VENTUS AND BUSINESS

PROCESS

OUTSOURCING

PRESENTED BY:

ADITYA RAMAN(264)

RIPUDAMAN SINGH(270)

MADHAV VAKHARIA(277)

AMEET ROY (157)

Content

• Overview

• Venture story

• Factors for success

• The Impact of the Global Financial Crisis on

Outsourcing

• Challenges

• Major Competitors

• Questions

Introduction

• ePLDT Ventus (Ventus), the outsourcing arm of Philippine Long Distance Telephone

Company(PLDT)

• Ventus has grown to become the largest Filipino-owned call center in the Philippines,

with over 6000 employees, seven locations, and revenues in excess of $120 million.

• In 2006 it had over 120 companies and over 1,45,000 employees.

• Call center revenues increased annually by over 30% since 2001

• Ranked top 10 in A.T. Kearney’s Global Services Location Index since 2004

• Philippine experienced a surge in the number of foreign companies that established footprint in Philippines

Ventus story

• Started its operation in March 2002

• 2005, Philippine Long Distance Telephone Company (PLDT) merged

with Parlance and Vocative to form a single global brand

• Value created based on cost savings, service level quality, and

process improvements

Factors for success

• Benefited from the explosive growth of international

outsourcing.

• Ventus has smartly leveraged the resources of the PLDT.

• Ventus is arguably one of the best led companies in the call

center industry in Philippines.

• Leadership team have created a culture that stresses

professionalism, high quality service, attention to customer

needs and strong camaraderie among employees.

The Impact of the Global Financial

Crisis on Outsourcing

• Hardship placed on companies that fuel growth for Ventus

• Consolidation in industries: Philippines emerges as primary beneficiary

• Changes in labor cost arbitrage dynamics of international outsourcing

Challenges

• Expansion into the Data Segment

• Market, Customer, and Geographic Diversification

• Supporting Current Customers

Major companies in Philippines

The country had 3.556 million main lines in use in 2011. The country

had 1.722 million fixed broadband subscribers in 2010.

Fixed line operators

Bayan Telecommunications

Digital Telecommunications

Eastern Communications

Globe Telecom

Philippine Long Distance Telephone Company

Philippine Telegraph and Telephone Company

Pilipino Telephone Corporation

Midsayap Communication System Corporation

Mobile operators

Globe Handyphone (Ayala Corporation)

Smart Communications (PLDT)

Sun Cellular (Digital Mobile Philippines, Inc.)

Extelcom (Express Telecommunications, Inc.)

1.1 What factors explain the growth of the

Philippine call center industry in general and ePLDT Ventus in particular?

Philippine call center industry growth

• Results of a general trend in cost reduction and outsourcing.

• The market of labour has become more global and in particular, anything that is

digital can move easily across borders,

• A country with english speaking people , high rates of college graduates looking for

work, and a population familiar with American culture.

ePLDT Ventus growth

• The company had the advantage of having the

technology in place.

• Ventus enjoyed from PLDT reputation as a good

employer.

• The company benefited from a strong and stable

leadership team.

• Partnerships with major U.S. clients promoted credibility

and visibility.

1.2 What current role(s) do business process outsourcers

(including call centers like Ventus) play in the global

supply chain for services? What additional roles can these outsourcers play in the future?

Bussiness process outsourcers reduce over all cost in the global supply chain and in some

cases provide a degree of supply diversification when multiple sources are used.

• The current services provided by ventus and others will probably expand in the future in the high value added services such as:-

1. Back-office transactions (Accounting, Finance and HR services)

2. Medical and legal transcription

3. Animation,

4. Engineering design

5. Software development6. Digital content development and support

2. What will be the best path for growth for Ventus?

Evaluate the various options discussed in the case. What path would you recommend Ventus take? Why?

• The two basic choices facing Ventus are to continue in the voice

services business or to grow the data process component of the

company.

• There doesn’t seem to be any reason why Ventus can’t do both.

• The company has established itself as a leader in call centers, and

has an infrastructure in place to continue this business line.

• Using its existing technology it has been able to leverage itself into

this market which is expected to continue to grow for the

foreseeable future.

• At the same time, the higher value back office services are already

being done through the acquisition of SPI and these services will grow

in demand as well.

• The Philippines has a favourable business environment for such

services and this appears to be a good opportunity to expand into a

more profitable business line.

• While the core competencies are not the same in both businesses, the

acquisition of SPI has presumably brought some needed

competencies and these competencies can be expanded.

2.2 What will be the best path for growth for Ventus?

Evaluate the various options discussed in the case.

What path would you recommend Ventus take? Why?

Market, Customer and Geographic Diversification

Ventus should continue to grow in its domestic market and

remains committed to the U.S. market and its current customers.

However, the company needs to build a diversified customer

base.

Ventus should attract clients from different sectors in order to

reduce risk, since different industries suffer different impacts

from crisis.

• The company needs to have a better mix between

B2C and B2B customers, since the latter is less affected

by the recession.

• Find new markets and evaluate them as possible

destinations to build new facilities, acquire competitors

or establish partnerships.

• Formation of a sales team that will cover various

geographic and industry segments in the U.S.

3.1 How should Ventus address the

emerging challenges that could potentially derail its growth?

• Ventus faces a number of current challenges:

The recession affected present and potential clients of Ventus

The crisis also led companies with outsourcing plans to cancel or put programs on hold

because of increasing funding difficulties, management turnover and lack of business

visibility.

Trend to consolidation of global service supply chains to fewer locations or sell off

captive operations to other providers.

Increase in U.S. unemployment has changed the labor cost so some customers are

repatriating work back to the U.S., demanding price concessions from offshore

providers, or increasing service-level requirements.

3.2 What other challenges are likely to emerge?

• New challenges may include:

the labour market is getting tighter in the Philippines as the country experiences

unexpected economic growth

more competition has entered the market.

• The Philippines already competes with India, Eastern Europe, the Caribbean, and

other places for call center operations, and now some foreign companies are setting

up call center operations in the Philippines.

consumer backlash from job outsourcing as the practice becomes increasingly

popular

newer technologies in voice recognition that require less need for human voice

services.

3.3 How should Ventus deal with these additional challenges?

• Ventus can best handle the current and future challenges by continuing to

manage its operations as a first-rate source for voice services and diversify into

other business services.

• Ventus has a good record of management and is the preferred employer among

potential call center employees.

• Greater training and accent reduction can decrease the perception that customers are

calling the Philippines.

Most of the unhappiness with offshoring of voice services comes from language

difficulties and misunderstandings.

These problems can be addressed through training.

• This addresses the problem of competition, although it will continue to be a threat, but the

problem of increasing technologies may reduce overall demand for human voice

services.

Diversifying into other back office operations reduces the risk of technology eliminating

business.