Outsourcing of various non-core services started with multinational and large enterprise corporations, and emerged as a mainstream business in the mid-1990s. Since then, the outsourcing industry, which later came to be known as business process outsourcing (BPO), has been through several transitions. Now, small and medium-sized companies are seeking to outsource to reduce cost on non-core business expenses, high taxes, high labour cost and often onerous government regulation. Despite the volatile global economic situations prevailing now, the future of the BPO industry continues to remain positive.
Operational cost reduction by outsourcing has always been the major attraction for the industry. Having routine ‘mechanical’ but necessary tasks delivered at as much as 50 per cent of the local cost still resonates with board rooms. Additionally, there has been a move to web-based solutions known as Software as a Service (SaaS). This is a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet. SaaS is one of three main categories of cloud computing, alongside infrastructure as a service (IaaS) and platform as a service (PaaS). This is further expanded under Software-Defined Everything (SDE/SDx) which refers to various systems controlled by advanced software programs and constructed in a virtual, versus physical, hardware space. This enforces that business is less anchored geographically than it ever was before. Both solutions have created greater growth opportunities for the BPO industry. Now we are seeing a pattern of specialization appear in BPO, where companies want to focus surgically on their core business and outsource everything else—meaning, all the baker wants to do is focus on baking. Procurement, scheduling, order taking, delivery, fulfilment, payment processing and accounting are all outsourced.
The global business of outsourcing in 2017 reached the US$400 billion point, growing at 12 per cent per annum. Asian countries continue to dominant this space, led by India with US$100 billion+ in contracts; Philippines $25 billion; Vietnam $5 billion; Pakistan $2 billion; Sri Lanka, $1 billion; and Bangladesh $600 million.
The Caribbean BPO market is still maturing, with Jamaica leading the way. In February of this year, the President of the newly minted Business Process Industry Association of Jamaica (BPIAJ), Gloria Henry, informed at its first annual conference that the BPO sector could soon become the country’s number one source of employment. Henry noted that the industry had, to date, contributed US$450 million, and based on current trajectory, the sector is on a path to contribute in excess of US$750 million by 2020.
“Over the past two decades, Jamaica’s outsourcing industry has grown exponentially, now employing over 26,000 individuals with over 55 active entities operating across the island in locations such as Portmore, Kingston and St. Andrew, Mandeville, Ocho Rios, Lucea and Montego Bay,” Henry said.
In June of this year, addressing a group of current and potential investors at the Jamaica Investment Forum at the Montego Bay Convention Centre in St James, Jamaican Prime Minister Andrew Holness stated that the Government was committed to making Jamaica the “centre of the Caribbean for innovation and technology”. The forum had the purpose of creating partnerships with local and international stakeholders to generate investments in key sectors, primarily the BPO industry.
Highlighting Jamaica as an ideal destination for business, the Prime Minister said that discussions were far advanced for the development of an economic industrial technology park, which has an estimated value of between US$3.7 billion and US$6 billion. He reiterated his commitment to a partnership approach with the private sector, as well as improvements in the ease of doing business, and enhancing the effectiveness and efficiency of the public sector.
Since 2014, the Trinidad and Tobago Financial International Financial Centre (TTIFC) has been aggressively marketing the capabilities of the island as a global BPO “high value” destination, using partners and business intelligence consultants to deliver pitches across the globe to make that country a choice for potential and existing BPO clients.
Barbados has never taken the BPO market seriously. It has never been seen as a game changer and a pathway to solving the simple issue that we as a country face today—that is, the ability to diversify the economy by shifting a large part of the workforce to a foreign-funded source. Barbados has a small but capable labour force that requires the focus and training to succeed in the BPO space. In the medical transcription market where Barbados has made some headway, the training to be proficient here is almost to the level of a registered nurse. The compensation is at the highest end of the BPO scale, where we understandably need to be. The major issue is we cannot train the talent fast enough to feed the industry growth.
Internet Service Providers (ISPs) are working to shift their platforms to accommodate the new consumer behaviour of significantly reduced voice and 32x data activity; inclusive of live streaming, video sharing, messaging and video conferencing. They have done an incredible job of keeping pace, but BPO, SaaS and SDE/SDx will require more at a much lower price than what is currently on offer. National broadband connectivity and high speed at a lower cost are the keys to success here.
Back to the point about not taking the industry seriously. It’s time for a National Skills Database—I have met many high skilled ICT professionals, many of them self-taught. There is still a huge dependence on academia, as a passport to making a contribution, rather than skill. If we are going to progress rapidly, we have to give the raw talent the same platform to play on as the structured student. The two are highly complementary.
As a country, we should set a goal to deliver US$100 million in BPO in our first year—this is a net add, above the current levels. We should build a team to deliver it and incentivize that group accordingly for reaching the target. The international online works freelance marketplace is producing some US$4.6 billion in activity using such sites as Upwork, Freelancers, Fivers and others. Our people need to be pushed toward these sites to establish what is being asked for, what skills are required to deliver what is being asked for, and what are the compensation, timelines and protocols for same. This should be buttressed by the research to determine supply, demand and skill gaps.
The Information and Communication Technology (ICT) sector has to be seen as it is across the world—as a thrust sector. Web applications, BPO, development of local solutions, e-government and e-citizen integration for efficiency and cost contraction, and building knowledge workers for tomorrow through Lego Science Centres for World Robotics Olympiad participation, Professional International Student Assessments (PISA) to test our students against the best in the world and using local talent to deliver local ICT solutions. This has to be the constant ringing in the ears to make this happen.
George Connolly is a Finance and Technology professional.