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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 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
Advantages and Disadvantages of Outsourcing Disadvantages
*Employer Perspective
*Employer Perspective Cost can be higher because provider may add
premium for risk in case processes are not well
- The Service Provider (BPO Company) defined
determines most efficient number of resources, - Example Problem: Vaguely defined task as
process, and supervision, to achieve output “provide clinic service”
- Service Provider may have more expertise/ - Example Solution: Redefine tasks 2
capability than the buyer full-time nurses and 1 full-time doctor, 8
- Buyer can leveraage economies of scale of the am to 5 pm, providing emergency,
Service Provider medicine (to what extent), and, emergency
care equipment (or not)
Service Provider may have more expertise/
capability than the buyer Buyer does not have full control of resources
doing work
Example: - Example: Can your agency provided office
Technical Support - Accounting - Animation assistant also do this extra errand bring pet
to the vet clinic, bring clothes to the dry-
Buyer can leverage economies of scale of the cleaner, pick-up kids from school?
Service Provider - Solution: Do not use outsourced office
assistant like your personal assistant.
Example :
Techincal Infrastructure - Human Resource -
Techincal Expertise

*Employee Perspective
- “Work Abroad, Live Here”
- Be near your friends and family
- Work in the country and support Philippine
- 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.
- 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
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 Key Technologies that Support Outsourcing
- Vendor in a country “close” (geographic and/
or cultural proximity) to client’s home country Video Conferencing:
- HP - Halo (8.5 min. video)
Advantages: - Cisco - Telepresence
- Fee-for-service variability rather than fixed - Sun - MPK20: Project Wonderland
compsensation costs
- Significant labor cost arbitrage Web-Based Conferencing and workflow tools:
- WebEX
Disadvantages: - MS Windows Meeting Space
- Additional coordination costs, sourcing - MS Sharepoint
management communications - Google Applications
- Transfer pricing/ tax margin requirements
Fundamentals of Outsourcing (Cycle)
Example: Hong Kong retail firm offshoring
garments manufacturing in Manila Business Process Outsourcing Engagements
Managing Outsourcing Transitions
Offshoring BPO Operations Management
- Vendor and client in different countries Issue Management and Critical Situation Control

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

- Data privacy/confidentiality issues
- Lack of right business acumen/right
market knowledge in offshore location
- Cultural differences leading to delays and
- Risk of high attrition in service provider,
weak staff selection/training
The BPO Contract:
Client-Service Provider Relationship:
Master Services Agreement
Attributes Definition: Covering agreement that summarize
terms applicable to every job-order with the
Client Company is concerned with: service provider
- Quality transition of processes
- Efficient operation of business functions that Main Elements:
were once handled in-house A. Service to be provided
B. Performance managament, issues, change
Service provider company is concerned with: management
- Scope of Service C. Country Laws
- Performance measures
- Benchmarks to ensure objective standards in Groups (A) and (B) are the “operational”
assessing work quality elements, used day to day. Group (C) generally
“just-in-case” terms
Therefore, as a result of these relationship
attributes, the BPO Contract is a unique, “tailor- Scope of Work
fit” agreement captured in a document that Definition: Describes specific work to be
resembles a performance contract. delivered, by when, at what cost

The BPO Contract Considerations:

- A business proces outsourcing (BPO) contract - Can be similar to a “job order”
is a formal agreement between a client and a - Is generally an attachment/addendum to a
service provider to take over a “pre-agreed Master Agreement, points to covering terms
portion” of the client’s business operations - May state that in case of terms inconsistency,
- This “pre-agreed portion” is documented in the SOW or Master Agreement supersedes
the contract as the scope of work (SOW)
- The BPO contract, with all its attachments, Core Elements
assumptions, and documented agreements, is - Service to be rendered or provided as
referred to as the master services documented in the Scope of Work (SOW)
management (MSA) - 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
- 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

- 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,
BPO REVIEWER (Module 4) Transition Strategies & Knowledge Transfer
Managing Outsourcing Transition
Generally, there are two common strategies
Definition of TRANSITION MANAGEMENT followed in migrating a function, these are:
- Transition Management is the set of activities
that transpire after a BPO contract is signed • Lift and Shift
that implements or executes the detailed • Re-engineer and Migrate
movement or transfer of processes from the
client to the service provider Lift and Shift

The Manager Definition

- A Transition Manager is responsible for - This is the most common methodology used.
migrating the function or the process from the When the process is mature, the ‘Lift and
client location or organization to the service Shift’ approach is used for migrating.
provider or outsourcing organization
- The Transition Manager needs to be an Phases
effective communicator, as the role requires 1. Move the current process to the service
extensive interaction with the clients provider without changes/ improvements
2. Stabilize
Because the nature of the role, a Transition 3. Re-engineer the process to achieve efficiency
Manger needs to have a variety of skills and gain - produce same output, less FTEs
competencies: - Modify the process
- Needs to have strong project management - Add end-user type or strategic automation
skills, as the migration process are complex - Combine role with others
projects that require expert management skills; - Move process into a production line
- Needs to be comfortable in working in a cross- - Negotiate elimination of unnecessary
cultural environment, as most often, the client outputs
teams are based overseas;
- Needs to have thorough understanding of the; Items to Consider
existing business and legal processes and, 1. Process change that will not affect process
current as well as emergin technologies as control points or output can be done by
these play a critical role in the off-shoring of a service provider independently
business function - 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
Transition Success & Effectiveness
- Advantages of an “as is” basis process Transition Pitfalls
- Training the new team is easier, as the Most of the issues with sub-par or failed
process is well understood and outsourcing endeavors can be attributed to a few
documented pitfalls
- Existing employees at the donor location 1. Inadequate investment and Sponsorship
are available to support the process in case 2. Unclear scope of work
of disruptions or instability 3. Unclear roles and responsibilities
- A fresh set eyes of (the new team) look at 4. Not retaining the experts
the process from a fresh perspective, often
resulting in process improvements and These can be avoided if the Transition Manager
enhanced controls constantly re-focuses attention of all involved
towards these
Re-engineer and Migrate
Transition Critical Success Factors
- Fundamental rethinking and radically The success or failure of a transition project is
redesigning of the business process so as fundamentally measured in two aspects:
achieve dramatic improvements in critical
measures of performance such as cost, service, 1. Technology Readiness
and, speed. - state of readiness of the enabling hardware
and software to support the on-going
Items to Consider operations
- Useful when the process is either broken and 2. Manpower Readiness
requires fixing, or is due to undergo significant - state of the readiness of the operating staff;
change in the near future (systems change or hired, trained, and, skilled for the service
process change) processes
- In such cases, it may be important to utilize
the expertise of the existing team (which is Transition Effectiveness
built over several years) to drive the change,
before it is handed over to the new team 1. Financial Benefits
- Company that outsource industry common It is important to quantify the real cost of the
processes to a market-leading service provider function before off-shoring (baseline costs), and
will generally follow service provider also to measure the cost of the off-shore team on
processes an ongoing basis.
- Company changes its processes as part of - Costs related to moving the function to the
transition service provider 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 4. Interim/ flash and final outputs are
- Primarily done by developing performance completely documented
metrics - Formats are completely defined
- Usually subject to a testing phase to - Control steps and quality assurance checklists
determine reasonability of the service are defined
measures - also known as the “baselining” - Delivery time/ day-of-period are defined: these
period are reviewed to ensure they are achievable/
consistent with input timelines
Document Readiness - Service Provider and transition project
manager should validate that timelines are
• Inputs current and not “aspirational”; tendency to put
• Processes are documented to standards in desired/ unerealistic deadlines when
• Replication Ready outsourcing
• Output
• Communication 5. Communication channels for output to be
• Supervision explicitly defined
- Clarity here minimizes misunderstanding
1. Inputs are documented during early production period
- Source systems and dependencies - Especially if the output is an input to another
- Timing of delivery quality assumptions, and process
work-around in case of failure in delivery of
some inputs 6. Onshore supervision points and what will be
- Historical timeliness and accuracy reviewed/ checklist should be defined
statistics. Helps size service provider - Some country regulations (US) require clear
resources need, helps identify likelihood of trail of supervisory control by an Onshore
work-compression (rushing 3 hours work person
in 1 hour) or overtime (working late to - Responsibility for output (e.g, financial
keep to output delivery targets) statements) rests with an accountable Onshore
- Format of inputs (structured or not) officer
- For shared services centers particularly, clear
2. Processes are documented to industry documentation on areas of supervisory review
standard format and in complete detail paves the way for transition into “center of
- Hand-offs to other parties, internal and excellence” mode where supervisory control
external, documented, including timing and rests offshore
- 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
BPO REVIEWER (Module 5) BPO: Operations Management Overview
- The main strategy that the BPO sector applies
BPO Operations Management is what is called; “End-to-End Service Level
Topical Overview - The theoretical and practical aspects of
designing and implementing End-to-End
• Operations Management Service Level Management (SLM) in any BPO
• Components of Operations Management relationship is through a formal agreement - a
• Process Mapping contract with the client
- The Service Level Agreement (SLA), is a
Course Norms & Rules formal agreement between the client and
You are responsible for your own learning: service provider for a common understanding
on aspects including service quality,
• Come on time, all the time responsibilities, performance metrics,
• Be participative - ask questions, share your penalties, and commitments.
thoughts and opinions, take notes
• Be supportive - assist your peers as long as SLM is a regular and systematic review of
they are willing to assist themselves service provider performance against the
• Do all assigned tasks to the best of your agreements.
• Be enthusiastic, energetic, and, fun BPO: Operations Management 6 Components
• Keep all distractions away in your bag -
mobile phones on silent mode, tablets, Performance Management
laptops - Is the systematic process by which an
organization involves its employees, as
Module Learning Objectives individuals and members of a group, in
improving organizational effectiveness in the
• Define what is operations management accomplishment of mission and goals
• Explain the value or importance of operations - Employee performance management includes:
management - Planning work and setting expectations,
• Enumerate and discuss the components of - Continually monitoring performance,
operations management - Developing the capacity to perform,
• Identify process mapping and notation shapes - Periodically rating performance in
• Explain the value or importance of process assummary fashion, and
mapping - Rewarding good performance
• Be able to satisfactorily map process
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 Quality Monitoring and Analyzing
- Transaction volumes/ Forecast
- Target Average Handle Time Quality Specification:
- Cost per seat/ hour/ transaction • Total Quality Management (TQM)
Reduce Waiting Time • Total Quality Circles (TCM)
- % of transactions hadled at a specific time • ISO 9001
- Abandon Rate % • Six Sigma
- Average speed of answer
Reduce Repeat Transactions Primary Elements of TQM:
- First time resolution % • Customer Focus
- Resolution Rate • Total employee involvement
• Process-centered
Limitations of Service Level Agreement (SLA) • Integrated System
- Lack of end customer focus • Strategic and Systematic approach
- Lack of emphasis on business objectives • Continuous improvement
- Over emphasis on efficiency rather than on • Fact-based decision-making
effectiveness • Communication
- Lack of sub-process metrics to ensure
consistency Total Quality Management (TQM)
- Is a management system or approach to long-
Professional Development term success through cutomer satisfaction. In a
TQM effort, all members of an organization
Approach to Personal Development: participate in improving processes, products,
• Case Study Method services, and the culture in which they work
• Consultation through the use of; strategy, data, and effective
• Coaching communications to integrate the quality
• Communitites of Practice discipline into the culture and activities of an
• Lesson Study organization
• Mentoring
• Reflective Supervision Total Quality Circles (TQC)
• Technical Assistance - Means having organized Kaizen activities,
involving everyon in a company - managers
Professional Development and workers - in a totally systemic and
- Refers to skills and knowledge attained for integrated effort toward improving
both personal development and career performance at every level
advancement - It is lead to increased customer satisfaction
throught satisfying such corporate cross-
Value functionals goals as quality, cost, scheduling,
- Lifelong learning, a sense of moral obligation, manpower development, and new product
to maintain and improve professional development
competence, enhance careeer progression,
keep abreast of new technology and practice,
or to comply with professional regulatory
ISO 9001 Productivity Monitoring and Control
- Is a very flexible quality standard that is
readily applicable to many industries, as well Employee Productivity
as to all sectors of IT-BPM industry, hence its - Is amount of outputs (usually regulated by
popularity in the Philippines even with small- requirement and quality) which can be
scale business. produced by employee per period of time,
- ISO 9001 is part of a series of International utilizing the given resources. The more stable
Standards for Quality Systems, it is primarily and elaborated the process of production (the
focused on quality systems as models for less X-factors or varying inputs it involves),
quality assurance in design/ development, the smoother level of productivity is expected
production, installation and servicing from employees operating it.

Six Sigma Guidelines for monitoring Employee

- Is a set of qualitative and quantitative Productivity
(statistical) techniques to systematically • Measuring
improve processes by eliminating defects and • Comparison
process variation. • Identification
- It is byproduct of decades of quality • Feedback
improvement methodologies such as Statistical
Process Control (SPC), Total Quality Continuous Improvement Initiatives
Management (TQM), and, Zero Defects.
5S Process
Six Sigma asserts that: - Or more simply “5S”, is a structured program
- Process variation is an obstacle to reliably to systematically achieve total organization,
delivering high quality products and services, cleanliness, and standardization in the
as defined by the customer, workplace.
- Continual focus on reducing process variation - 5S was invented in Japan, and represents five
is the foundation for business improvement (5) Japanese words: Seiri, Seiton, Seiso,
and success, Seiketsu, Shitsuke
- All business processes (manufacturing,
service, administrative, etc) can be measured, Benefits
analyzed, controlled, and improved, • Improve Safety
- Effective problem solving can only be • Decrease down time
achieved by data driven decision-making, and, • Raise employee morale
- Achieving and maintaining quality • Identify problems more quickly
improvement requires an organizational • Develop control through visibility
commitment that comes from senior
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
- Represents; sequence flow. Connects the tasks,
shows/ indicates the flow direction
- 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