Business process outsourcing (BPO) has been one of the most dynamic industries in the Philippines over the past decade. It is now the country’s largest source of private employment, as well as the second largest source of foreign exchange remittances.
Between 2004 and 2014, the Philippines grew its global market share in BPO from 4 percent to 12.3 percent, with the Oxford business group forecasting a 19 percent share by 2020. And with the government’s current push for digital adoption, the Philippines is expected to claim an even stronger position as a leading offshoring destination in the short term.
The cost savings of offshoring certain business processes are well established. However, these benefits have until now mainly been realized only by large enterprises, which have the knowledge and capacity for successful internationalization that many small-medium enterprises (SMEs) lack.
Specifically, SMEs don’t have the economies of scale, nor the well-established processes, required for traditional offshoring arrangements. SMEs also often lack the resources to establish subsidiaries in host countries and may not be willing to shell out the enormous sunk costs for this.
This represents a striking gap – as well as an opportunity – that the government now hopes smaller BPO centers in the Philippines will close. In January 2017, the state-run Philippine Institute for Development Studies (PIDS) published a policy note on the promise presented by micro-offshoring, encouraging local BPO centers to sell their services to Australian SMEs, which make up 99 percent of total business in that country.
A BPO for SMEs
This was the opportunity seen by the relatively young Hammerjack when it decided to set up shop in the Philippines in 2015. But unlike other micro-offshoring providers, which offer seat-leasing arrangements where customers still have to co-manage the outsourced desks and workers, Hammerjack is the first to offer fully managed services to Australian SMEs.
“We offer small and medium business in Australia two things: digital transformation and enterprise-grade managed services,” says Andrew Mault, Hammerjack’s country manager and a Philippine BPO veteran who oversees operations from the company’s Makati offices. “We help these businesses have better products, services, and processes through digital tools from Microsoft. And we provide a fully managed service at lower cost, allowing them to focus on their core business.”
Hammerjack’s business is based on the idea that even the smallest companies, regardless of the industry they’re in, can benefit greatly from enterprise-grade tools and processes. This covers digital transformation, which Hammerjack sees as the leveraging of new digital technology to become more agile, secure, responsive, and efficient in day-to-day operations.
It likewise covers the company’s outsourced services, which are available to everyone from small bookkeeping companies and car garages, to mid-size accounting firms, larger wholesalers, and chain gyms.
Nick Hastings, who oversees business development back home in Australia explains “You could save up to 70 percent on a seat-leasing arrangement, however to see holistic benefit you would realistically need to pay for a large volume of seats and manage the resources yourself without offshoring experience from 6000km’s away, In most cases it’s a false economy with a high turnover rate.
Or, you could save 50 percent, but then have the resource fully managed by us, with the experience, letting you focus on the things that drive your business,”
The greater promises of digital for BPOs
According to Hammerjack, SMEs are often much tougher customers than large enterprises – a thought echoed by PIDS’s own study. Because smaller businesses lack the resources and capacities of large companies, they are often much more averse to perceived risks in both digital transformation and offshoring, even if these offer significant cost savings over time.
This makes winning the trust of prospects much more difficult in the Australian SME space. To get over this hump, Philippine BPOs must be able to present themselves as capable and trustworthy, while responding to escalations and inquiries speedily.
“The key to a fully managed service is to use effective and efficient collaboration tools. Hammerjack uses the same digital solutions internally that we provide direct to Australian SMEs, enabling a quality outsourced service model for our clients at a lower cost.”
This is something that Hammerjack has improved on with the help of Microsoft Teams, the new chat-based workplace that comes with the Office 365 suite. Since its beta release, Teams – with its enterprise-level security, threaded chats, real-time file-editing, and full integration with other Office 365 applications – has become a central part of the company’s day-to-day collaborative workflow.
Roy Figueroa, site director of the Makati office, says: “Teams has made internal collaboration a lot easier. It allows us to quickly call up a team for, say, a new proposal, update shared files in real time, and to see that prompt action is being taken on our to-do’s. It’s also allowed us to do away with about 50 percent of internal e-mail. People tend to respond differently to e-mail, and now that it’s all about Teams internally, our work is at once more efficient, seamless, convenient, and better organized.”
Mitch Yano, a process transitions lead, agrees: “The way it integrates with other Microsoft tools makes Teams almost like a one-stop shop. You can log minutes of meetings; post comments; set to-do lists and checklists according to our internal teams, and even ‘like’ messages and use emojis. All this makes Teams a very good project management application, even if it’s designed as a collaboration tool first of all.”
This ease of collaboration may be the key for other outsourced service providers to successfully sell to Australian SMEs, and deliver promised outcomes. Making sure these results – whether sales outcomes or transactional outcomes – are delivered consistently to a high quality and to a rational, clearly established process is something that Hammerjack has been very successful at, with the aid of tools like Teams, Office 365, and Dynamics 365.
The rolling out of these Microsoft tools were an integral part of Hammerjack’s rapid growth in the past year. “At first, Hammerjack was focusing on a smaller number of clients. They were adopting the clients’ processes, bringing them offshore, but Hammerjack didn’t have the technology background and the BPO background back then to make managed services really attractive for Australian SMEs,” Mault points out.
“After we came on board in July 2016, we accelerated what Hammerjack could do for SMEs across a wider range of services, and at more competitive transactional pricing. And that was done by embedding key processes in an approach to driving productivity and quality, and through adopting Microsoft technology,” he adds.
“When the company started, they had an array of different applications, and it was really messy. The applications weren’t talking to one another, and they had an application for this and an application for that. Once, we switched everything over to Microsoft, we could collaborate more easily to put together proposals, while making our service delivery more efficient as well.”
Paying for outcomes as the great equalizer
The PIDS study also points out that cost remains a big hurdle for many Australian SMEs, a fair conclusion considering that these businesses don’t have the economies of scale needed for traditional offshoring to work. Hammerjack solves this problem by offering a transactional model for offshore services, in contrast to more common seat-leasing and its co-managed resources.
According to Mault, the efficiencies borne by digital transformation are a prerequisite for this transactional offering: “The Microsoft stack helps us maintain a cross-functional team of skilled people, letting us queue work and offer transactional pricing to SMEs instead of a fully dedicated resource, which can be a bit concerning for small businesses. If you give them an option to pay just for a transaction or an outcome, like better customer engagement or optimizing operations in one instance, then it becomes something smaller businesses are more willing to try. It’s low-cost and low-risk, and it lets them see if IT-enabled offshoring is something they’ll want to commit to more in the long-term.”
Hastings also points out that start-ups need to be flexible, which makes a cost-effective transactional model more appealing: “It’s natural with the rate of change we’re seeing that if you’re not responsive, small businesses get nervous, this takes focus and capacity off their core business, so it’s very important to provide a proactive flow of information and hit the right answer quickly, that’s something that Microsoft is allowing us to do.
Its also important to understand SMEs are constantly learning, so there’s a need to take them through a journey towards successfully leveraging digital whether that be rolling out Dynamics 365 (CRM) into their business or taking some of their internal processes to the Philippines.”
“If you’re talking about digital transformation, and not pursuing that transformation yourself, then you’re probably not the right partner for start-ups. Dealing with new technology has given us credibility in the eyes of many small businesses,” he adds.
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