Mary Christine Anne B.

Batal SMP4 Business Process Outsourcing 1

T-Th 5:30 – 7:00 PM Section: F SMP4 Assignment 1
Answer the following:

1. Define Outsourcing.
Outsourcing is a business practice in which services or job functions are farmed out
to a third party. In information technology, an outsourcing initiative with a technology
provider can involve a range of operations, from the entirety of the IT function to
discrete, easily defined components, such as disaster recovery, network services,
software development or QA testing. Companies may choose to outsource IT
services onshore which is within their own country, nearshore which is to a
neighbouring country or one in the same time zone, or offshore which is to a more
distant country. Nearshore and offshore outsourcing have traditionally been pursued
to save costs. Business process outsourcing (BPO) is an overarching term for the
outsourcing of a specific business process task, such as payroll. BPO is often
divided into two categories: back-office BPO, which includes internal business
functions such as billing or purchasing, and front-office BPO, which includes
customer-related services such as marketing or tech support. Information technology
outsourcing (ITO), therefore, is a subset of business process outsourcing.

2. Reasons why companies outsource.

In business, outsourcing is a very complicated issue. There isn't just one

explanation, but numerous, and they all rely on the company's environment and
needs. Remember that outsourcing is when a corporation engages outside staff for a
variety of reasons, which can and will vary. However, the following are some of the
most typical motivating factors:

1. Reduce and manage your operation's costs (this usually the main reason).
2. Improve the company’s focus.
3. Liberate inner sources for new purposes.
4. Improve the efficiency of some time-consuming activities for which the
organization may be short on resources.
5. Use external resources as much as possible.
6. Sharing risks with a partner firm.

3. What activities and functions are to be outsourced?

Here are some of the top areas where you might consider it.

Accounting is one of the most common areas where small businesses choose to
outsource. If you’re not a financial expert, then it can take a lot of time and skills to learn
all the processes and compliance standards your company must meet. 
Marketing When it’s time to grow your business, an outside marketing firm can help you
do it quickly. They can take the ad design, content creation or social media posting off
your plate so you can focus on the internal functions of your business. 
Sales Similarly, your company might not have the personnel or expertise to make sales
calls or set up funnels and processes geared toward closing deals. By outsourcing to
sales firms or professionals, you can hand those tasks over to skilled individuals who will
bring in more business.
IT Management IT is one of the largest outsourcing industries around. In fact, the global
market for outsourced IT services reached $85.6 billion this year. You can outsource to a
managed service provider or work with a firm that offers on-demand assistance to handle
any tech issues or initiatives you may have.
Administrative Tasks Virtual assistants are becoming more and more common,
especially for solopreneurs and entrepreneurs who work out of a home office. There are
VAs who can handle everything from inbox management and scheduling to social media
posting.
Customer Service For businesses that deal with customers mainly online or over the
phone, you can outsource your customer service strategy to an outside call center or chat
service. 
Manufacturing Setting up a dedicated manufacturing facility can be quite costly for a
small business. That’s why so many product sellers choose to outsource this step. You
don’t necessarily need to offshore this process either.
Shipping and Logistics Additionally, you can actually have your manufacturing facility or
a separate drop shipping service handle the shipping and handling of your products
directly to customers. 
Human Resources Human resources encompass any tasks in your business related to
hiring, onboarding, or managing your team. The most common type of outsourcing in this
area is to work with a recruiting service to bring in qualified candidates for a new position. 

4. Advantages and disadvantages of outsourcing

Outsourcing's Benefits

There are a variety of reasons why a company would choose to outsource a specific
operation, job, or process. Some of the well-known advantages of outsourcing, for
example, are:

1. Enhanced focus on core business activities - outsourcing allows your company to

concentrate on its strengths, enabling your employees to focus on their primary jobs
and the long-term plan.

2. Enhanced efficiency - hiring an outsourcing business that specializes in the

process or service you need will help you get a more productive, efficient, and
frequently higher-quality service.

3. Controlled costs - cost reductions from outsourcing can help you free up capital to
invest in other areas of your company.

4. Greater reach - outsourcing can provide access to capabilities and facilities that
would otherwise be unavailable or too expensive.
5. Outsourcing can help you utilize your expertise and talents, as well as your whole
supply chain, to gain a competitive advantage.

Outsourcing can also help your company become more flexible and agile, allowing it
to respond more quickly to changing market conditions and problems while saving
money and improving service quality.

Disadvantages of outsourcing
Outsourcing involves handing over direct control over a business function or
process to a third party. As such, it comes with certain risks. For example, when
outsourcing, you may experience problems with:

 service delivery - which may fall behind time or below expectation

 confidentiality and security - which may be at risk
 lack of flexibility - contract could prove too rigid to accommodate
change
 management difficulties - changes at the outsourcing company could
lead to friction
 instability - the outsourcing company could go out of business
You should examine carefully all the pros and cons of outsourcing to make sure
that the benefits outweigh the risks. Before deciding on your strategy, it may be
worth looking at some common outsourcing considerations.

5. Recent updates on the BPO industries, or current events in

relation to it. And give a 1000 words reflection on it. (30PTS) A
sample format is given below

“Transport, agri get P6B subsidy”

The most current news or updates about the Government of transportation and
agriculture sector. According to the Department of Energy, they would get 6.1 billion
pesos in subsidies to assist businesses cope with rising oil costs (DoE).
Under the “Pantawid Pasada” Program, the transportation sector, which includes
public utility drivers and operators, would get a one-time P5 billion cash fuel
subsidies. Farmers and fishermen would receive a total of P1.1 billion in gasoline
rebates. This is very good new to our Farmers and local employees under
transportations because as we know increases in oil prices are expected to raise
inflation and slow economic development. Oil prices have a direct impact on the
prices of items created using petroleum products in terms of inflation. Oil prices, as
previously said, have an indirect impact on expenditures such as transportation,
production, and heating.
This is also the effect of Russia’s war in Ukraine went from a threat to reality in late
February, which caused crude oil prices to briefly rise. Energy giants such as Shell,
BP and Exxon all pulled out of Russian energy deals, while the Biden administration
has announced a ban on importing Russian oil and other petroleum products. The
Russia-Ukraine crisis significantly changed global oil supply forecasts, and this is a
key input into how oil is priced globally. This may also the reasons, why here in the
Philippines fuels has increased their prices. These past few days, drivers have been
scratching their heads in anxiety as oil companies have been giving hints about a
looming oil price hike. 
My opinion for this article is that this will be a relief to those who were given
subsidies of this crisis we are experiencing. Because if the fuel and other energy
keeps rising then it will also have an effect to our economy not to mention the
products we are consuming, I am sure consumer goods will keep rising if the fuels
and other energy will keep rising.

This will also have an effect to those people suffering poverty and to those people
who’s not working or stay at home. When gas prices rise, it can be a drag on the
economy impacting everything from consumer spending to the price of airline tickets
to hiring practices. Gas is an important input for transportation, which directly
impacts households as they drive, but also businesses that rely on logistics and
transportation chains around the globe. Higher gas prices can result in noticeable
increases in some public transportation ridership. Shared and public transportation
may become more appealing if gas prices continue to rise as it provides a more
cost-effective alternative to sitting in traffic with expensive fuel in the tank.

In the past, geopolitical tensions, typhoon hits, flooding, and increased

travel demand during the summer driving season were forces pushing prices higher.
At the individual level, higher gas prices mean that each of us pays more at the
pump, leaving less to spend on other goods and services. But higher gas prices
affect more than just the cost to fill up at the gas station; higher gas prices have an
effect on the broader economy.

Inversely, when gas prices fall, it is cheaper to fill up the tank for both households
and businesses, and really eases costs on transportation-focused industries like
airlines and trucking—but it also puts a damper on the domestic oil industry.

In general, higher oil prices are a drag on the economy. Here we will focus on some
of the direct and indirect negative effects of high gas prices. Higher gas prices can
result in noticeable increases in some public transportation ridership. Shared and
public transportation may become more appealing if gas prices continue to rise as it
provides a more cost-effective alternative to sitting in traffic with expensive fuel in
the tank. A side effect of high gas prices is that the discretionary spending of
consumers drops as they spend a relatively larger portion of their income on
gasoline. Higher prices also mean that shoppers will tend to drive less including
places like the mall or shopping centres. Indeed, academic and industry studies
provide support for this, showing that driving miles are directly tied to gas prices.
Also, rising gas prices may force some businesses to re-evaluate their hiring plans,
holding off because they are uncertain about the economy's health. Less
discretionary spending results in decreased sales, both of which can influence a
company's ability to hire. Many job candidates must weigh prospective positions
against the costs associated with the commute. Some workers who have been
offered new jobs have been forced to turn down the position simply because the
costs to get to and from work would eat up such a large percentage of the
salary. Freelancers can also be affected by higher gas prices, limiting the
geographical region in which they will do business because commuting costs make
it impossible for some gigs to be profitable.

Rising gas prices produce a level of hardship for a group that is already suffering
from high levels of unemployment and stagnant or declining real wages. Even in
good times, but especially in recessions, the least skilled are far more likely to be
unemployed. Most experts do not believe there is much that government can do to
reduce oil price spikes caused by unrest in the Middle East or other short-term
factors. But the government can at least cushion such effects by providing
unemployment insurance benefits, payroll tax cuts or other assistance to lower-
income households to help offset the impact of higher gas prices on both their
pocketbooks and the strength of the economic recovery.

Though economists and analysts may argue about the extent to which gas prices
have an effect on the economy, there is, at the least, a correlation
between consumer confidence, spending habits, and gas prices. An August 2020
Gallup poll in the United States, for example, showed that individuals' views of the
economy appear to be inversely correlated to the price of gasoline. The poll showed
that increases in state gas prices made respondents feel more pessimistic about the
economy over the time period in question.