The Sauce BPO News

BPO Labour Markets Start to Restructure and Fragment

As more first world medium sized companies (SME) are turning to outsourcing by using remote freelance agents and telemarketers working from home it's causing BPO labour markets to become tighter and more complicated. BPO owners and managers need to r

According to analyst firm Ovum, the variety of industries that are availing themselves of the home-based outsource agent business model is expanding, while the agents are starting to diversify beyond strict customer care functions to "managing more complex enquiries across multiple channels."

"The long-time benefits associated with third- party home agents, such as competitive pricing and labour quality, have been determinants in helping to foster this significant growth," says Peter Ryan, principal analyst in Ovum's IT Services practice and author of the report.

Within the major BPO delivery centres themselves, the number one business issue is staff turnover and retention. No matter which way you dress it up; working in a contact centre environment is not for everyone. What some owners/managers of offshore Outsourcing / BPO contact centres fail to realise is that their most important assets are their people.

High staff turnover due to poor working environments

Contrary to popular belief, working in a contact centre is not all that it is cracked up to be, especially if you are poorly paid, working the grave yard shift and the working environment is drab and lifeless. For some, working in an Outsourcing/BPO environment is a means to an end. Individual Philippine Outsourcing/BPO Service Providers have staff turnover rates running as high as 40% to 60%.

When one considers the real cost in terms of replacement, recruitment, training, management time and lost productivity until new agents get up to speed, it is a massive cost to bear for any business and it's driving operating costs up quickly.

So why don't agents stay? Well, why should they? In a lot of BPO environments they are poorly treated and merely considered as units of production, to be moved on when it all becomes too hard. For the agents it's just a tedious grind.

Many Outsourcing/BPO service providers (and some internal captive centres) see the symptoms of operational problems and seem to think that a productivity/adherence crackdown of some sort is the answer. That worked OK when there appeared to be an endless supply of available labour, who would put up with such behaviour, however the wheel has turned.

Furthermore on the demand side of the labour market we are now seeing that there is only a 3% take up rate for all the people that are interviewed for positions and it's only going to get worse. Currently there are over 3,000 new people being employed every week in the

BPO market in The Philippines, which means that over 100,000 people are being actually interviewed or screened in one form or another. BPO management are wringing their hands about ways to hang on to their people. It's a very expensive exercise to be constantly back filling your front line teams. But that's a story for another time.

As if outsourcing industry management needs to be reminded that their contact centre agents are as precious as they are intelligent! These agents are being asked to perform one of the most stressful jobs available and they are required to be physically tethered to their workspace (even by wireless headset) and then, be subjected to having every movement they make constantly measured and monitored.

Agents with four or five years experience who are sick of working night shift and battling a 2- 4 hours daily commute and being over supervised are leaving the industry in droves and finding better opportunities, more money and no commute time by becoming virtual agents and working from home. It's a very attractive proposition!

They have saved enough to own their own laptop or PC and they are open for business. So these people 'graduate' from the corporate structure and work out that being their own boss has its benefits.

They are better off without you as an employer

This fast emerging Global Virtual Labour Market (GVLM) is metamorphosing around a group of web sites that collectively broker freelance contractors from around the world. It's been made possible by pitching for work off sites like FreeLancer, ODesk and They pick up a small contract and do a good job and find themselves being asked by their new remote employer to commit to a fixed number of hours per month.

Two or three clients later and they are fully occupied; making more money and having more time to do all of those other work life balance things that we talk about in western nations. They are much happier and now do not need to throw themselves on the mercy of the big BPO players.

Virtual Assistants can do pretty much anything under the sun. They already have extensive BPO training and understand other cultures, the requirements for technical writing, customer service standards and corporate etiquette. Examples might include a website for a niche market, a mobile app for a legacy product line, a blogging effort for the company website, an issue-specific customer support service for a low-volume product, or a public service website that the company would like to sponsor. Unusual combinations and occasional requirements are especially common in lean start-ups and non-profits. These projects may be important and valuable, but they are notoriously hard to staff and manage.

Millions of providers around the globe offer every possible skill and level of expertise and Freelancers (aka providers) work as individuals. As it's a free market freelancers may charge significantly lower rates than more corporate counterparts, yet still be paid more than they earned as employees as they are not carrying any corporate overheads.

Freelancers expect to work 'as needed ' as being assigned 10 hours of work per month is completely normal. The beauty of these sites is that they make it easy for individuals to do business as they also provide free tools for recruiting, monitoring, rating and payment.
It had to happen as the next stage in the evolution of VA labour market development is where the individuals organise themselves into small collegiate type cooperative clusters and pool their skills and pitch for bigger projects. We are starting to see the first green shoots of Virtual Assistant clusters springing up in the outer metropolitan areas of the major Philippine cities. We are also starting to see more experienced VAs becoming a form of front line agency and then subcontracting work to less experienced newbies who they train on a local level. After all these people all have a tertiary education, many with a business qualification, in other words its what they are trained to do.

Thus we are seeing these new microstructures starting to eat into the natural domain of the lower end of the corporate BPO space. Its partly the fault of the BPO corporates themselves as apart from not treating their staff properly they have failed miserably to promote themselves as value adding providers and left the door open for this part of the market to prosper.

Tags: human resources, Productivity & Environment, social responsibility, strategies, teleworking

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Martin Conboy
The Sauce BPO News

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