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BPO Solutions for BOI Projects

1. The document discusses the different types of outsourcing including third-party outsourcing where a service is provided by an external vendor, and shared services centers where a company provides services to its own affiliates. 2. It describes what types of activities and processes are commonly outsourced such as business processes, IT functions, and support services. Core activities that deliver a company's value proposition are generally not outsourced. 3. Key elements of an outsourcing contract between a client and service provider include the specific services, performance standards, timeline, costs, and operational requirements. Pricing models can be fixed price or based on time and materials used.

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Brielle Gab
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70 views4 pages

BPO Solutions for BOI Projects

1. The document discusses the different types of outsourcing including third-party outsourcing where a service is provided by an external vendor, and shared services centers where a company provides services to its own affiliates. 2. It describes what types of activities and processes are commonly outsourced such as business processes, IT functions, and support services. Core activities that deliver a company's value proposition are generally not outsourced. 3. Key elements of an outsourcing contract between a client and service provider include the specific services, performance standards, timeline, costs, and operational requirements. Pricing models can be fixed price or based on time and materials used.

Uploaded by

Brielle Gab
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

BPO 201- FUNDAMENTALS OF BUSINESS ● Tasks that deliver the primary

PROCESS OUTSOURCING (BPO) product, the unique value


proposition of the company.
MODULE 2: FUNDAMENTALS OF ● “Essential, defining activities of an
OUTSOURCING organization,” what it needs to keep
enhancing to improve competitive
TWO TYPES OF OUTSOURCING advantage.
1. Third-Party- owned by a service provider, a ● Design
local entity or part of a global group. ● Product Development
Providing services to clients of the service ● Process
provider. ● “Recipe”
● Accenture 2. Non- Core Activities- Tasks- Processes:
● AEGIS ● Support activities, processes,
● Convergys functions.
● EGS (NCO/APAC)
● IBM TYPICALLY OUTSOURCED ACTIVITIES- TASKS-
● Sitel PROCESSES
● SPi Global 1. Business Process Outsourcing (BPO):
● Sutherland outsourcing of entire business process
● Sykes components; e.g., HR, Payroll, Accounting,
● Tele Tech Financial, etc.
● Telepeformance 2. IT Outsourcing:
● Telus ● IT Technical Support
2. Shared Services Center (SSC)- wholly ● IT Application Development
owned by the mother company. Providing ● IT Application Management
services entirely to affiliates and ● Data Center Operations
subsidiaries, or more rarely to clients of the ● Software as a Service (SaaS)
mother company. ● Cloud (On-line Storage) Services
● ANZ Bank 3. Support function/ services:
● Chartis Technology and Operations ● Cafeterias
Management ● Copy Centers
● Chevron ● Security
● Citigroup ● Janitorial Services
● Dell ● Trucking/ Shipping
● DKS ● Building Maintenance
● HP 4. Routine activities or activities that can
● HSBC be automated at larger centers:
● J.P Morgan Chase ● Small banks outsourcing check
● Maesrk processing to larger banks, riding on
● Manulife ATM base of multi-bank network.
● Shell Shared Services Asia ● Small vendors using [Link]
● Thomson Reuters as data center, marketing, and
payment processing platform.
STRATEGIES FOR OUTSOURCING ● Banks using common/multi-bank
1. Multisourcing- multiple vendors for client’s core banking services of large
outsourced project. technology providers.
2. Crowdsourcing- company puts out a call 5. Seasonal Requirement/s:
for a project; best solution/ submission is ● One day 50 employees needed; next
accepted and contracted. day only 10 are needed.
3. Onshoring- vendor in the same home ● Christmas hires to handle additional
country as client. volume of transactions.
4. Nearshoring- vendor in a country “close” ● Temporary extension of operating
(geographic and/or cultural proximity) to hours to accommodate foot traffic.
client’s home country. 6. All Part- based Activities:
5. Offshoring- vendor and client in different ● These are activities that are: routine,
countries. scheduled, with little uncertainty.
● Automobile Assembly
WHAT TO OUTSOURCE (TWO TYPES) ● Electronics Assembly
1. Core Activities- Task- Processes: ● Packaging Solutions
● Primary process or product of the ● Handicrafts or garments for mass
business. production
KEY TECHNOLOGIES THAT SUPPORT ● Country laws (Just in case)
OUTSOURCING
1. Video Conferencing
● HP- Halo (8.5 min. video) ❖ CORE ELEMENTS
● Cisco- Telepresence 1. Services to be rendered or provided
● Sun- MPK20: Project Wonderland ● Out-ound sales call
2. Web-based conferencing and workflow ● In-bound inquiries or subscriptions
tools ● Delivering food or flowers or mail
● WebEx 2. Performance standards
● MS Windows Meeting Space ● “Handle Time” and “Average Handle
● MS Sharepoint Time”
● Google Applications ● Sales attainment
● Customer satisfaction rating
3. Timeline
● Detailed schedule of when the
MODULE 3: BPO ENGAGEMENT transition period starts
● In terms of type per duration; most
CLIENT- SERVICE PROVIDER RELATIONSHIP contracts are typically multi-years
contracts
❖ ATTRIBUTES 4. Cost
1. Client Company is concerned with: ● Refers to the payments made by the
● Quality transition of processes. client to the service provider
● Efficient Operation of business 5. Specific operational requirements
functions that were once handled ● Who will provide the service
in-house. ● Qualifications of personnel
2. Service Provider Company is concerned ● Location of operations
with: ● Outline of reporting procedures,
● Scope of Service decision-making, and escalation of
● Performance Measures problems
● Benchmarks to ensure objectives ● Legal provisions
standards in assessing work quality
BPO CONTRACT PRICING MODELS
Business Process Outsourcing (BPO) Contract- 1. Fixed Price:
is a formal agreement between a client and a ● This pricing model is easy to plan
service provider to take over a “pre-agreed portion” and more predictable than other
of the client’s business operations. pricing models
2. Time and Material:
❖ SCOPE OF WORK (SOW)- describes ● The price of services is based on the
specific work to be delivered, by when, at time and material that was used
what cost. The “pre-agreed portion” that is
documented in the contract. BPO CONTRACT FINANCIALS
Considerations: 1. CAPEX AND OPEX
● Can be similar to a job-order ● Capital Expenditure (CAPEX)- is a
● Is generally an attachment/ business expense incurred to create
addendum to a Master Agreement, future benefit. Expenditure on assets
points to covering terms like a building or the physical space,
● May state that in case of terms machinery, equipment or upgrading
inconsistency, the SOW or Master existing facilities so their value as an
Agreement supersedes asset increases.
● Operational Expenditure (OPEX)-
❖ MASTER SERVICE AGREEMENT (MSA)- is the money the business spends in
covering agreement that summarizes terms order to turn inventory into output
applicable to every job-order with the (throughput). These are operating
service provider. Referred to the BPO expenses, which also include
contract, with all its attachments, depreciation of plants, and
assumptions, and documented agreements. machinery that are used in the
Main Elements: production process.
● Service to be provided (Operational/ 2. COMPONENTS OF PROCESS COST
used day to day) ● Labor Cost- This refers to the sum
● Performance management, issues, of wages, salaries, benefits,
change management (Operational/ bonuses and incentives paid to all
used day to day) employees.
1. Compensation ● Bureau of Immigration
2. Benefits ● Department of Labor and
3. Bonuses Employment (DOLE)
4. Incentives ● Pag-Ibig Fund
● Direct Cost: ● Philippine Economic Zone
1. Employee development Authority (PEZA)
(training), Employee relations ● Securities and Exchange
program Commission (SEC)
2. Employee Tools/ Equipment: ● Social Security Services
desktop computers, (SSS)
communications ● Data privacy Law
3. Coordination and 2. Industry/Company Regulations
Management: travel, are institutional and operational
representation, meetings, standards/ policies/ guidelines
and workshops implemented by the service provider.
● Indirect Cost: Internal regulations refer to
1. Infrastructure- related regulations levied by the industry
expenses related to upon itself to ensure the
maintenance of the network, standardization of various practices
e-mail, any other employee for its own benefit.
shared services, rentals, and
other usual costs that the EXTERNAL REGULATORY REQUIREMENTS
business will incur with or 1. Board of Investment (BOI):
without the operation in ● The BOI is a Republic of the
place. Philippines agency created under
2. Other charges: For more the Department of Trade and
global multi-national BPMs, Industry.
these could include head ● It strives to attract direct investments
office or regional cost into the country to contribute to
allocations, any interest economic growth and jobs creation
costs, capital, foreign in the Philippines
exchange gains or losses
especially if you’re BOI QUALIFICATIONS
transacting in foreign According to BOI, “a Philippine enterprise
currency outside of US dollar can register their project with the BOI if the
and peso. proposed activity is listed as a preferred project in
3. COMPONENTS OF LOADED ONSHORE the current IPP. The said enterprise may engage in
COST: domestic-oriented activities in the IPP whether
● Compensation: Salary and classified as pioneer or non-pioneer.”
Bonuses However, an activity that is not listed may
● Benefits: Training, Health and Life still be entitled to incentives if the following
Insurance, Profit Sharing, Pension conditions are met:
Matching,Worker’s Compensation, ● At least 50% of the production is marked for
Employer share of payroll and Social export (for 60% Filipino-40% Foreign-owned
Security taxes. enterprises); or
● Infrastructure: Facilities, Venue ● At least 70% of production is marked for
Rent, IT Support export (for more than 40% Foreign- owned
enterprises)
TWO MAJOR TYPES OF REGULATORY Any outsourcing company is qualified under
REQUIREMENTS 100% export.
For foreign-owned firms or those whose
1. Adherence to Government foreign investment exceeds 40% of the outstanding
Regulations (External). External capital stock who can engage in domestic-oriented
regulations refer to the various activities, can only be registered with the BOI if they
government regulations from the propose to engage in an activity listed or classified
appropriate government agency. in the IPP as pioneer.
Below is a list of government However, if it fails to meet the pioneer
agencies that have a regulatory classification, it can likewise opt to be an export-
relationship with the industry: oriented firm to qualify for BOI registration.
● Board of Investments (BOI) However, this time, the export requirement is at
● Bureau of Internal Revenue least 70% of actual production.
(BIR)
BOI REQUIREMENTS ● Industry Specific Regulations - Control of
● DTI Registration: Sole Proprietorship communication channels and information
● SEC Registration: Corporation, systems: ARTICLE 16- (1) The
Branch Office, Regional communication channels and information
Headquarters systems of the bank shall be controlled to
● Audited financial statement and ensure that information obtained within the
Income Tax Return for the past three bank is reliable, complete, traceable,
years (if consistent, in a suitable format and
● applicable) character to meet the requirement, and
● Board Resolution to authorized accessible by relevant units and personnel
company representative in a timely manner.
● Accomplished Application Form 501 ● Industry Specific Regulations - Auditing
and Project Report of partnerships subject to consolidation:
ARTICLE 34- (1) Banks shall take all
Philippine Export Processing Zone Authority necessary measures to ensure that their
(PEZA) internal audit units can inspect all activities
Another entity created for the benefit of the and units of their consolidated partnership
Philippine business sector is the PEZA. without limitation.
PEZA promotes Philippine investments,
extend assistance, register, grant incentives to and Amortization- The systematic repayment of
facilitate the business operations of investors in a debt; in accounting, the systematic writing
export-oriented manufacturing and service facilities off of some account over a period of years.
inside selected areas throughout the country Bonus- A payment, which is backward
proclaimed by the President of the Philippines as looking and usually discretionary or at least
PEZA Special Economic Zones. not expected from the employee(s).
The development of Special Economic Incentives- A plan, which is
zones throughout the country, and the very forward-looking. Payment is tied to the
competitive incentives available to investments achievement of specific objectives that have
inside PEZA Special Economic Zones are been pre-determined and communicated to
embodied in the Special Economic Zone Act of the employees that are on the plan. The
1995 (Republic Act No. 7916), a law passed by the purpose of the incentive scheme is to
Philippine Congress. influence behavior to reach the objectives
by providing an incentive to work towards
PEZA QUALIFICATIONS the goals.
● Export-oriented enterprises that are found in
Key Performance Indicator (KPI)- A set of
any of PEZA special economic zone
quantifiable measures that a company or
industry uses to gauge or compare
PEZA REQUIREMENTS
performance in terms of meeting their
● Duly accomplished and notarized PEZA
strategic and operational goals. KPIs vary
application form and anti-graft certificate.
between companies and industries,
● Corporate Profile (including that of parent
depending on their priorities or performance
company, if applicable)
criteria. Also referred to as "key success
● Board Resolution authorizing the filing and
indicators (KSI)".
designation of a representative
Service Level Agreement (SLA)- A part of
● Securities and Exchange Commission SEC
a service contract where a service is
Certificate of Registration, Articles of
formally defined. In practice, the term SLA is
Incorporation and By Laws (if not available,
sometimes used to refer to the contracted
submit draft of Articles of Incorporation)
delivery time (of the service or
● Project brief (i.e., Information on Market,
performance).
Technical, Financial and Management
aspects of the project to be registered)

Data Privacy Law – Republic Act No. 10173


This act aims to protect individual personal
information in information and communications
systems in the government and the private sector,
creating for this purpose a national privacy
commission, and for other purposes.

INTERNAL REGULATORY REQUIREMENTS-


INDUSTRY

Common questions

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Outsourcing agreements must consider external regulations from government agencies such as the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA), as well as compliance with data privacy laws. Internally, companies adhere to industry standards and operational guidelines ensuring communication and auditing measures are in place. Compliance is ensured through careful documentation in contracts, regular audits, and maintaining up-to-date knowledge of regulatory changes to mitigate risks of non-compliance .

Key technologies such as video conferencing (e.g., Cisco Telepresence) and web-based tools (e.g., WebEx) facilitate effective communication and collaboration across geographies, essential for seamless outsourcing operations. They enable real-time meetings, file sharing, and process management, reducing the barriers of distance and enhancing productivity. These tools ensure projects remain on track and stakeholders are continuously updated, ultimately supporting efficient and effective outsourcing partnerships .

Core activities define the essential and value-proposition tasks of an organization, such as design and product development, critical for maintaining competitive advantage. Non-core activities include support processes like HR and IT support, typically outsourced to optimize resource allocation and focus on core competencies. Distinguishing these helps businesses prioritize and streamline operations, focusing investments on activities that directly enhance their competitive edge while offloading less critical operations for efficiency .

In outsourcing agreements, companies balance CAPEX (capital expenditure) and OPEX (operational expenditure) by strategically allocating resources to new investments and managing day-to-day operational costs efficiently. Proper management of CAPEX ensures sustainable growth through investments in infrastructure and technology, while optimized OPEX focuses on lean operations to maximize profitability. Balancing these elements is crucial for financial stability and achieving long-term strategic goals .

Defining the Scope of Work (SOW) in BPO contracts is crucial as it specifies the exact services to be provided, timelines, costs, and performance expectations. This clarity helps prevent misunderstandings, scope creep, and disputes between the client and the service provider. Typical SOW components include detailed descriptions of duties, deliverables, conditions for success, timelines, and cost estimates, all of which align with the Master Service Agreement (MSA).

Adopting a multisourcing strategy offers benefits such as diversification of risk, increased access to specialized skills, competitive pricing, and flexibility in service provision. However, it also poses challenges like complex management of multiple vendors, potential inconsistencies in service delivery, and increased administrative overhead to coordinate and integrate various sources. Successfully implementing multisourcing requires robust governance structures and effective vendor management systems .

BPO contracts integrate performance standards by detailing performance measures such as handle time, average handle time, sales attainment, and customer satisfaction ratings. Financial considerations are addressed through pricing models like fixed price or time and material, specifying payments and costs in the Scope of Work (SOW) and detailed in the Master Service Agreement (MSA). These elements ensure that both service expectations and financial commitments are clear, enabling effective monitoring and management of service delivery .

Onshoring, where the vendor is in the client's home country, provides strong cultural fit and ease of communication, reducing the risk of misunderstandings and allowing for more efficient collaboration. However, it tends to have higher costs compared to offshoring. Offshoring offers cost benefits and access to specialized skills, but can face challenges in cultural differences and communication barriers, potentially impacting efficiency. The choice between the two depends on a company's priorities between cost savings, efficiency, and cultural alignment .

The primary strategies for outsourcing include multisourcing, crowdsourcing, onshoring, nearshoring, and offshoring. Multisourcing involves using multiple vendors for a client's outsourced project, increasing diversification and risk mitigation. Crowdsourcing calls for open public contributions to solve a problem, providing a broader range of solutions. Onshoring retains the vendor in the same home country as the client, easing cultural and regulatory challenges. Nearshoring targets vendors in geographically or culturally similar countries, balancing proximity with cost benefits. Offshoring involves vendors in different countries altogether, often focusing on cost reduction and accessing specialized skills .

Service Level Agreements (SLAs) are critical components of outsourcing contracts that define service expectations, including performance metrics, quality standards, and timelines. They set explicit benchmarks for service providers, ensuring accountability and providing a basis for evaluating service performance. SLAs protect client interests, offering recourse through penalties or corrective measures if service levels are not met, thus incentivizing consistent and reliable delivery by the provider .

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