CASE STUDY Meralco Outsourcing Strategy

In Meralco, outsourcing shall be undertaken to help achieve the Companys business goals and targets through the following means: 1. providing organization flexibility and lean manpower focused on the core business activities of the company; 2. achieving operational efficiency and better quality; and 3. managing the companys labor cost. The following are the five (5) phases of outsourcing: 1. Outsourcing Planning In this phase, the identification of jobs to be outsourced is done through the assessment of their criticality to the Companys business. Criticality is assessed based on the information involved in carrying out such job, the use of licensed software system, and the degree of changes in current operations once outsourcing is pushed through. Cost-benefit analysis is conducted to ensure that savings will be generated out of outsourcing. Further, the impact/implications of outsourcing to affected organization and manpower are all identified/determined in this phase. 2. Contract Planning Service Level Agreement (SLA) development is done in this phase. SLAs are negotiated contracts between the company and the service provider. This contract contains the scope of work outsourced, the responsibilities and accountabilities of both the client and the service provider, performance metrics and the contract price. A vendor pool is created to allow line organizations to choose which contractor is most fitting and capable of providing the required service at desired quality. 3. Acquisition The contract is awarded to the most technically competent service provider who offered the most reasonable contract price. SLAs are stipulated in the outsourcing contract. The Purchasing Department, signing on behalf of the company in the outsourcing contract, will act as conduit between the service provider and the clients line organization. 4. Contract Administration

The line organizations monitor the daily performance of the service provider vis--vis what is stated in the SLA. However, all concerns such as non-compliance to standard operations/process, misconduct, etc., will have to be coursed through the Purchasing Department and not directly to the contractor employees. Recommendations for contract renewal or termination all come from the line organizations. 5. Outsourcing Audit The efficiency and effectiveness of outsourcing is regularly monitored to ensure success of the project. HR, for its part, sees to it that the service providers are evaluated based on standards to guarantee quality of output. In addition, it also monitors timely payment of line organizations to the contractors to ensure financial viability of the latter. A job can be a candidate for outsourcing if it is deemed non-critical. However, if the cost-benefit analysis would result in no savings generated out of outsourcing, then the performance of the job would be retained in-house. As the Company enters into a deregulated business environment, it is more drawn to focus on investing on positions which directly impact its core business. In this regard, outsourcing has become a major thrust in achieving operational and cost efficiencies. Currently, all organizations are enjoined to develop their outsourcing initiatives. Organizations review their operations and assess the criticality of their processes for possible outsourcing. The following are outsourcing milestones in Meralco: Year 1992 1995 1997 2001 2008 Outsourcing Activity Meter reading contracting of residential meters Contracting of shuttle bus services Delivery of electric bills and disconnection notices by Messengerial contractor InformationTechnology Tellering (acceptance of payments) at Branches

CitiBANK Experience
Like any other companies, it was imperative for citi to look for radical changes in its business processes; moreso as it was heavily affected by the current global financial crisis. Even before the current crisis, the bank moved into outsourcing several functions in the apparent need to strengthen its competitive advantage. Some functions that were outsourced where the call based citiphone service, internal messengerial service, IT functions, statement rendition units, and its credit acquisition units. The immediate impact of such move was the perceived deterioration of service in the citiphone function. Before it was outsourced, according to reliable reports, citiphone was known to be the heart and soul of citi. Most of the officers who rose from the ranks were citiphone graduates. It was a real time one stop shop for anything that is citibank at that time. Once outsourced, quality dropped considerably. Complaints were mostly due to substandard customer care as VIP clients complain about the grammar inadequacy of call agents and for failure to provide accurate and reliable information such as updating client accounts. This has impacted on the corporate image of the company. Complaints and dissatisfaction over the outsourcing initiative likewise affected the morale of the employees prompting the Citibank Philippines Employees Union to file several cases with the Office of the Secretary of Labor questioning the other outsourcing initiatives of the company. Since the cases are pending, it would be prudent not to comment on the issue at this time. To take advantage of the boom in the BPO industry, citi organized its own BPO venture. Since it is organized in a regional set-up, various countries are competing against each other to acquire several processes that would be regionalized in country. The Philippine branch has its CBS (Citibank Business Solution) Asia where it offers expense/payment processing to other regions like North America, EMEA, and Australia. Singapore offers IT services. Shanghai offers bank reconciliation. The reason for these initiatives is to be more competitive by focusing in its core business (banking and credit cards) while having a peripheral vision on areas that can add to its competitive advantage. Being a dynamic institution, citi continues to look for business opportunities that may help the corporate giant weather the current economic uncertainty.

CONTINGENT STAFFING IN AMBER GROUP OF RESTAURANTS

Amber Group Of Restaurants is a fast growing family corporation that is synonymous in the Makati Business District for its pancit, barbecue and pichi-pichi. From a single store in 1988, Amber has now 2 other branches in Muntinlupa and

Mandaluyong, with a third branch opening in Quezon City sometime in the last quarter of the current year. Demand has been growing for the past 5 years and from a small eatery, Amber has now expanded to offer delivery and catering services. Amber is now a full blown SME. Like any other restaurants, Amber has a peak period from September to December. Demand usually increases three fold as the Christmas season nears. To augment the existing workforce, contingent or seasonal workers are employed from September to early January. Amber has been sourcing the seasonal workers from the unemployed sector. The company does not use any agency to source their manpower needs. They have been engaged in the direct hire practice for the past 5 years. The owners want a personal hand at recruitment and views this as a desirable social dimension, that of providing employment opportunities to the needy. Their business orientation is anchored on helping others alleviate poverty by proving livelihood. A number of those initially hired as seasonal employees were eventually given regular status as the business grew. This practice has motivated their employees to be loyal to the company and one proof cited was the low turn-over rate in the past years. Employees feel that they are part of the companys growth and expansion.