BPO REVIEWER (Module 1) Part-Based Activities

- Automobile components
Definition of OUTSOURCING - Cruise-ship rooms
- everytime we buy something from somebofy - Airplane abionics
rather than producing it ourselves, we have - Desktop build and configuration
essentially ‘outsourced’ the production of that
good or service. What is being Outsourced?
- contracting of a service provider for the
delivery of a process or service Support or Auxiliary Services
- Cafeteria
Why Companies Oursource? - Janitorial Service
- Copy Center
Capacity Management - Building Maintenance
- Need to acquire/buy/hire (temporary) capacity - Trucking/ Shipping
- Demand chasing (one day 50 employees - Security
needed, next day only 10 are needed) - Payroll
- Legal
Lower Cost
- Replace expensive local or in-house resources Routine activities or activities that can be
with less expensive resources from external automated at larger centers
service providers - Small banks outsourcing check processing to
- Tax with differential or government incentive larger banks, riding on ATM base of multi-
programs in other locations leading to lower bank network
cost - Small vendors using amazon.com as data
center, marketing, and payment processing
Better Performance platform
Use of Specialization external providers which - Banks using common/multi-bank core banking
can deliver service with better quality, services of large technology providers
innovation, in new platform:
- Sales force providing web-based sales IT Services
management - Application Development
- PeopleSoft providing employee-facing tools - Application Maintenance and Management
- Production/ Data-Center Operations
Faster and Continuous Service - Production Technical/ Systems Support
- Greater output from work being done around - Helpdesk
the clock - Software as a Service (SaaS): Shared
- Offshoring market research support to application software
locations in reverse time zones - Cloud Services: Shared data storage facilities,
- Offshoring processes of bills of lading to database management
centers in other time-zones to complete task
faster
Advantages and Disadvantages of Outsourcing
Advantages
*Employer Perspective
- The Service Provider (BPO Company)
determines most efficient number of resources,
process, and supervision, to achieve output
- Service Provider may have more expertise/
capability than the buyer
- Buyer can leveraage economies of scale of the
Service Provider
Service Provider may have more expertise/
capability than the buyer
Example:
Technical Support - Accounting - Animation
Buyer can leverage economies of scale of the
Service Provider
Example :
Techincal Infrastructure - Human Resource -
Techincal Expertise
Disadvantages
*Employer Perspective
Cost can be higher because provider may add
premium for risk in case processes are not well
defined
- Example Problem: Vaguely defined task as
“provide clinic service”
- Example Solution: Redefine tasks 2
full-time nurses and 1 full-time doctor, 8
am to 5 pm, providing emergency,
medicine (to what extent), and, emergency
care equipment (or not)
Buyer does not have full control of resources
doing work
- Example: Can your agency provided office
assistant also do this extra errand bring pet
to the vet clinic, bring clothes to the dry-
cleaner, pick-up kids from school?
- Solution: Do not use outsourced office
assistant like your personal assistant.

*Employee Perspective
- “Work Abroad, Live Here”
- Be near your friends and family
- Work in the country and support Philippine
growth
- Professional Growth
- Financial Independence
- Employee Assistance
- Enjoy your favorite food
BPO REVIEWER (Module 2) Strategies for Outsourcing

The Two (2) Types of Outsourcing Multisourcing

- Multiple vendors for client’s outsourced
Third-Party project.
- Owned by a service provider, a local entity or
part of global group Example:
- Providing Services to clients of the provider - GM’s Brazillian e-commerce site. Vendors:
Oracle, AT &T, Microsoft, Cisco, EDS
Examples: (now HP Enterprises and Services), IBM
- Accenture - GM’s 2007/ $7.5B IT outsourcing contract
- AEGIS with EDS (HP Enterprises and Services),
- Convergys IBM, Capgemini, and Wipro Ltd.
- EGS (NCO/APAC)
- IBM Crowdsourcing
- Sitel - Company puts out a call for a project; best
- SPI Global solution/ submission is accepted and
- Stream Global contracted.
- Sutherland - Crowdsourcing: “… outsourcing to an
- Sykes undefined, generally large group of potential
- Tele Tech offerers in the form of an open call.” (Jeff
- Teleperformance Howe)
- Telus
Onshoring
Shared Service Center (SSC) - Vendor in the same home country as client
- Wholly- owned by the mother company
- Providing services entirely to affiliates and Advantages:
subsidiaries, or more rarely to clients of the - Allows immediate response: product
mother company designers in same country respond to
market feedback quickly
Examples: - Local contractors have same market
- ANZ Bank knowledge, culture, language,
- C h a r t i s Te c h n o l o g y a n d O p e r a t i o n s communication, style; minimizes culture
Management issues
- Chevron
- Citigroup Disadvantages:
- Dell - Risk of inadequately selected, trained,
- DKS supervised staff- i.e, less skilled because
- HP contactor staff are lower paid
- HSBC - Risk of higher attrition (lower business
- J.P Morgan Chase acumen/process knowledge) than internal
- Maersk staff; less motivation to deliver quality
- Manulife
- Shell Shared Services Asia Example: New York bank contracting start-up
- Thomson Reuters security service firm in New York
Nearshoring
- Vendor in a country “close” (geographic and/
or cultural proximity) to client’s home country
Advantages:
- Fee-for-service variability rather than fixed
compsensation costs
- Significant labor cost arbitrage
Disadvantages:
- Additional coordination costs, sourcing
management communications
- Transfer pricing/ tax margin requirements
Example: Hong Kong retail firm offshoring
garments manufacturing in Manila
Offshoring
- Vendor and client in different countries
Key Technologies that Support Outsourcing
Video Conferencing:
- HP - Halo (8.5 min. video)
- Cisco - Telepresence
- Sun - MPK20: Project Wonderland
Web-Based Conferencing and workflow tools:
- WebEX
- MS Windows Meeting Space
- MS Sharepoint
- Google Applications
Fundamentals of Outsourcing (Cycle)
Business Process Outsourcing Engagements
Managing Outsourcing Transitions
BPO Operations Management
Issue Management and Critical Situation Control

Advantages:
- Allows company to focus on core business
- Fast ramp-up/down at reasonable cost
- Opportunity to expand into new areas cost
effectively

Disadvantages:
- Data privacy/confidentiality issues
- Lack of right business acumen/right
market knowledge in offshore location
- Cultural differences leading to delays and
miscues
- Risk of high attrition in service provider,
weak staff selection/training
BPO REVIEWER (Module 3)
Client-Service Provider Relationship:
Attributes
Client Company is concerned with:
- Quality transition of processes
- Efficient operation of business functions that
were once handled in-house
Service provider company is concerned with:
- Scope of Service
- Performance measures
- Benchmarks to ensure objective standards in
assessing work quality
Therefore, as a result of these relationship
attributes, the BPO Contract is a unique, “tailor-
fit” agreement captured in a document that
resembles a performance contract.
The BPO Contract
- A business proces outsourcing (BPO) contract
is a formal agreement between a client and a
service provider to take over a “pre-agreed
portion” of the client’s business operations
- This “pre-agreed portion” is documented in
the contract as the scope of work (SOW)
- The BPO contract, with all its attachments,
assumptions, and documented agreements, is
referred to as the master services
management (MSA)
The BPO Contract:
Master Services Agreement
Definition: Covering agreement that summarize
terms applicable to every job-order with the
service provider
Main Elements:
A. Service to be provided
B. Performance managament, issues, change
management
C. Country Laws
Groups (A) and (B) are the “operational”
elements, used day to day. Group (C) generally
“just-in-case” terms
Scope of Work
Definition: Describes specific work to be
delivered, by when, at what cost
Considerations:
- Can be similar to a “job order”
- Is generally an attachment/addendum to a
Master Agreement, points to covering terms
- May state that in case of terms inconsistency,
the SOW or Master Agreement supersedes
Core Elements
- Service to be rendered or provided as
documented in the Scope of Work (SOW)
- Out-bound sales calls
- In-bound inquiries or subscriptions
- Delivering food or flowers or mall
- Performance standards expected from the
service provider; ervice Level Agreements
(SLA), and, Key Performance Indicators (KPI)
- “Handle Time” and “Average Handle
Time”
- Sales attainment
- Customer satisfaction rating
- Timeline of the contract; start dates (“go live”)
and, duration
- It is a detailed scheduled of when the
transition period starts and when the
service provider assumes control of the
contracted processes
- In terms of type per duration; most
contracts are typically multi-year contracts,
however and when deemed most effective,
on-demand contracts may also be put into
effect

- Cost to the client

- Refers to the payment made by the client
to the service provider for honoring
contractual agreements

- Other Specific Operations Requirements:

- Who will provide the service
- Qualifications of personnel
- Location of Operations
- Outline of reporting procedures, decision-
making, and escalation of problems
- Legal provisions (e.g., non-competition,
confidentiality)
BPO REVIEWER (Module 4)
Managing Outsourcing Transition
Definition of TRANSITION MANAGEMENT
- Transition Management is the set of activities
that transpire after a BPO contract is signed
that implements or executes the detailed
movement or transfer of processes from the
client to the service provider
The Manager
- A Transition Manager is responsible for
migrating the function or the process from the
client location or organization to the service
provider or outsourcing organization
- The Transition Manager needs to be an
effective communicator, as the role requires
extensive interaction with the clients
Because the nature of the role, a Transition
Manger needs to have a variety of skills and
competencies:
- Needs to have strong project management
skills, as the migration process are complex
projects that require expert management skills;
- Needs to be comfortable in working in a cross-
cultural environment, as most often, the client
teams are based overseas;
- Needs to have thorough understanding of the;
existing business and legal processes and,
current as well as emergin technologies as
these play a critical role in the off-shoring of a
business function
Transition Strategies & Knowledge Transfer
Framework
Generally, there are two common strategies
followed in migrating a function, these are:
• Lift and Shift
• Re-engineer and Migrate
Lift and Shift
Definition
- This is the most common methodology used.
When the process is mature, the ‘Lift and
Shift’ approach is used for migrating.
Phases
1. Move the current process to the service
provider without changes/ improvements
2. Stabilize
3. Re-engineer the process to achieve efficiency
gain - produce same output, less FTEs
- Modify the process
- Add end-user type or strategic automation
- Combine role with others
- Move process into a production line
- Negotiate elimination of unnecessary
outputs
Items to Consider
1. Process change that will not affect process
control points or output can be done by
service provider independently
- Onshore approval of process changes is
good practice
- Onshore review if the change impacts
regulatory control points
2. Major effort: Post go-live reengineering
- Transition phase can be easy especially if
“people and processes” are moved; may
take 3 and 4 months only
- Risk that Onshore loses political will to
reengineer processes after a while

Advantages
- Advantages of an “as is” basis process
migration:
- Training the new team is easier, as the
process is well understood and
documented
- Existing employees at the donor location
are available to support the process in case
of disruptions or instability
- A fresh set eyes of (the new team) look at
the process from a fresh perspective, often
resulting in process improvements and
enhanced controls
Re-engineer and Migrate
Definition
- Fundamental rethinking and radically
redesigning of the business process so as
achieve dramatic improvements in critical
measures of performance such as cost, service,
and, speed.
Items to Consider
- Useful when the process is either broken and
requires fixing, or is due to undergo significant
change in the near future (systems change or
process change)
- In such cases, it may be important to utilize
the expertise of the existing team (which is
built over several years) to drive the change,
before it is handed over to the new team
- Company that outsource industry common
processes to a market-leading service provider
will generally follow service provider
processes
- Company changes its processes as part of
transition service provider
Transition Success & Effectiveness
Transition Pitfalls
Most of the issues with sub-par or failed
outsourcing endeavors can be attributed to a few
pitfalls
1. Inadequate investment and Sponsorship
2. Unclear scope of work
3. Unclear roles and responsibilities
4. Not retaining the experts
These can be avoided if the Transition Manager
constantly re-focuses attention of all involved
towards these
Transition Critical Success Factors
The success or failure of a transition project is
fundamentally measured in two aspects:
1. Technology Readiness
- state of readiness of the enabling hardware
and software to support the on-going
operations
2. Manpower Readiness
- state of the readiness of the operating staff;
hired, trained, and, skilled for the service
processes
Transition Effectiveness
1. Financial Benefits
It is important to quantify the real cost of the
function before off-shoring (baseline costs), and
also to measure the cost of the off-shore team on
an ongoing basis.
- Costs related to moving the function to the
new team should be tracked separately as
project costs
- Capturing these cost elements enables
comparison of baseline costs with current
costs, and provides an accurate
measurement of the saves
2. Performance of the Team
- Primarily done by developing performance
metrics
- Usually subject to a testing phase to
determine reasonability of the service
measures - also known as the “baselining”
period
Document Readiness
• Inputs
• Processes are documented to standards
• Replication Ready
• Output
• Communication
• Supervision
1. Inputs are documented
- Source systems and dependencies
- Timing of delivery quality assumptions, and
work-around in case of failure in delivery of
some inputs
- Historical timeliness and accuracy
statistics. Helps size service provider
resources need, helps identify likelihood of
work-compression (rushing 3 hours work
in 1 hour) or overtime (working late to
keep to output delivery targets)
- Format of inputs (structured or not)
2. Processes are documented to industry
standard format and in complete detail
- Hand-offs to other parties, internal and
external, documented, including timing and
format
- Interim/ flash reports, if required, are
documented as deliverables. Delivery time,
day-of-month, period targets are documented
3. R e q u i r e d t o o l s , m a c r o s , w o r k f l o w,
application, shared directory access are listed in
sufficient detail to allow replication in the
service provider
4. Interim/ flash and final outputs are
completely documented
- Formats are completely defined
- Control steps and quality assurance checklists
are defined
- Delivery time/ day-of-period are defined: these
are reviewed to ensure they are achievable/
consistent with input timelines
- Service Provider and transition project
manager should validate that timelines are
current and not “aspirational”; tendency to put
in desired/ unerealistic deadlines when
outsourcing
5. Communication channels for output to be
explicitly defined
- Clarity here minimizes misunderstanding
during early production period
- Especially if the output is an input to another
process
6. Onshore supervision points and what will be
reviewed/ checklist should be defined
- Some country regulations (US) require clear
trail of supervisory control by an Onshore
person
- Responsibility for output (e.g, financial
statements) rests with an accountable Onshore
officer
- For shared services centers particularly, clear
documentation on areas of supervisory review
paves the way for transition into “center of
excellence” mode where supervisory control
rests offshore
BPO REVIEWER (Module 5)
BPO Operations Management
Topical Overview
• Operations Management
• Components of Operations Management
• Process Mapping
Course Norms & Rules
You are responsible for your own learning:
• Come on time, all the time
• Be participative - ask questions, share your
thoughts and opinions, take notes
• Be supportive - assist your peers as long as
they are willing to assist themselves
• Do all assigned tasks to the best of your
ability
• Be enthusiastic, energetic, and, fun
• Keep all distractions away in your bag -
mobile phones on silent mode, tablets,
laptops
Module Learning Objectives
• Define what is operations management
• Explain the value or importance of operations
management
• Enumerate and discuss the components of
operations management
• Identify process mapping and notation shapes
• Explain the value or importance of process
mapping
• Be able to satisfactorily map process
BPO: Operations Management Overview
- The main strategy that the BPO sector applies
is what is called; “End-to-End Service Level
Management.”
- The theoretical and practical aspects of
designing and implementing End-to-End
Service Level Management (SLM) in any BPO
relationship is through a formal agreement - a
contract with the client
- The Service Level Agreement (SLA), is a
formal agreement between the client and
service provider for a common understanding
on aspects including service quality,
responsibilities, performance metrics,
penalties, and commitments.
SLM is a regular and systematic review of
service provider performance against the
agreements.
BPO: Operations Management 6 Components
Performance Management
- Is the systematic process by which an
organization involves its employees, as
individuals and members of a group, in
improving organizational effectiveness in the
accomplishment of mission and goals
- Employee performance management includes:
- Planning work and setting expectations,
- Continually monitoring performance,
- Developing the capacity to perform,
- Periodically rating performance in
assummary fashion, and
- Rewarding good performance
Metrics and Reporting
Operational Goals and Metrics
Increase Responsiveness
- turnaround time
- quality of service provided through
customer contact
Increase Lead Generation
- Leads generated per hour if it is an
outbound process
Meet Operational Budget
- Transaction volumes/ Forecast
- Target Average Handle Time
- Cost per seat/ hour/ transaction
Reduce Waiting Time
- % of transactions hadled at a specific time
- Abandon Rate %
- Average speed of answer
Reduce Repeat Transactions
- First time resolution %
- Resolution Rate
Limitations of Service Level Agreement (SLA)
- Lack of end customer focus
- Lack of emphasis on business objectives
- Over emphasis on efficiency rather than on
effectiveness
- Lack of sub-process metrics to ensure
consistency
Professional Development
Approach to Personal Development:
• Case Study Method
• Consultation
• Coaching
• Communitites of Practice
• Lesson Study
• Mentoring
• Reflective Supervision
• Technical Assistance
Professional Development
- Refers to skills and knowledge attained for
both personal development and career
advancement
Value
- Lifelong learning, a sense of moral obligation,
to maintain and improve professional
competence, enhance careeer progression,
keep abreast of new technology and practice,
or to comply with professional regulatory
organizations
Quality Monitoring and Analyzing
Quality Specification:
• Total Quality Management (TQM)
• Total Quality Circles (TCM)
• ISO 9001
• Six Sigma
Primary Elements of TQM:
• Customer Focus
• Total employee involvement
• Process-centered
• Integrated System
• Strategic and Systematic approach
• Continuous improvement
• Fact-based decision-making
• Communication
Total Quality Management (TQM)
- Is a management system or approach to long-
term success through cutomer satisfaction. In a
TQM effort, all members of an organization
participate in improving processes, products,
services, and the culture in which they work
through the use of; strategy, data, and effective
communications to integrate the quality
discipline into the culture and activities of an
organization
Total Quality Circles (TQC)
- Means having organized Kaizen activities,
involving everyon in a company - managers
and workers - in a totally systemic and
integrated effort toward improving
performance at every level
- It is lead to increased customer satisfaction
throught satisfying such corporate cross-
functionals goals as quality, cost, scheduling,
manpower development, and new product
development
ISO 9001
- Is a very flexible quality standard that is
readily applicable to many industries, as well
as to all sectors of IT-BPM industry, hence its
popularity in the Philippines even with small-
scale business.
- ISO 9001 is part of a series of International
Standards for Quality Systems, it is primarily
focused on quality systems as models for
quality assurance in design/ development,
production, installation and servicing
Six Sigma
- Is a set of qualitative and quantitative
(statistical) techniques to systematically
improve processes by eliminating defects and
process variation.
- It is byproduct of decades of quality
improvement methodologies such as Statistical
Process Control (SPC), Total Quality
Management (TQM), and, Zero Defects.
Six Sigma asserts that:
- Process variation is an obstacle to reliably
delivering high quality products and services,
as defined by the customer,
- Continual focus on reducing process variation
is the foundation for business improvement
and success,
- All business processes (manufacturing,
service, administrative, etc) can be measured,
analyzed, controlled, and improved,
- Effective problem solving can only be
achieved by data driven decision-making, and,
- Achieving and maintaining quality
improvement requires an organizational
commitment that comes from senior
management
Productivity Monitoring and Control
Employee Productivity
- Is amount of outputs (usually regulated by
requirement and quality) which can be
produced by employee per period of time,
utilizing the given resources. The more stable
and elaborated the process of production (the
less X-factors or varying inputs it involves),
the smoother level of productivity is expected
from employees operating it.
Guidelines for monitoring Employee
Productivity
• Measuring
• Comparison
• Identification
• Feedback
Continuous Improvement Initiatives
5S Process
- Or more simply “5S”, is a structured program
to systematically achieve total organization,
cleanliness, and standardization in the
workplace.
- 5S was invented in Japan, and represents five
(5) Japanese words: Seiri, Seiton, Seiso,
Seiketsu, Shitsuke
Benefits
• Improve Safety
• Decrease down time
• Raise employee morale
• Identify problems more quickly
• Develop control through visibility
The 5S Process Lean
- Is a process management framework and
Seiri - Tidiness methodology derived mostly from the Toyota
- Throw away all rubbish and unrelated Production (TPS). It aims to optimize the flow
materials or speed of production goods and services by
removing the traditional “8 deadly wastes”
Seiton - Orderliness
- Set everthing in its proper place for quick - Lean implementation (or transformation, as it
retrieval and storage is commonly called) leverages tools for
assessing process flow and delay at every step
Seiso - Cleanliness in a process. The focus is on separating value-
- Clean the workplace; everyone should be a added from non-value-added activities
janitor eliminating the root causes and cost of non-
valued-activities. Lean methods are used to
Seiketsu - Standardize quantify and eliminate the cost of complexity.
- Standardize the way of maintaining cleanliness

Shitsuke - Discipline Process Mapping & Notation:

- Practice “Five S” daily, make it a way of life; Basic Shapes - Flow
this also means commitment
Flow
- Represents; sequence flow. Connects the tasks,
shows/ indicates the flow direction
KAIZEN:
- It is a Japanese management concept for Examples:
incremental (gradual, continuous) change • Check for duplicate invoices is followed by
(improvement) generate accounts payable entry
- It is a way of life - a philosophy, assuming that
every aspect of our life deserves to be Group of Tasks
constantly improved - Represents; a group of task. It is literally a
- Kai means Change and Zen means good visual indicator that the included tasks are
within a logical group
Key elements of Kaizen:
• Quality Examples - Pay Supplier group can include:
• Effort • Generate balance sheet entries (credit cash,
• Involvement of employees debit accounts payable)
• Willingness to change • Issue check-payment request
• Communication • Pay supplier
• Get official receipt