HOW IS CHINA IN THE BPO RACE?

Here's the latest in Outsourcing...

China has been tagged as India's formidable contender in the race to become Outsourcing's top destination.

Two articles tackle this issue.

Where does China stand in BPO race? and China lags far behind India in BPO sector

"Though the Chinese government came out with supportive ordinance to promote BPO in the country with huge level of visibility on the global arena, Chinas offshore market has not taken off as expected and it still seems a long way before it could claim to be of any potential alternative to India, as reported by technology research firm Forrester on Thursday.

Forresters Vice-President John McCarthy said "When China was looked upon as an alternative to offshore two years back, it was widely considered as a key contender to challenge India's dominance on offshore business. However, the latest finding reveals an opposite story, which says, "China has still more to prove,"

In addition...

"Forrester in its finding clarifies that Chinas overall offshore resources has dropped and other countries are growing at a rapid pace. The need of the hour for the country is to refurbish its offshore efforts.

Instead of trying to compete in areas like application development and management, where India clearly dominates, China should encourage its local firms to focus on other areas like testing, data management and product development services.

Chinese firms also need to implement strict intellectual property controls..."

STRONG ASIAN CURRENCIES SCARE ASIAN BPO FIRMS

I have always argued that the BPO industry should be treated by Asian governments as a part of its export industry. As such, it should be given the full incentives due to exporting companies. With the current strengthening of most Asian currencies, the export market is generally suffering and this situation is very much being felt by BPO firms.

Since most outsourcing contracts are dollar denominated, a boost in the value of the local currencies has resulted in corresponding cost increases and decline in profits.

The Philippines, which earned approximately US$2 Billion in 2007, is becoming a little nervous due to the continuous appreciation of its currency. The Peso, which closed at PhP46.60=US$1.00 last Friday, has been on a constant climb since last year.

The other Asian currencies (Malaysian RmB, Indian Rupee, Chinese Yuan, etc.) have also appreciated despite governments’ attempts to restrain its value.

RELATED QUOTES:
Peso to reach our 46 target sooner than expected

"General weakness of the dollar. Despite attempts of most Asian Central Banks to keep their currencies from further strengthening against the dollar, the pace of appreciation seemed to have increased over the past two months. The Indian rupee, which was quite stable from January to March for example, suddenly moved eight percent higher in just two months. This is an exceptional move given that the Reserve Bank of India has been managing its exchange rate closely with the rupee appreciating by only 1.8 percent in 2006 and 3.6 percent in 2005. Likewise, the Malaysian ringgit began accelerating against the dollar in mid-March following announcements of key economic reforms. The Philippine peso, meanwhile, has been on a gradual appreciation since the start of the year primarily due to healthy remittances and capital inflows, and a generally peaceful election period. Finally, the baht is still up 2.3 percent against the dollar despite earlier attempts of capital controls by the Thai government."

Strong peso may dampen foreign investors’ interest in BPO sector

"A strong peso may deter foreign investments from coming into the country as this makes the cost of doing business here more expensive.

International real estate provider CB Richard Ellis warned that the continued strengthening of the peso against the dollar may be a threat to business process outsourcing (BPO) firms in the country.

“If the exchange rate continues to climb, it can potentially be a threat because it makes it expensive to do business here,” CB Richard Ellis general manager Trent M. Frankum said."

MEDICAL OUTSOURCING

In a related development, Karen talks about reasons why even critical medical services are being outsourced. The practice which is commonly known in Asia as Medical tourism has actually been going on for quite sometime. I remember meeting US citizens (10 years ago), who continues to travel to Manila in order to get medical treatment. The quality and price of the treatments, they told me, are both excellent. The last time I checked on them was last year and I found out that they continue to visit the country and enjoy the quality of medical service that the country provides.

The people in the article both had heart conditions. They both went to New Delhi for surgery. She received more tests than she could remember, & her total, including the 4 week stay in the hospital, was $16,000.00. He spent 20 days in the hospital, had 24/7 nursing, & his total was $15,000.00. They both said the quality of the care was much better than here. He’s even started his own company, to help people who need to arrange such a trip for the same reasons. Please Read the complete article here.

Further to India's outsourcing industry, economists predict that a slowdown in the US economy will force US firms to send more jobs offshore. However, the same analysts also claim that a rise in the US interest rates might reduce the volume of US investments in their outsourcing industry.

And finally, this got me laughing really hard...

An employment expert in The Wall Street Journal recently advised bosses to reward young people with freakin’ balloons and gold stars just for showing up for work on time. We used to get that in the first grade, not on Wall Street. One employer, definitely of the old school, wrote in that instead of calling in the party planner, he would prefer to call in the outsourcing consultant. Amen to that. -- Please Read the complete article Here.

More Newspaper Jobs being Outsourced, Commentaries and Other News.

An Indian paper claims; “American inefficiency is India’s outsourcing gain”. I beg to disagree. Outsourcing leads to higher productivity for the companies that sent the jobs elsewhere. The end result will undoubtedly be a stronger and bigger enterprise. Please read my related discourse through this link.

The beneficiaries of outsourcing, instead of angering their clients, should be thankful for the inflow of new employment and business opportunities. Instead of namecalling, why not focus on doing the job well? Geesh, is that the way to treat clients? Call them inefficient? I wonder why the paper stopped itself from calling them stupid.

A day after a New Zealand newspaper announced the outsourcing of 70 sub-editing jobs to Australia (details here); an American newspaper declared plans to outsource jobs to another country. In the news, the Star Tribune (Minneapolis) will be sending 25 graphic design jobs to India (details in this page). Of course, the union is mad. Again, this site’s contention in regard to this topic remains.

This site preaches the gospel of outsourcing but is constantly aware of the follies of a few employees of outsourcing companies specifically, call center agents. Of course, most people know that absurd replies to customer questions are heard everywhere. Furthermore, it is also known that offshore contact centers are delivering better services at lesser cost. It is indeed very true, that the benefits of outsourcing far outweigh the costs. As an example, PC manufacturer DELL has thousands of customer service representatives in the Philippines and in a television advertisement in Manila, a ranking Dell executive declares that their BPO facility in the country is the best so far. Here is another testimony to outsourcing’s exemplary benefits.

OTHER DEVELOPMENTS:

- As the US turns to India and other Asian countries for their outsourcing needs, Western Europe is sending jobs to its former adversaries-Eastern Europe. Please read the complete news here.

- Infosys BPO is expanding to Manila. Please read it here.

- While call centers are rapidly being outsourced to Asian countries, some US call centers continue to expand (onshore). Please read it here.

PRICING ONE'S SELF OUT OF THE MARKET

Yesterday's article in PE.com illustrated what most of the BPO insiders know but are not talking about. Read the article here.

Technology has made it possible for some tasks to be done from distant locations. As a result, offshore companies who are into customer services, information technology, transcription, animation, architectural & engineering design, medical research, etc. has successfully penetrated the US and European markets.

As the demand for outsourced work continuous to grow, the existing service providers are observed to be increasing their prices. This is mostly due to sharp increases in their factors of production (loss of government incentives and rising cost of wages, office spaces, etc.).

Unfortunately for them, customers are not complacent. After a while, the same creative minds that made them resort to outsourcing will tell them to continue and look for new places to send their outsourcing requirements. For example, the garments industry which left the US years ago, has started departing from the Philippines towards China. In addition, the call center and transcription businesses which used to be synonymous with India are now known to be successfully being hosted by other Asian countries like the Philippines, China, Pakistan and Indonesia.

In the Philippines, BPO firms which used to be predominantly located within Metro Manila have started to expand to the provinces in order to lower their costs (land, labor, taxes, electricity, etc.). At this point, the call centers can still afford the cost of doing business in the country. However, the industry should take heed.

Be careful not price yourselves out of the market. When you keep on increasing the cost of servicing a client, the customer will be forced to move on to the next provider.

WORKPLACE SAFETY + BPO NEWS AND COMMENTS FOR TODAY

Last week, different newspapers articles reported the shutting down of several call centers in the US. This week however, there are reports of new ones rising. To cite a couple, there is one in Colorado and another in Pleasanton.

Call Centers in the Philippines continue to expand. On 2006, companies led by DELL hired thousands of new call center employees. This year, People Support and several other existing BPO’s are contracting new buildings that will house their expansions. Today, another call center expands its operation.

The voice of the customer management profession points out that outsourcing is inevitable. However, there are some perils associated with it and discussed ways to avoid it.

In Dubai, a center called the Financial Technologies Centre for Straight Through Processing Services (FT-CSS) was created to act as a “Technology platform for brokers of stocks and commodities to outsource their complete trading and back-office transaction processing.”

Emirates, the Dubai based airline company will will inaugurate a big call and data center at the Dubai Outsource Zone in order to augment its existing facilities.

A call center incident in Portland has highlighted the need to establish steps to protect contact center employees from infectious diseases. Hopefully, all those affected will recover properly. What happened in that call center should serve as a lesson to all other BPO and non BPO firms all over the world.

The workplace conditions should be planned, taking into careful consideration the outmost safety of the people working in it. Despite the cut throat competition, it will always be a good business practice to institute measures that will protect the employees.

Clients should also take such matters into consideration whenever they choose new vendors. It is not simply the low figures that they should rely upon. Clients and vendors alike, should compete and take pride for the distinction of having and supporting the best working environments in the industry. Calling the Safety Organizations in the world...

Apartheid in the BPO Industry? + Other BPO Updates

A US Congressman filed a bill requiring foreign call center workers to disclose their location. Read the complete news this page:

"The congressman, a Democrat, has filed legislation called the Call Center Consumer's Right to Know Act that would require call center employees to state their physical location when called by consumers. supporters believe location disclosure would inform consumers that many of their calls have been redirected to foreign countries and will focus attention on the degree to which U.S. call center jobs have moved overseas."

Hmmn.. Does the congressman want to encourage the practice discrimination based on location, race and color? Isn't this bill leading to a new variant of Apartheid and Racial Profiling? Let's see what the American Civil Liberties Union have to say regarding this.

Andolini, an economist, will probably have a different take on this. Let's wait for his comments.

Cops Outsource the maintenance of their crime database. Click here.

"Police officers are entering crime incident reports, arrest records and other important data into the CrimeCog integrated criminal justice system using personal computers and a common Internet browser. The information is encrypted as it is sent to a secure data center, where it can be accessed by other authorized users, including other police departments."

In Jerusalem, large tourists arrivals are forcing hotel owners to do what others may think as "Unthinkable". Hotels are currently outsourcing rooms to competitors. I hope Asian hotels will have a way of transporting the tourists to their hotels for the evening and return them to the streets of Jerusalem in the morning. Hmmn.. "Beam me up, Scottie!" Read the news here

Everybody, take heed! The leader speaks!

This is very much worthy of commendation. Let's hope that all other players will immediately follow.

Despite a 31% growth in revenues (US$ 31B), Indian BPO companies are getting their acts together in order to maintain their leadership.

In the annual meeting of the country's industry group, experts emphasized the need to innovate and not simply rely on the low labor cost and large talent pool of their country. The inventory of qualified talents is diminishing, wages are increasing and other low cost BPO centers like Eastern Europe, China, the Philippines and Vietnam are also fighting for their share of contracts from their biggest client-- The United States.

Please click here for the rest of the story.