POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Taguig Branch

Gen. Santos Ave. Lower Bicutan, Taguig City

Business Process Outsourcing

Library Paper

In Partial Fulfilment of the Requirements for the Degree of Business Administration Major in
Marketing Management

Presented to the Faculty of

College of Business

Presented by:

Concepcion, Agasi D.

BSBA-MM 2-1

Presented to:

Prof. Margarita T. Sevilla

Subject Professor

July 2019
Introduction

Business Process Outsourcing or simply BPO is one of the booming industries here

in our country. Year 1992, Frank Holz established Accenture Global resource center - a

single contact center and it was said as the beginning of local BPO industry in the country.

After the Philippine congress passed the special economic zone act in 1995 that provides

lower area requirements for developments and tax incentives, foreign investors are attracted

to start a business here in the Philippines one of the said business are BPO companies.

During that time People support and Convergy’s are the leading international BPO together

with ePLDT that helps the unemployment rate decreases and the GDP rate increased. From

this point, the BPO industry continued to grow and generate more revenue, with the industry

providing the most job opportunities in the private sector.

In the present time, Business Process Outsourcing establishments are still lively in

the industry and it says that this will become the capital of the Philippines as its operations

here in our country continuously growing. According to Philippine Statistics Authority There

are 851 registered BPO company in the Philippines as of 2018 and expecting almost

700,000 additional opportunities for medium and high-skill jobs by 2022 in addition the

Philippines ranks seventh among the world’s top outsourcing destinations based on its

financial attractiveness, people skills and availability, and business environment according to

the 2017 A.T. Kearney Global Services Location Index.

As of now BPO creates an important role in our economy and producing a

professional employee that truly represents Filipino people around the globe. Set it aside

BPO industry just not help and focus to the external environment the main objective of it is

the support and its crucial purpose inside the management. As we go further we will deeply

inform about what really is it, the processes, type and jobs it offers, and its importance.
Business Process Outsourcing

According to Ghillyer (2012) outsourcing is the practice of subcontracting certain work

functions to an outside organization. It is an attempt to cut costs, or an effort to increase

service. Business Process Outsourcing or BPO refer to hiring a third party firm which will

perform the non-core operations of a company. Outsourcing the non-core operations like

customer services and human resource management to focus the internal operations of the

company and to improve their core competencies, it is also use to lessen the operations

perform by the firms, reduce the cost of the management and speed up the companies

processes.

In addition Siddarth (2018) explain how BPO works, he said that it involves the full

shift of a business process to an external service provider. It involves contracting of the

business operations and responsibilities of specific functions to a third party organization.

Third party helps the service providers to improve their customer experience by providing

excellent customer service. It is also an effective way to expand the business operations to

other countries without having to be a physically present.

BPO typically categorized into two types the “back office outsourcing” and “front office

outsourcing”. Stranathan (2018) differentiated the two terms, when we say back office

outsourcing the back office functions of the company such as accounting, finance, data entry,

human resource management, payroll, and information and technology management are

being outsource, meanwhile front office outsourcing the front office which is the main function

is customer-facing who possess a great skill in communications and offering services to the

clients includes marketing function of the company are being outsource. Although they have

distinct role this two functions has a big contribution to the growth of the company but the

most common function that the company outsource are the back office functions. In the
Philippines BPO services consist of two broad categories: horizontal and vertical. Horizontal

BPO offers a function-center services across different businesses like for example the IT and

HR. While vertical BPO offers industry-center services that specialize in a certain industry

such as for legal, finance, and healthcare services.

Offshoring vs. Outsourcing

The term offshoring and outsourcing is a very common word in a business process

outsourcing industry, sounds the same but it has a distinct definition to each other.

Outsourcing means contracting a third party to perform the specific function of a company

while offshoring refers to transferring and performing the work in other country. On the other

hand there is an interconnection or combination of the two and it is offshore outsourcing.

Offshore outsourcing is a way where the company hire a vendor to do the work offshore; it is

a practice of a firm to lower the costs, and to take advantage of the vendor's expertise.

(Diffen.com, 2019).

Call center

Call center is directly associated with the term BPO, according to Rouse M. (2019)

call center is a centralized area where calls from current or potentials clients are being

recognise. It can be “in-bound” or “out-bound” calls and perform inside the company or being

outsource. Call center offers a variety of services like customer services, polling services and

also it sells a specific product. Call center has a different types depending to the service and

the functions they offer such as in-house, outsourced, offshore, and virtual call center.

As mentioned earlier call center can be “in-bound” or “out-bound” they differ

according to whom they will offer their services. On in-bound the agent handle a volume of

calls while operating the screen and using interactive voice response to address customers
concerns like technical support, scheduling, complaints and queries about the product or

services to be render. While out-bound is an opposite of in-bound because most of the calls

are come from the company who is the main objective is to make sales, the calls are out

going so it means that the company are the one who target the clients.

Call center and BPO are not alike when we say BPO is the process of hiring another

company to handle business activities for them starting from data processing, back office

support, recruitment, payroll, sales, customer service or technical support, up to

telemarketing. On the other hand Call Center is a form of BPO that deals with inbound and

outbound calls providing sales, customer service, technical support, telemarketing, and

phone surveys for their clients. In short, all call centers are BPO's but not all BPO's are call

centers.

Types of BPO according to location

Business process outsourcing has a wide operations and functions that’s why it

categorized into three types according to the location where they provides the services - the

offshore, onshore, and near shore BPO.

Offshore as I discussed earlier is outsourcing the business operations and functions in the

other country, usually business use an offshore type of outsourcing because it can help the

operations productive, using the other resources specifically the skills that the vendor from

other can use to increase the competitive advantage of the company. America is the leading

country who does offshoring their companies.

Onshore is outsourcing the business operations to another company located in the same

geographic region. Companies use this kind of outsourcing to reduce the labor cost and
avoid cultural and language barrier that may affect their operations when they hire vendors

coming from other country.

Lastly, near shore is outsourcing the business operations of the company to other companies

from other country which is located near from its origin, company that have the same cultural

and language skills. It is easy for the company to visit the outsourced company and retain the

skills that are needed for operations.

According to International Labor Organization, the disadvantages of offshoring are

miscommunication, political instability, and security issues. The cost of having this kind of

outsourcing is quiet larger than others and the foreign labor is higher. In addition language

and cultural foundations indifferences from the other country dissatisfied customers because

of miscommunication is arising issues that offshore outsourcing has been facing that

somehow affects the reputation of the business. While onshore outsourcing embrace its

advantage in the industry, because of its affordability and attractive many of the customers

are satisfied with the services that its offers, the company can give the quality service that

they demand because the company know the psychological needs of the clients as they live

on the same location. In today’s situation service provider such as BPO are highly affected

by the so called technological advancement in our environment where the standards of

people are getting higher and broader. The bottom line of it is offshoring is less-effective way

of outsourcing in relation to the cost needed for the operation.

Types of BPO according to services being provided

BPOs offers a lot of services that is why sometimes it is categorize according to the

services that they offer namely KPO, LPO, and RPO.

Knowledge Process Outsourcing or KPO serves His/her expertise about the business

process and function to the customers. LPO or Legal Process Outsourcing from the title itself

serves legal services such as drafting legal documents, research, and advice. Lastly RPO or

Research Process Outsourcing refers to research and analysis functions, investment and

marketing firms are the types of organizations who commonly acquire this kind of services.

Types of services provided by BPOs

One of the important roles of BPO companies is to provide quality services to their

clients. In terms of services they offer a wide range and variety of services that satisfies the

demand of customers they assisting. The book of Jaipur National University (2013),

explained the different types of services that BPOs commonly rendered namely Data-entry

services, accounting services, customer support services, Technical support services, IT

helpdesk support, and online services.

 Data-entry services, a kind of service that encodes data for the efficiency purposes of

the company. The common data that this particular type of BPO are about Sales,

purchase, and mortgage of the company.

 Accounting services, a service provider that the main scope is to help the customer

about the financial statements, balance sheet, cash flows, and bank processes may

be included here. Most of the people behind this firm are highly skilled professional

workers that have a broad knowledge about accounting.

 Customer support services, a voice or email based services and its main job is to

resolve customers concerns about the status and the product information as well.

 Technical support services can be a voice or email based services that assist

customers about their technical queries that pertains hardware, software and internet

issues.
  IT helpdesk support, IT skilled employee serves the internal customers or the

employee on the same company about their problem in relation with technical

aspects.

 Online services, it is the most accurate type of BPO where customers and vendors

can easily deal to each other in a short span of time. E-booking, e-ticketing, and

online selling are the operations of this section.

As we notice there are different types of BPOs according to the services that they

offer to the customers. Some are for the technical, legal and financial advices; and some are

created for marketing purposes. Most of the platform that they use are the online and

telephones to catch up their customers.

Roles in BPOs

BPOs won’t run as it is, in every firm or establishments there would be professionals

that will manage and help the company to run. As like any company BPOs has it people

inside the organizations, different people with different positions that helps each other to

achieve the company’s goals. Mentioned below are the people who are working inside BPOs

according to, the book of Jaipur National University (2013).

 Customer service representatives, usually they are the front liner of the firm. Holds

the vital role of the company because they are the one who face customers around

the globe.

 Technical support, they are well-trained personnel of the company that has their

specific support to the company. They are the one who is assign to maintain the

technicality of the company.

  Software, hardware, and network support - people that are inclined to operate the

computer’s applications and programs.

Other specializations inside the BPOs:

- Medical transcriptionist, a person who transcribe medical reports dictated by

professionals such as doctors, physicians or nurse.

- Business analyst, a professional who is the main job is to give his/her analysis about

the market or the business status according to the data that are gathered.

- Language specialist, a person who is inclined in translating real-time or written

language from another language.

Advantages and Disadvantages

There are several advantages that BPO offers the common advantage of BPO is it

decrease the costs of the company and it helps to lessen the workload of the establishment.

The following are some of the advantages of BPO: (technopedia,2019)

 Efficient business processes

 Enhance competitive advantage and employees may invest more time in internal

business strategies

 Organizational growth increases

Organizations decide to outsource their operations to the other company located in the

same country or not to focus on their core operations and to be more productive. Through

outsourcing the productivity of the company will increase because of the efficient movements

that the company acquire. The separation of back office functions and front office functions

can lessen the workload that the company consist. The performance of the employees inside

the company can be enhanced because they now focus on the internal functions of the
company. The processes are continuously working the organizational growth of the company

will increase because the third party agency help to manage the operations and the functions

of the company. Lastly, Outsourcing can also help to make the business more flexible and

fast-moving can able to adapt to the changing market conditions and challenges, while

providing cost savings and service level improvements.

Risks can be also taken by having a BPO, there is no assurance that the third party

agency will gave their full functions like the original company can. Issues may come out

because of overdependence on service provider like data breach were the confidentiality of

the company’s internal data can have its security risk. Underestimated cost is also one of the

disadvantages of outsourcing where the company does not calculate some costs that may

affect the financial capabilities of the company.

Conclusion

BPO is a great avenue for the organizations to do their operations and functions in a

more accurate, affordable, and efficient method. We can say that it is helpful for those

companies that have a wide range of operations because the back office functions of the

company can be perform by the third party agents and invest their time to the core

operations. We discover that there are lot of services that the BPO can offer like customer

services, technical, financial, medical and financial supports and we cannot say just BPO is

just a call center. BPO are categorized according to the service that they offer and the

locations where the services are being provided, but their goals are the same which is to

provide a quality service that their customers demand.

Here in country call center takes a vital role in the industry because it allows business

to operate in a more concrete way, it leads the business in the right way to achieve their

mission, vision, and goals. It is also helpful in our economy BPO has a large contribution to

the GDP rate of the country because it creates taxes from the establishment and to the

employees that the government needed for the development of the country’s infrastructure

and status.

BPO continuous to offer a quality services to their customer worldwide that attracts

potential investors to start a business in the Philippines that will grant a lot of opportunities to

the fellow Filipino. In the end we can say that one of the capital of the Philippines in terms of

workforce and opportunities are the BPO. It’s not just supporting the customers and the other

company but also it supports the financial status of the Filipino citizens and the Country as a

whole.
Book References:

Ghillyer,A. (2012). Management Now: skills for 21st century management, Pg. 147-148.
McGraw-hill Education. 2 Penn Plaza New York, NY.

JNU[pdf.](2013). Introduction to BPO, Pg. 2-3. JNU Jaipur, India.

Online References

“BPO definition” retrieved on (June 30,2019). Retrieved from:

https://searchcio.techtarget.com/definition/business-process-outsourcing

“Inbound vs. Outbound call center” retrieved on (June 30,2019). Retrieved from:
https://www.avoxi.com/blog/what-is-the-difference-between-an-inbound-and-outbound-call-
center/

“Offshoring vs. Outsourcing” retrieved on (June 30,2019). Retrieved from:

https://www.diffen.com/difference/Offshoring_vs_Outsourcing

“Onshoring vs. Offshoring” retrieved on (June 30,2019). Retrieved from:

https://chiefexecutive.net/onshoring-vs-offshoring-servicesupport-businesses-are-coming-
back-home/

“Registered BPO in the Philippines according to PSA report” retrieved on ( June 30, 2019).
Retrieved from:
https://psa.gov.ph/sites/default/files/LABSTAT%20Updates%20%20Vol%2022%20No%2013
%20on%20Industry%20Profile%20-%20BPO%202018_0.pdf

Siddarth (2018). BPO, how does it work Retrieved on (June 30,2019). Retrieved from:
https://www.quora.com/What-is-BPO-How-does-it-work

Stranathan (2018). “What is Back office outsourcing”. Retrieved from:

https://www.staffvirtual.com/blog/what-is-back-office-outsourcing

“The BPO industry in Philippines setting” retrieved on (June 30,2019). Retrieved from:
https://grit.ph/bpo/

“What is call center?” retrieved on (June 30,2019). Retrieved from:

https://searchcustomerexperience.techtarget.com/definition/Call-Center