Convergys to Expand Operations in Philippines by Nearly 50 Percent

May 20, 2008

(Cincinnati and Manila; May 20, 2008) - Convergys Corporation (NYSE: CVG), a global leader in relationship management, announced today it will expand operations in the Philippines by nearly 50 percent with the addition of five new integrated contact centers throughout the country.

The five new sites will bring the total number of Convergys contact centers in the Philippines to 14. At capacity, the new state-of-the-art facilities will employ up to an additional 7,000 talented individuals, bringing Convergys’ total employment in-country to approximately 20,000.

“As a global leader in relationship management, we are all about our clients’ needs and our clients’ success, and that means Convergys strives to serve our existing and future clients wherever that may take us in the world,” said Andrea Ayers, President of Customer Management at Convergys.

Three of the new sites will be located in Metro Manila: UP Science Park, Glorietta 5, and San Lazaro. The additional two sites will be outside Manila: Nuvali in Santa Rosa, Laguna; and Cebu i3 in Cebu City. Negotiations are already underway on these five new facilities and when they are finalized and completed, Convergys will have 9 contact centers in Metro Manila, 3 in Cebu City, 1 in Bacolod City, and adding to the geographic diversity of operations, 1 in Laguna.

“This exceptional growth demonstrates Convergys’ commitment to providing a superior service experience during every customer contact,” stated Marife Zamora, vice president and country manager for Convergys in the Philippines. “Our continued growth is based on demand from our clients, and our clients are telling us that the service experience provided by the dedicated and talented employees in the Philippines is excellent.”

The new contact centers will provide both general support and advanced technical help desk services to a variety of Convergys clients via traditional voice calling, e-mail, and Web chat as well as “back office” application and document processing.

All Convergys facilities are closely integrated into Convergys’ “Global Assurance Network.” This gives Convergys control of its end-to-end operations and processes, and assures 100 percent redundancy and flexibility for our clients.

Outsourcing Agreements: It’s the Outcomes, Stupid

Posted by Ann All on May 21, 2008 at 1:57 pm

As I wrote way back in February of last year, service-level agreements can end up being more trouble than they are worth in outsourcing agreements.

As I pointed out, companies often rely too heavily on SLAs and use them as a substitute for other management techniques, such as communicating early and often with outsourcing suppliers. SLAs offer plenty of potential for unintended consequences. For instance, customer service representatives working under an SLA that imposes strict time restrictions on length of calls could end up being too abrupt with customers. And according to a KPMG consultant, too many SLAs drive up outsourcing complexity and costs.

Pharmaceutical company AstraZeneca has sliced the number of SLAs it has with supplier IBM by providing Big Blue with the detailed objectives it wants to attain — but leaving the specific details to IBM. By monitoring outcomes rather than processes, AstraZeneca has shrunk its SLAs from “thousands to hundreds,” says its CIO.

Among the services IBM provides for AstraZeneca, reports silicon.com, are server and storage hosting, service desks, and PC management, plus network, communications and computer operations support.

AstraZeneca might tell IBM it needs storage delivered in a certain area of the network and then IBM chooses how to deliver it, clarifies the CIO. This approach not only “delivers value for money,” says the CIO, it allows AstraZeneca to focus on its core business of bringing pharmaceuticals to market.

Offloading more management responsibilities to suppliers is becoming a key trend, especially in deals involving multiple suppliers. Shell’s recent contract with EDS, in which EDS not only provides computing services but manages two other suppliers, AT&T and T-Systems, could forge new ground in this area, say some experts.

Introduction

EquaTerra is pleased to release the fi ndings of the 1Q08 BPO/ITO EquaTerra advisor and service provider Pulse surveys. Through these surveys, EquaTerra has developed a highly informative gauge that provides quarterly insights nto trends and projections on the BPO/ITO market gleaned from its own fi eld advisors, as well as leading global BPO/ ITO service providers. EquaTerra’s advisors are the leading experts on business process and information technology outsourcing and are intimately involved on a daily basis with buyer organizations actively exploring or undertaking major outsourcing efforts.

Since their inception in 2004, the EquaTerra BPO/ITO Pulse surveys have yielded insightful market analysis including longitudinal comparisons derived from recurring topical themes. The Pulse surveys capture changes in demand, scope, capacity and related key market indicators. They highlight changes, and the direction of change, in the outsourcing industry as a whole. The surveys focus on where the market is going and how that future direction is changing – or not – compared to prior quarters and years. EquaTerra also incorporates into this research deliverable additional key quantitative market data and leading indicators from sources outside the Pulse surveys. These sources include, but are not limited to, EquaTerra’s own pipeline, interviews with leading BPO and ITO service providers, and fi ndings from other EquaTerra market research.

This edition of the advisor and service provider Pulse surveys reflect BPO and ITO market activity during 1Q08 (January through March 2008) and projections for the balance of 2008. Topics evaluated include the following:

• Demand and buying patterns, including the impact of the economic downturn on outsourcing demand
• Deal scope, pricing, contract value and profi tability
• Sales cycles and ramp-up time
• Service provider pursuit and delivery capacity

Additional market research incorporated in this edition of the Pulse survey report includes:

• Outsourcing’s role in making human resources more strategic
• The characteristics and critical success factors of next generation outsourcing
• Trends in mid-market ITO

These surveys focus on BPO, defi ned as the outsourcing of multiple, back-offi ce or general and administrative business
processes, vertical industry services, and customer care work, to a third-party service provider and/or ITO services in either a
standalone arrangement or integrated with BPO. The primary functional areas covered under the surveys are as follows:

• Customer care/call center
• Finance & accounting
• Human resources
• Information technology
• Knowledge process outsourcing
• Procurement
• Vertical industry business services

The following leading global BPO/ITO service providers were polled for this quarter’s sell-side survey:

• ADP
• Capgemini
• Ceridian
• Convergys
• CSC
• ExcellerateHRO
• Fidelity
• Hewlett Packard
• ICG Commerce
• Infosys
• Outsource Partners
• Perot Systems
• TCS
• T-Systems
• Wipro
• WNS

Read more: http://www.equaterra.com/newsletters/Pulse_Results_1Q08.pdf

The Impact of an Economic Slowdown on Outsourcing

Jagdish Dalal, Managing Director, Thought Leadership, IAOP

Despite Washington’s denial of the “R” word, clearly the economy is in a negative growth situation. There are many factors driving it; some are long-term — the U.S. national debt and oil prices — while some are short-term, like the sub-prime loan situation. Although this economic crisis is largely created by business conditions in the U.S., the world economy is not quite strong enough to offset its impact on the global economy. Economists everywhere are pontificating about it, so let us look at the impact of a slowing economy on the subject of our interest — outsourcing.

Buyer’s point of view (A Mixed Environment for Outsourcing):
Businesses are beginning to see the impact of lower economic growth on their financial results, and we are seeing more stories about cutbacks on spending to retrenchment of expansion plans. Increased profit pressure on businesses will drive them to evaluate their cost basis and look for opportunities to reduce expenditures. For example, information technology (IT) spending is expected to be lower in 2008 than the previous year (see inset). We believe that similarly, other functions — human resources, logistics, real estate spending — will see a slowdown in budget growth for the coming year.

Text Box: Ø “In the U.S., budgets are still growing, at 2.3 percent, but that represents a drop from 3.1 percent in the last study.” Gartner Study, April 2008 Ø IDC is predicting that global IT spend will be lower by 0.5-1.0%. December 2007What does this mean for outsourcing? We believe that the companies needing to lower costs will explore outsourcing as a means of achieving that goal. Additionally, the uncertainty of economic conditions will encourage them to lower their “fixed” costs and seek a “variable” cost basis provided by outsourcing. Uncertain market conditions will lead companies to examine capital spending and look toward outsourcing to lower investment requirements. Thus, we predict a mixed business environment where demand is smaller due to decreased spending, but increased transaction activities increase due to businesses’ need to outsource more. Major U.S. based outsourcing providers have predicted in their first quarter financial analyses stable growth for their businesses in 2008. However, experts believe that the uncertain business climate will slow corporate decision making. (See the interview with Atul Vashistha, chairman and founder of neoIT and a founding member of IAOP after this article).

Provider’s point of view (A challenging environment for business):

It is unclear how much impact the economic slowdown will have on outsourcing providers. Lower demand due to reduced budgets may be offset by an increased demand for the benefits of outsourcing. However, it is clear that providers will face a tougher negotiating environment where businesses will try to maximize their benefits from outsourced work. This, coupled with their own belt tightening will reduce margins from the outsourcing work and force providers to look for alternatives for increasing their profits (See article by D. Davison and E. Kublanov of neoIT posted on Firmbuilder.com: Navigating Economic Uncertainty: Leveraging the Services Globalization Advantage).

Additionally, globalization puts another key economic factor into play for outsourcing providers — currency values. The U.S. dollar is near an all-time low, and the Indian and Chinese currencies are at an all-time high. This gap in currency translation will induce pressure on the labor savings projected by providers. To further complicate the profitability picture for providers, wages are not expected to drop significantly, and there will be continued pressure for wage increases. Rising prices of commodities and fuel will increase raw material costs (for example, rising utilities and transportation costs, short-term credit interest rates and postage rates) and impact cost and operations for providers, as well.

Summary:

So, what does this all mean for outsourcing? Turbulent times require companies to manage operations with great discipline, and we can expect companies to plan, negotiate, implement and manage outsourcing agreements more efficiently and effectively. As these stakes get greater, companies increasingly expect outsourcing to be handled as a new management science based on standards, proven methodologies, and industry best practices. This is giving rise to companies seeking to employ Certified Outsourcing Professionals (COPs) who understand and apply best practices in the marketplace. IAOP already has seen a dramatic increase in demand from companies (and individuals) looking to attend classes to become a certified professional.

One way that providers also can demonstrate sustained value for their clients is through greater attention to outsourcing’s relationship to social issues.In today’s environment, social responsibility is not only good policy, it’s good business. It’sone categoryof risk that companies can directly influence through their own actions. This “socially responsible outsourcing” is a new phenomenon, and IAOP will explore it further throughout the coming year and even dedicate a track to it during the 2009 Outsourcing World Summit.

We would love to hear from you: jag.dalal@outsourcingprofessional.org.

Web 2.0: Facebook Not So Useful as a Business Tool

Posted by Ann All on May 8, 2008 at 9:38 am

Back in October, I wrote about Facebook’s efforts to make itself more attractive to business users by, among other things, allowing users to segregate their business contacts from their strictly social ones.

This is handy, I agree, but it doesn’t exactly make Facebook a business tool.

Any of you Facebook lovers out there need proof? According to a new study from Flowing Data, just a tiny percentage of Facebook’s 23,160 applications are business-oriented. News.com blogger Caroline McCarthy notes that nearly half of them, 9,601, are “just for fun” while the “gaming” and “sports” categories include more than 2,000 apps each. Thus, she sums up, most of Facebook’s applications are “goofy time-wasters.”

As someone who regularly gets Super-Poked, I can’t say that I am surprised. It’s not uncommon for me to feel like hurling something at colleagues, so I guess it’s useful that Facebook offers the option of tossing sheep at them — but I rarely give in to the temptation.

Of course, there are companies out there that have figured out innovative ways to use Facebook. Serena Software, which uses a private Facebook group and some specialized apps in place of an intranet for its 800 employees, is an often-cited example. Yet many companies have barred their employees from using Facebook at the office, after finding employees devote more time to activities such as tossing sheep rather than work.

I can use Facebook at work, but I don’t often care to. Evidently I am not the only one who feels this way. IT Business Edge blogger Loraine Lawson writes:

I do not get Facebook as a business tool. Oh sure, Facebook is great for keeping up with my friends’ reading habits or musical tastes without actually talking to them. But even when I’ve tried to use Facebook for more professional pursuits, it fell flat. In particular, I don’t get “the Wall.” How are you supposed to use it? It’s not really good at anything: Blogs are better for posting personal updates; e-mail, IM and discussion groups are all better for conversation and comments. To me, the Wall is like a pencil without a lead - pointless.