Developing FAO in the Philippine Shores
It’s a fact that the Philippines overtopped India in becoming the most preferred contact center hub in the global market.
But it is also a fact that the demand for voice services in the outsourcing industry is not as high as it used to be. Foreign clients have seen the benefit of outsourcing knowledge-based business functions; thus, they encourage service providers to provide strategic solutions to other business areas as well. For example, HCL Technologies, a global BPO provider and IT outsourcer, has reduced the share of voice services in its BPO business from 60% to 40% in three years.
High-end knowledge-based services mostly belong to non-voice or Back Office Outsourcing. These services are the ones that give support to the front-line services which are the voice services. These jobs entail more complex tasks; thus, employees with a specialty on the field are needed, and not just someone who has above-average analytical skills and has a good English accent.
One of the most commonly outsourced back office services is F&A, or Finance and Accounting.
FAO (finance and accounting outsourcing) services are maturing in the accounting world and providing significant benefits of productivity (often more than 25% during the contract term) and cost reduction (as much as 40% is not uncommon), as well as improved quality, flexibility, economies of scale, standardized processing, applied technology, and general efficiency and effectiveness. Chief Financial Officers (CFOs) have long been using BPO models alongside back office services such as financial and accounting functions for more than 10 years now.
At first, CFOs were nervous about handing over such delicate and critical tasks to third-party service providers. But properly delivered BPO services are tremendous assets to CFOs attempting to better manage their operating costs while gaining productivity and quality benefits.
FAO is clearly one of the high-end Back Office Services that is still new to the Philippine BPO industry. It will also be demanding a pool of talents that specializes in the field of Finance and Banking.
Philippines should be focusing more on enhancing its BPO industry in the area of Back Office Services, specifically in FAO. Areas like mortgage processing, core banking, supply chain, and healthcare insurance are some of the common jobs under FAO.
Saurabh Gupta, vice president at Everest Group, recently stated, “BPO is fast morphing from being a horizontal service to a more industry-specific offering. Even in traditional BPO services, more and more industry-flavors are being included – be it around revenue cycle management for healthcare providers or meter-to-cash for utilities.”
The financial services industry has generally been the biggest and most innovative adopter of outsourcing solutions and methodologies. According to Gartner research director T J Singh, more and more clients in this industry are now looking to outsource more vertical-specific mid- to front-end operations that need profound domain knowledge. These comprise domains such as core banking, mortgage processing, and insurance.
The big question is whether the Philippine BPO industry, having conquered the call center market, can now move up the value chain. To keep growing rapidly and profitably, it needs to capture some of the more sophisticated back-office jobs, such as FAO and processing insurance claims. In these business functions, called knowledge-process outsourcing and legal-process outsourcing, India still rules supreme.
Philippines may not even comprise one-fourth of the total population of India, but it has succeeded in besting the population behemoth with the voice services. Now, it’s time for Philippines to rule the non-voice sector.
But it is also a fact that the demand for voice services in the outsourcing industry is not as high as it used to be. Foreign clients have seen the benefit of outsourcing knowledge-based business functions; thus, they encourage service providers to provide strategic solutions to other business areas as well. For example, HCL Technologies, a global BPO provider and IT outsourcer, has reduced the share of voice services in its BPO business from 60% to 40% in three years.
High-end knowledge-based services mostly belong to non-voice or Back Office Outsourcing. These services are the ones that give support to the front-line services which are the voice services. These jobs entail more complex tasks; thus, employees with a specialty on the field are needed, and not just someone who has above-average analytical skills and has a good English accent.
One of the most commonly outsourced back office services is F&A, or Finance and Accounting.
FAO (finance and accounting outsourcing) services are maturing in the accounting world and providing significant benefits of productivity (often more than 25% during the contract term) and cost reduction (as much as 40% is not uncommon), as well as improved quality, flexibility, economies of scale, standardized processing, applied technology, and general efficiency and effectiveness. Chief Financial Officers (CFOs) have long been using BPO models alongside back office services such as financial and accounting functions for more than 10 years now.
At first, CFOs were nervous about handing over such delicate and critical tasks to third-party service providers. But properly delivered BPO services are tremendous assets to CFOs attempting to better manage their operating costs while gaining productivity and quality benefits.
FAO is clearly one of the high-end Back Office Services that is still new to the Philippine BPO industry. It will also be demanding a pool of talents that specializes in the field of Finance and Banking.
Philippines should be focusing more on enhancing its BPO industry in the area of Back Office Services, specifically in FAO. Areas like mortgage processing, core banking, supply chain, and healthcare insurance are some of the common jobs under FAO.
Saurabh Gupta, vice president at Everest Group, recently stated, “BPO is fast morphing from being a horizontal service to a more industry-specific offering. Even in traditional BPO services, more and more industry-flavors are being included – be it around revenue cycle management for healthcare providers or meter-to-cash for utilities.”
The financial services industry has generally been the biggest and most innovative adopter of outsourcing solutions and methodologies. According to Gartner research director T J Singh, more and more clients in this industry are now looking to outsource more vertical-specific mid- to front-end operations that need profound domain knowledge. These comprise domains such as core banking, mortgage processing, and insurance.
The big question is whether the Philippine BPO industry, having conquered the call center market, can now move up the value chain. To keep growing rapidly and profitably, it needs to capture some of the more sophisticated back-office jobs, such as FAO and processing insurance claims. In these business functions, called knowledge-process outsourcing and legal-process outsourcing, India still rules supreme.
Philippines may not even comprise one-fourth of the total population of India, but it has succeeded in besting the population behemoth with the voice services. Now, it’s time for Philippines to rule the non-voice sector.
About the Author
Miche is a self-employed blogger and copywriter from Philippines who has a love on writing and always happy to share his passion on blogging.