IT 306 BPO 101 UNIT 1 Lesson 1.pdf

UNIT 1: Introduction to Business Process Outsourcing UNIT 1 INTRODUCTION TO BUSINESS PROCESS OUTSOURCING This module...

UNIT 1: Introduction to Business Process Outsourcing UNIT 1 INTRODUCTION TO BUSINESS PROCESS OUTSOURCING This module introduces the students to the IT-BPM Industry. This should give them an idea on what the industry is all about, what is currently happening and what opportunities can be found inside the industry. By the end of this unit, students should be able to:  define and explain what is outsourcing  identify the reasons why companies outsource  identify the functions/ Services that are being outsourced  enumerate the advantages and disadvantages of outsourcing IT 306 BUSINESS PROCESS OUTSOURCING 101 1 UNIT 1: Introduction to Business Process Outsourcing LESSON 1: IT-BPM INDUSTRY SNAPSHOT IN THE PHILIPPINES OBJECTIVES: At the end of this lesson, students are expected to:  describe the IT-BPM Industry in the Philippines  identify the 5 types of outsourced activities  recognize challenges of the IT-BPM industry in our country  explain how IT-BPM can contribute to the overall growth and development of the country Duration: 1.5 hours IT 306 BUSINESS PROCESS OUTSOURCING 101 2  UNIT 1: Introduction to Business Process Outsourcing IT-BPM Industry Snapshot in the Philippines The Philippines’ Information Technology and Business Process Management (IT-BPM) sector is one of the best-performing and employment generating activities in the past years. Its global leadership in voice-based services as well as continuing improvements in non-voice and complex process outsourcing show the promising growth trajectory of the IT-BPM sector. To be able to cement its position in the global IT-BPM sector, the Information Technology and Business Process Association of the Philippines (IBPAP) has advocated for deeper policy reforms which will support employees’ skills development and maintain a competitive business environment for the industry. Figure 1.1 IT and Business Process Association of the Philippines Source: https://pia.gov.ph/news/articles/1002618 The industry's initiatives focus on four action areas: (1) widening and deepening human capital by scaling up industry with public-private partnerships; (2) strengthening Philippine attractiveness as an investment destination through advocacy activities; (3) achieving Roadmap 2016 goals by leading cross-sectoral efforts; and (4) building the Philippine IT-BPM brand globally through marketing programs. As of 2010, the Philippines’ IT-BPM sector has already overtaken India’s standing in voice-based services, making the country the number one provider for such services in the global economy. Voice-based services are also identified as the largest contributor in the local BPO industry, comprising 64% (493,000) of generated direct employment and 67% ($ 7.4 billion) of total revenues in 2011. Aside from this, several non-voice and complex BPO services such as healthcare information management, knowledge process outsourcing, engineering, animation, and software development are gaining prominence in the global BPO sector and are at a higher growth pace vis-à-vis voice-based businesses. The global foothold of the Philippine IT-BPM industry is largely attributable to the strong skills of the Philippine labor force. In voice-based services, Filipinos hold a competitive advantage in English communication skills, strong customer service orientation, and adaptability to consumers’ Western culture. In non-voice and complex services, The Economist and Everest Group analysts report the growing number of businesses providing healthcare information management, human resources management, business intelligence, and offshore financial consulting in the Philippines. Coupled with Filipinos’ hard work and IT 306 BUSINESS PROCESS OUTSOURCING 101 3  UNIT 1: Introduction to Business Process Outsourcing openness to learning, these two existing advantages provide investors with a strong advantage once they set up shops in the country. Figure 1.2 The BPO Industry in the Philippines Source: https://www.straightarrow.com.ph/blog/the-philippines-outsourcing-capital-of-the-world Original photo courtesy of the Business World As an enabler of business, the Philippine government provides IT-BPM firms with one of the best investment environments so that they can operate their enterprises productively. For instance, the Board of Investments (BOI) provides income tax holidays, tariff reductions in capital equipment and streamlined business registration, and coordination procedures for non-voice and knowledge process outsourcing enterprises which produce original content. The Philippine Economic Zone Authority (PEZA) also provides an incentive package for IT-BPM businesses, including voice-based services in its scope of qualified investors. Aside from better coordination procedures with the government, IT-BPM enterprises benefit from a sound telecommunications infrastructure in the country as well as a stable pool of skilled professionals in urban cities, where the population base is growing at stable replacement rates. These conditions assure that businesses can conduct their activities within a stable macroeconomic and investment climate. Figure 1.3 IT-BPO Sector Highlights Source: IBPAP, presented during “Career Opportunities in the IT-BPM Sector” Online IT-BPM Industry Career Roadshows, August 26,2020 IT 306 BUSINESS PROCESS OUTSOURCING 101 4  UNIT 1: Introduction to Business Process Outsourcing IT-BPM Industry Overview In 2010, The Philippine Information Technology and Business Process Management(IT-BPM) industry garnered recognition from around the world. The UK’s National Outsourcing Association determined the country as #1 in the business process outsourcing service in its Global Business Trends report. Figure 1.4 Philippine IT-BPM Industry Through the Years Source: IBPAP, presented during “Career Opportunities in the IT-BPM Sector” Online IT-BPM Industry Career Roadshows, August 26, 2020 The word is definitely out – the Philippine is a major player in the global IT-BPM. The opportunity remains for the Philippine IT-BPM industry to capture a bigger share, given the global offshoring services market is seen to more than double by 2016. The industry has the potential to bring in USD$25 billion in revenue, and employ 1.3 million individuals by 2016. Figure 1.4 Philippine IT-BPM Industry Through the Years Source: IBPAP, presented during “Career Opportunities in the IT-BPM Sector” Online IT-BPM Industry Career Roadshows- August 26, 2020 IT 306 BUSINESS PROCESS OUTSOURCING 101 5  UNIT 1: Introduction to Business Process Outsourcing Offshoring and Outsourcing (O&O) is perhaps one of the most unique developments in business and industry. Firms now adopt a truly global scope with the opportunity to situate their operations across the world. Outsourcing is said to have first flourished in the run-up to the beginning of the second millennium. IT processes and operations were migrated to India as some American and European companies focused on dealing with the Y2k problem. Y2K explained: The Year 2000 problem, also known as the Y2K problem, the Millennium bug, Y2K bug, the Y2K glitch, or Y2K, refers to events related to the formatting and storage of calendar data for dates beginning in the year 2000. Problems were anticipated and arose because many programs represented four-digit years with only the final two digits – making the year 2000 indistinguishable from 1900. The assumption of a twentieth-century date in such programs could cause various errors, such as the incorrect display of dates and Figure 1.5 The Y2K Bug the inaccurate ordering of automated dated Source: https://nchschant.com/16255/news/y2k-not-today-looking- back-on-the-millenium-bug-20-years-later records or real-time events. The Philippines is a recognized global strategic partner in providing continuously excellent service in the following: 5 types of outsourced activities Contact center Back-office and KPO Software development Animation and game development Engineering design The industry not only provides us jobs for making and receiving calls. Those with expertise in other subsets of the IT-BPM industry such as Knowledge Process Outsourcing, Software Development, Animation and Game Development and Engineering Design also have opportunities. So, contrary to popular understanding, beyond making outbound and taking inbound phone calls, the Philippines is proven to be a preferred solutions provider to the global clientele. IT 306 BUSINESS PROCESS OUTSOURCING 101 6  UNIT 1: Introduction to Business Process Outsourcing Figure 1.6 Philippine IT-BPM Industry Source: IBPAP BPO 101 Teacher’s Guide module 2013 The graph shows a clear upward trend and growth projection for the country. The “Percentage of GDP (Gross Domestic Product) is the industry’s direct contribution to the financial growth of the country. “Direct Jobs” is employment directly attributed to activities – operations, growth and expansion – of the industry. “Indirect Jobs” is employment indirectly generated in relation to activities of the industry. For example, contact center employees working on graveyard shifts buy their food from fast-food restaurants who decided to do business 24 hours because of demand. The same goes for jeepney and taxi drivers who decided to stay up late for employees going to the office in the evening. They are not employed by companies yet are benefiting from these opportunities. “What’s at Stake” is a very clear opportunity for the country to positively uplift the quality of life. This is accomplished through salaries and wages paid to employees of the IT-BPM industry as well as to salaries and wages earned through indirect employment. Regardless if the job is direct or indirect in its origin, taxes are paid to the government. These taxes are then used to put to work the development of infrastructure, utilities, security and welfare of the country. The current challenge of the country is its ability to cope with the growing demand for personnel who meet the quality standards of the industry. Some components of these quality standards are represented through English proficiency, business acumen, technical expertise, computer proficiency, and overall professionalism. IT 306 BUSINESS PROCESS OUTSOURCING 101 7  UNIT 1: Introduction to Business Process Outsourcing The current nationwide challenge and opportunity are to consistently and reliably provide highly skilled and professional “homegrown” personnel. Figure 1.7 former Senator Mirriam Defensor-Santiago stressed the importance of meeting the international standard to boast BPO Industry in the country Source: Call Center Philippines FB Page Posted on January 7, 2016 This is a golden opportunity for each of you to join this very progressive, dynamic, and financially robust industry as a means to grow personally, professionally and economically, and at the same time, actively contributing to the overall growth and development of the country. Figure 1.8 The Philippine IT-BPM Roadmap 2022 is all about accelerating the growth of the PH IT-BPM industry Source: https://www.asocio.org/members/our-members/it-business-process-association-philippines-ibpap/ Hopefully, you have gained a better understanding of what the IT-BPM industry is and its overall value to the Philippines. The next topic will take a more in-depth look at the industry. IT 306 BUSINESS PROCESS OUTSOURCING 101 8