VENTUS AND BUSINESS PROCESS

OUTSOURCING

INTERNATIONAL BUSINESS

SUBMITTED BY:A65 SANDIP KUMAR

A30 GULSAN KANOJIA
A68 LAXMI PATEL
A66 ANGAD KUMAR

Case Summary
Ventus and Business Process Outsourcing
In 2007, Ventus, the voice business process outsourcing subsidiary of Philippine Long Distance
Telephone Company (PLDT) became the largest Filipino-owned call center in the Philippines,
with over 6,000 employees, seven locations, and revenues in excess of $120 million.
About the Philippine Call Center Industry
India had become the global hub for call center outsourcing attracting worlds attention towards
it. Similarly the Philippines had also silently developed as a prominent provider of business
process outsourcing, particularly in the call center industry. In 2006, the Philippines had more
than 120 companies and over 1, 45,000 people employed in the industry. The industry generated
revenues of about $1.7 billion in 2005 compared to $800 million in 2004. Thus it can be said that
the Philippines BPO industry was growing at the double rate.
Questions & Answers
1.1 What factors explain the growth of the Philippine call center industry in general
and ePLDT Ventus in particular?
Answer:
Philippine call center industry growth
Results of a general trend in cost reduction and outsourcing.
The market for labor has become more global and in particular, anything that is
digital can move easily across borders.
A country with English speaking people, high rates of college graduates looking for
work, and a population familiar with American culture.
ePLDT Ventus growth

The company had the advantage of having the technology in place.

Ventus enjoyed from PLDT reputation as a good employer.
The company benefited from a strong and stable leadership team.
Partnerships with major U.S. clients promoted credibility and visibility.

1.2 What current role(s) do business process outsourcers (including call centers like
Ventus) play in the global supply chain for services? What additional roles can
these outsourcers play in the future?
Answer:i.
ii.

Business process outsourcers reduce overall costs in the global supply chain and
in some cases provide a degree of supply diversification when multiple sources
are used.
The current services provided by Ventus and others will probably expand in the
future into other high value added services such as:
Back-office transactions (Accounting, Finance and HR services)
Medical and legal transcription
Animation,
Engineering design
Software development
Digital content development and support

What will be the best path for growth for Ventus? Evaluate the various options
discussed in the case. What path would you recommend Ventus take? Why?
Answer:i.

ii.

The two basic choices facing Ventus are to continue in the voice services business
or to grow the data process component of the company.
There doesnt seem to be any reason why Ventus cant do both.
The company has established itself as a leader in call centers, and has an
infrastructure in place to continue this business line.
Using its existing technology it has been able to leverage itself into this market
which is expected to continue to grow for the foreseeable future.
At the same time, the higher value back office services are already being done
through the acquisition of SPI and these services will grow in demand as well.
The Philippines has a favorable business environment for such services and this
appears to be a good opportunity to expand into a more profitable business line.
While the core competencies are not the same in both businesses, the acquisition
of SPI has presumably brought some needed competencies and these
competencies can be expanded.

Market, Customer and Geographic Diversification

Ventus should continue to grow in its domestic market and remains committed to
the U.S. market and its current customers.
However, the company needs to build a diversified customer base.
Ventus should attract clients from different sectors in order to reduce risk, since
different industries suffer different impacts from crisis.

 The company needs to have a better mix between B2C and B2B customers, since
the latter is less affected by the recession.
Find new markets and evaluate them as possible destinations to build new
facilities, acquire competitors or establish partnerships.
Formation of a sales team that will cover various geographic and industry
segments in the U.S..
3.1 How should Ventus address the emerging challenges that could potentially derail its
growth?
Answer:i. Ventus faces a number of current challenges:
The recession affected present and potential clients of Ventus
The crisis also led companies with outsourcing plans to cancel or put programs on
hold because of increasing funding difficulties, management turnover and lack of
business visibility.
Trend to consolidation of global service supply chains to fewer locations or sell
off captive operations to other providers.
Increase in U.S. unemployment has changed the labor cost so some customers are
repatriating work back to the U.S., demanding price concessions from offshore
providers, or increasing service-level requirements.

3.2 What other challenges are likely to emerge?

Answer:

i. New challenges may include:

the labor market is getting tighter in the Philippines as the country experiences
unexpected economic growth
More competition has entered the market.
ii. The Philippines already competes with India, Eastern Europe, the
Caribbean, and other places for call center operations, and now some
foreign companies are setting up call center operations in the Philippines.
Consumer backlash from job outsourcing as the practice becomes increasingly
popular
Newer technologies in voice recognition that require less need for human voice
services.

3.3 How should Ventus deal with these additional challenges?

Answer:i.

Ventus can best handle the current and future challenges by continuing to
manage its operations as a first-rate source for voice services and diversify
into other business services.
ii. Ventus has a good record of management and is the preferred employer
among potential call center employees.
iii.
Greater training and accent reduction can decrease the perception that
customers are calling the Philippines.
Most of the unhappiness with offshoring of voice services comes from language
difficulties and misunderstandings.
These problems can be addressed through training.
iv. This addresses the problem of competition, although it will continue to be
a threat, but the problem of increasing technologies may reduce overall
demand for human voice services.
Diversifying into other back office operations reduces the risk of technology
eliminating business.

3.4 It would be helpful to use the five-forces model discussed in Chapter 11 to analyze
their strengths and weaknesses.
Answer:i. Looking at the Porter Five-Forces model, Ventus faces threats from all five forces in
voice services:
Threats from Suppliers: Problems of increasing labor costs due to shortages.
Threats from Buyers: In-house operations such as Dell operating in the Philippines.
Threat of Substitute Products: Newer technologies that reduce the need for humans.
Threat of New Entrants: Foreign firms setting up shop in the Philippines. Competitive
Rivalry Threats: The existing competitors.
ii. The best solution is for Ventus to continue to try and outperform all competitors on the
basis of quality and cost, and to diversify into data process services.