c.

onshoring
In BPO (Business Process Outsourcing) is like getting
help from the internet instead of hiring a single

FUNDAMENTALS
company.
Advantage:
Makes quick responses possible: product
designers in the same country address to
OF OUTSOURCING
Fundamentals of Business Process Outsourcing 101
market feedback quickly
Local Contractors' Communication: share the
same market knowledge, culture, language,
and communication style and reduce cultural
issues
Module 2 Disadvantage:
Risks of Inadequate Staff Selection: has
inadequate training and less skilled workers
MEMBERS: since contractor staff are lower paid.
Raya Mae Dela, Hannah Abigail Jagolino, Angela De La Cruz, Xenia Risks of Higher Attrition: internal staff
Kim, Jelliane Navarro, Antoanete Noelle Acelar, Kate reduction and reduced motivation for quality
Alessandra Hofileña, Joshua Nathaniel Alera delivery.
d. nearshoring
TOPICAL OVERVIEW: The transfer of business to a nerby country, often
I. The 2 types of Outsourcing sharing the same border.
Advantage
II. Outsourcing as a Business Strategy Variability in service fees:
Variable costs go up and down with your
III. Outsourced Activities/ Processes level of business activity unlike fixed
Core versus Non-Core Processes compensation costs that have to be paid
even if a business doesn’t do any trade for
VI. Technologies and trends the day.
Significant difference in labor costs:
The labor cost or wages are cheaper than
its previous location or country.
Business Process Outsourcing (BPO) involves Disadvantage
subcontracting or outsourcing some business operations Coordination Complexity:
mainly consisting of customer related services such as While nearshoring can reduce geographic
marketing and technical help. distance, it does not automatically resolve
operational and cultural differences. The
assumption that proximity equates to
similarity can lead to underestimating the
I. THE TWO (2) TYPES OF OUTSOURCING challenges in communication and
Third party management.
owned by a service provider, a local entity or part of Proximity does not equal similarity.
a global group. Nearshoring can bridge distances but not
providing services to clients of the service provider. always differences. For instance, a
company in the United States nearshoring
Examples: Web development, customer support, data to Mexico must navigate a distinct business
services, virtual assistant culture, language barriers, and differing
legal frameworks, which requires careful
Shared Service Center planning and clear communication
owned wholly by the mother company, a unit strategies.
responsible to do specific operations to the company. Increased Management Overhead
funding and resourcing of the service is shared and Nearshoring might require additional layers
the providing department effectively becomes an of management or specialized teams to
internal service provider. handle cross-border operations. This can
lead to increased expenses and resource
allocation that might not have been
II. STRATEGIES FOR OUTSOURCING necessary for domestic operations.
Nearshoring can sometimes be a trade-off
A. Multisourcing between reduced labor costs and increased
[Link] management costs. To ensure smooth
[Link] operations, companies like our Hong Kong
[Link] retail example must invest in local
[Link] management teams that can bridge the
A. MULTISOURCING parent company's practices with the unique
aspects of the nearshore location,
Involves partnering with multiple multiple effectively balancing cost against control.
specialized companies for different tasks instead of Financial Implications
one all-in-one provider. Transfer pricing involves setting prices for
Advantage: transactions between company divisions
Reduce cost: Choose the most affordable located in different countries. Tax margin
provider for each task, potentially saving requirements refer to the profits that must
money. be reported and taxed in the country of
Expert power: Each company specializes in operation, which can impact overall cost
something unique, savings from nearshoring.
Disadvantage: Financially, nearshoring is not just about
More complex:Managing multiple vendors finding cheaper labor. Companies must
requires more communication and effort. navigate the intricate web of transfer
Security concerns:Sharing data with multiple pricing and tax regulations, which can be as
vendors requires strong security measures. challenging as strategic chess moves. For
B. CROWDSOURCING our Hong Kong firm, this means ensuring
that their pricing strategies are compliant
In BPO (Business Process Outsourcing) is like getting with both local and international tax laws,
help from the internet instead of hiring a single which is crucial for maintaining
company. profitability.
e. offshoring II1. outsourced activities/processes
Vendor and client in different countries.
Advantages 2 types of what to outsource
Core Business Focus Core Activities - Tasks - Processes:
Offshoring enables companies to delegate Primary process or product of the business
non-core activities to external vendors, Tasks that deliver the primary product, the
often in different countries, allowing them unique value proposition of the company
to concentrate on their primary “Essential, defining activities of an
competencies such as product design, organization”, what it needs to keep enhancing
innovation, and strategic growth to improve competitive advantage
Consider Apple’s strategy: by offshoring
chip manufacturing to Samsung, they can Non-Core Activities - Tasks - Processes:
invest more in what they do best— Support activities, processes, functions
developing cutting-edge technology and
user-centric design What NOT to outsource:
Scalability
The flexibility to scale operations up or Core Activities - Tasks - Processes
down without committing to long-term Design
capital investment is a significant benefit Product Development
of offshoring. This elasticity allows Process
companies to adapt to market demands “Recipe”
and economic changes more effectively.
Offshoring provides a buffer for fluctuating What to outsource:
demands. Companies can ramp up
production quickly in peak times without Well-defined/documented tasks, standard
the need for extensive local investment, outputs
and similarly, scale down when demand
wanes. SUMMARY OF What to outsource:
Cost-Effective Expansion
Offshoring can reduce the cost of entering BPO
new markets by leveraging the lower IT OUTSOURCING
operational costs in other countries, which SUPPORT FUNCTION
can include lower wages, cheaper raw ROUTINE ACTIVITIES
materials, and reduced regulatory SEASONAL REQUIREMENTS
expenses PART-BASED ACTIVITIES
Expanding into new territories doesn’t have
to be prohibitively expensive. Offshoring Business Process Outsourcing (bpo):
opens doors to global markets with a This is the practice of outsourcing non-core
leaner investment approach, making functions like accounting and customer support.
international business ventures more BPO companies usually have large teams of
accessible. skilled workers who can handle these tasks at a
Disadvantages lower cost than in-house staff.
Data Security
Data privacy and confidentiality are Companies that
paramount, especially when company data Business
Process outsource the Companies that caters tothe function
crosses international borders. Offshoring function
necessitates stringent data security Human Shell SSC, Deutsche knowledge services, Coca
measures to protect intellectual property Resources (HR)
Reebok
Cola Bottlers Business Services
and sensitive information.
With data breaches posing a serious risk, Washington Mutual,
companies must enforce strict data Financial Salle Mae and
Aegis, DSM “Manila” LLC, Du-Baladad &
Associates
security protocols with their offshore
Expedia

partners to safeguard their intellectual

property and customer information. Payroll and Del Monte Manulife Financial, DKS, BPO International Inc.

Market Knowledge
Accounting Philippines

There's a risk that offshore vendors may

not possess in-depth knowledge of the
client's target market, which can lead to a it outsourcing:
disconnect between product offerings and This is the practice of outsourcing computer-
market expectations. related functions like software development,
It's essential to bridge the knowledge gap. network maintenance, and IT support to an
Offshoring requires a transfer of market external provider.
insights to the vendor to ensure the IT Technical Support
products developed resonate with the IT Application Development
intended audience. IT Application Management
Cultural Differences Data Center operations
Cultural and linguistic differences between Cloud (on time Storage) Services
the client and vendor countries can lead to
misunderstandings and inefficiencies, Support Functions outsourcing:
potentially impacting project timelines and This is the practice of outsourcing non-core
outcomes. functions like finance, and human resources to
To mitigate cultural clashes, companies an external provider.
must invest in cross-cultural training and
establish clear communication channels to Support function/ services:
ensure that all parties are aligned and Cafeterias
misunderstandings are minimized. Copy centers
Staff Turnover Risks Security
High attrition rates at vendor locations can Janitorial Services
disrupt the continuity of service and Trucking/ Shipping
quality. This presents a challenge in Building Maintenance
maintaining a stable and well-trained
workforce.
Choosing an offshore partner with strong
human resource practices is key. Staff
retention is not just a local concern; it
affects the quality and reliability of the
services received from an offshore partner.
Routine Activities or activities that can be automated at notes:
larger centers:
Small banks outsourcing check
processing to large banks, riding on
ATM base of multi-bank network
Small vendors using [Link] as
data center, marketing, and payment
processing platform.
Banks using common/multi-bank core
banking services of large technology
providers
seasonal requirement/s:
Seasonal requirements refer to the
fluctuations in demand or specific needs
that occur during different times of the
year.
Examples:
Holiday and Peak Seasons, Retail and E-
commerce Peaks
all part-based activities:
These activities are often part of larger
processes that can be outsourced to third-
party service providers for increased
efficiency and cost-effectiveness.
Examples:
Car Company automobile assembly,
Electronics Assembly

vi. technologies and trends

Key technologies that support outsourcing
Video conferencing:
HP - Halo (8.5 min. video)
CISCO - Telepresence
Web-based conferencing and workflow
tools:
MS Windows Meeting Space
MS Sharepoint
Google Applications
fundamentals of outsourcing

Business Process
Outsourcing
Engagements

Management and Managing

Critical Situation Outsourcing
Control Transaction

BPO
Operations
Management