Ventus and Business Process Outsourcing - Article Example

Ventus and Business Process Outsourcing How should ventus address the challenges that could potentially derail its growth? What other challenges are likely to emerge? How should ventus deal with the additional challenges? It would be useful to use the five forces model discussed in chapter 11 to analyze ventus’s strengths and weaknesses. Ventus: Ventus is a venture by the Philippine Long Distance Telephone Company. PLDT diversified into the business outsourcing sector to make profits from the boom in the industry. The company’s operations began in March 2002 with 50 full time employees. Towards the end of 2008, the company had more than 6500 employees working with them serving more than 20 customers. The company focuses on delivering value to its customers in various areas such as cost-savings, service level quality, and process improvements. The customers chose Ventus due to its superior performance and the cost savings that were incurred. Ventus also provided value added services such as designing specific systems to deal with busy seasons such as holidays for example it developed a system for a flower company that dealt with the spike in calls on Valentine’s day and Mother’s day. The Philippine BPO industry has been hit by the global recession. Due to this most companies are forgoing new projects and consolidating outsourcing services in one area to cut cost. The recession has been a major challenge for Ventus as it has decreased the number of present and potential customers. Outsourcing was usually for corporations that were involved in financial services, retailers and travel firms which were the hardest hit by recession. Banks and other financial institutions have merged and wrapped up their various operations to cut costs. Companies who have incurred losses have dropped plans to outsource the processes. The fierce competition in the BPO industry in Philippines will make it more difficult for Ventus and its competitors to survive as the customers decrease and profits fall. Ventus can address the challenges it faces by diversification into other countries apart from America. Before the financial crisis, Ventus had diversified its customer base by reaching out to local customers. Domestic clients cushioned the impact of the global financial crisis on Ventus and helped it sustain profitability and growth. Thus Ventus should focus more of its resources locally and globally. This will enable Ventus to diversify its market and risks. Due to the recession more international and US companies are looking for one stop and low cost solutions to their outsourcing needs. By combining data outsourcing and call centers Ventus can tap into a new market segment as well as attract the data business from its existing customers. With this value addition, existing customers will be less likely to switch to other providers and customers that need both data and voice services will be more likely to opt for Ventus. Ventus is facing other challenges that include gaining a better mix between B2B and B2C customers, tapping into sectors that are growing despite the recession, growing local business and diversification into emerging markets. Ventus needs to gain more B2B clients as they have been less affected by the economic downturn. Ventus can achieve this by advertising and developing the sales division in the USA ( which it has been considering). This will help in Ventus marketing its services directly to businesses in America rather than waiting for clients t oapproach them. A more aggressive marketing approach will help Ventus overcome the challenge of attracting new customers. In order to attract local customers, Ventus can customize services and rates for local businesses and train its staff according to local needs. By providing value added services and marketing them Ventus can attract more local customers. Segments such as telecommunications have been experiencing high growth despite of the recession and their need for outsourcing services (especially call centers and customer service) has been growing accordingly. By hiring experienced people and/or training employees in the relevant sectors, Ventus can gain this market as well. As the focus of the company is inbound calls and customer service it should be ideally placed to tap into the telecommunications market with the right amount of training, services mix and marketing. With reference to expansion into high growth emerging markets such as China, this would be difficult as China has low labor costs as well. Collaboration with other companies would be a better option than setting up new facilities as it would entail less risky investment. Although Ventus management is addressing issues for future growth of the business it also has a keen interest in keeping existing customers satisfied. The major priority for Ventus is to enhance its reputation in the call centre industry and continue to attract and retain high quality service representatives. Ventus has a prestigious image as an employer due to its affiliation with PLDT, this way it attracts qualified personnel at low salaries by providing health insurance, travel and other fringe benefits. It needs to develop relationships with universities and focus on hiring and training efficient professionals. Managers use Porter’s five forces model to determine the competitive strength and therefore attractiveness of a market. Attractiveness refers to the overall business profitability. An "unattractive" industry is one which has the combination of five forces to lower the overall profitability. Other challenges that Ventus might face can be determined by an analysis of the market forces: Additional challenges that may emerge include: Due to the increase in unemployment and the resulting decrease in salaries, US companies may opt to relocate their outsourced processes to the US. India and other countries may already have gained an edge in high growth sectors and may attract more customers due to lower costs. Since bargaining power of buyers is high, they can further push down costs or demand more services at the same cost. It might be difficult to train employees for other sectors and new employees may have to be hired resulting in an increase in training costs. As Ventus does not pay top wage rates in the industry, employees might look for better options due to the economic downturn. Ventus faces an increasingly competitive market and pressures from all sides. Although, Ventus has not suffered greatly due to the recession; many BPO firms that have, will intensify their attempts to gain a larger market share to maintain previous profits. Ventus can address these additional challenges by firstly, focusing on its key success factors of providing low cost, efficient and value added services. It should anticipate customer needs and go the extra mile. This will help Ventus in keeping its existing customers. The key is to focus on lowering costs without compromising on quality of service and Ventus can do so by capitalizing on PLDT’s resources and competencies. The inclusion of data services will further help Ventus gain a competitive edge in the industry. Due to the high rivalry between firms it is important to differentiate services and market a brand identity. Ventus should enhance its image as a top employer that provides many benefits to employees in order to attract the top employees. Ventus should also aim to attract multinationals that are looking for low cost alternatives and companies that are based in the European Union. Training to cater to other countries such as the EU should be undertaken which will lead to diversified clients. Read More