. The offshore outsourcing companies with assets may have those assets pledged to first-priority lien holders,” says Peterson. “Thus, even if the U.S.-based customer manages to get a judgment against the outsourcing company, there may be little or no cash to collect.”

Make sure your vendor is not what the legal community calls “judgment proof” before you look to the courts for restitution.


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Outsourcing – A Perspective

By Martin Conboy – President, Australian BPO Association

Outsourcing has evolved and seen a number of major changes over the last 15 years. For a long time the industry in Australia was battling negative perceptions because of a disproportionate level of scrutiny driven by accent neutralization challenges with outbound telemarketing call centres in South Asia and the challenge was making the Australian public understand that outsourcing is so much bigger than annoying calls at dinnertime.

As I am fond of saying outsourcing is a very broad church and people might be surprised to learn that the industry employs over a ¼ of a million people in Australia.

Front office outsourcing, which is often referred to, as call centre work is a small albeit very important part of the outsourcing value chain. They are used by businesses for both inbound customer service work and outbound telemarketing work. Call centres and how they work and their functions are reasonable well understood, and over the years there have been countless research projects investigating them with over 80% of all customer interactions now going via call centres.

Many of them have been centralized and they are now being outsourced to specialise outsourcing companies for various reasons around efficiency gains, expense reduction and enterprise reengineering. (See next story about captive centres) Having said that the broad church of outsourcing is also about back office processes such as data entry, accounting, debt collection, database management, claims processing and HR administration and recruitment, all the way through to shared services and IT Data centres.

It’s time to move the debate along from the very narrow perspective of call centres to the larger arena of all of the business process that can be outsourced.

With the benefit of hindsight we can now see that the first wave of outsourcing has just about passed. To put things in perspective and to give context to our understanding of the outsourcing journey that all major companies are going through we now refer to three stages of outsourcing as ‘BPO 1.O, BPO 2.O and BPO 3.O’. Much could be said about each stage of market development, but at its plainest:

BPO 1.O or the first wave of outsourcing was all about basic “lift-and-shift” or labour arbitrage. That wave has landed and washed back. On the back of this around 1999 we saw the rise and rise of outsourcing destinations like India and the Philippines. These countries were able to bring to the table their highly educated, highly motivated and relative to countries like the US, UK and Australia inexpensive pools of labour. The economic change in these countries because of BPO has been nothing short of amazing, in fact according to the Business Process Outsourcing Association of the Philippines (BPA/P) the Philippines has about 17,000 seats valued at $400 Million serving the Australian market. There is absolutely no doubt what so ever that BPO is floating a lot of boats around the region and it is brilliant to see.

BPO 2.0 Although Australia has a risk adverse business culture; businesses are being driven by an appetite for change and a gradual acceptance of outsourcing as a legitimate and mainstream business strategy. Moreover Australian businesses are really starting to focus upon what their core business is. This new focus is steering them to re-structure and re-engineer their businesses. Process re-engineering delivers better efficiencies and many people are now familiar with concepts like Six Sigma and expense reduction analysis.

At this stage of outsourcing market development we see the introduction of tactical quick fix technology point solutions that solve one particular problem without regard to related issues or higher lever strategies. Having said that technology point solutions along with BPO enable better straight-through performance and higher effectiveness. In my view the leading Australian companies have just broken through the BPO 2.0 barrier.

BPO 3.0: As organisations move along the outsourcing journey, we will see organisations move beyond outsourcing transactional processes to outsourcing complex, high-end processes that have a higher impact and thus positively impact the bottom-line and create shareholder value faster. We will see terms like Knowledge Workers who may not necessarily be based in centralized locations become common place and companies will see the opportunity to link BPO solutions and move to transaction-based and outcome-based de-risked pricing models. At this stage of the BPO journey organisations will start to utilize SaaS, BPaaS, cloud-computing and social media driven business platforms to allow them to convert from capital expense business models to switch on / off operating variable expense business models. We are already starting to hear about innovative services that will address these opportunities. Our own company (FooBoo) has developed such a service called RVSA for the recruitment industry. (Recruitment Virtual Support Agents)

What’s Hot?

The sort of areas we are seeing a lot of interest is in RPO which is Recruitment Process Outsourcing and HRO (Human Resource Outsourcing) which includes Payroll outsourcing, with global organisations working on multi-country payroll outsourcing deals. Sizzling!!!

Other hot areas include financial and accounting outsourcing not only transactional processes such as accounts payable and receivable but also higher-end processes such as general ledger and tax.

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