Innovation Impediments
At a workshop in Taiwan delegates were asked what was impeding innovation in their business. The answer was, "we have too much respect" – middle-level managers felt too much reverence for the executives in the company to challenge their views and question the way that things were done. They were used to accepting and implementing decisions that were handed down to them rather than pushing back with better suggestions and radical ideas of their own. Taiwan, like many Asian societies, is well-ordered with good self-discipline. The people are polite and you never see graffiti on walls the way you do in the West. The "bad" attitudes that are manifested in many ways in Western society may have some upsides. Can a company benefit from rebellious employees who challenge assumptions and rudely assert a different point of view? Should a business seek to employ more people who are unruly and disrespectful?

Respect Vs. Deference
What is needed is not a lack of respect but a lack of deference. In the modern innovative organization leaders need to earn the respect of their employees because of the values they stand for – not because of their position in the hierarchy. A lack of deference should be encouraged so that anyone can challenge anyone else’s ideas regardless of their status.

"Innovation comes from angry and driven people," says business management expert Tom Peters. The innovator is not happy with his lot – he is impatient for change. This can be a problem for successful companies. The natural satisfaction that people derive from success can lead to complacency, which is the enemy of innovation. The innovative leader engenders a healthy dissatisfaction with the status quo. It is all very well telling shareholders that the company is making steady and satisfactory progress but the internal message needs more of an edge: "We are doing well but there is much more to be done. We cannot afford to rest on our laurels."

Often innovators have to be obsessive to the point of apparent irrationality in pursuit of their dreams. They appear insubordinate in opposing convention. Anita Roddick (founder of The Body Shop), Trevor Baylis (inventor), James Dyson (industrial designer) and Richard Branson (entrepreneur) were all seen as obstinate, angry rebels before they achieved the success that changed their status to visionaries. Sometimes the programmer with the worst attitude is the one who produces the most brilliant code.

Harnessing Rebels
How can a business harness the energy of its mavericks? How can negative energy be turned into positive? Throw down a challenge. Rebels can be critical, but leaders can turn a situation around and ask the rebels how they would do things better – without getting into an argument. Take rebels’ ideas on board. Praise them for good proposals and encourage them to find new and better ways to do things. Thank them for their criticisms but insist that they also make positive suggestions.

IBM's Rebel Achievement
Rebels can achieve amazing successes. In 1994, two rebels saw the future. John Patrick and David Grossman were determined to galvanize the lumbering giant IBM into a response to the opportunities presented by the Internet. Initially, IBM, with its investment in mainframe computers and corporate systems, failed to appreciate that the Internet was going to revolutionize the world. In this respect they were in good company – even Microsoft missed the importance of the Internet at first. Patrick and Grossman saw that being online was a trend that their employers could not afford to miss so they launched a subversive internal campaign. They found a network of enthusiasts and activists. They launched a "manifesto" and circulated it by email. They gave demonstrations of the Internet’s capabilities to senior executives. The two took risks, broke the rules and exceeded their authority. Eventually their pleas were heard, the super tanker turned and IBM became leaders in e-commerce and Web services.

Innovative Staffing
When interviewing candidates, do not necessarily "like" those who respectfully agree with the company’s policies and plans. Recruit staff with attitude, people who are prepared to disagree with the status quo and challenge the company’s direction. Give candidates hypothetical problems to see if they come up with inventive ideas or routine answers. Look for people with unusual interests and hobbies.

Conclusion
Every revolution starts with a rebel. Cultivate a team with some particular bad attitudes – the ones with rebellious, contrary and divergent views – people who some might label as troublemakers. A maverick staff is not negative or cynical – on the contrary, they are passionate about their ideas. They do not defer to authority, they are dissatisfied with the status quo, they are impatient for change and they are angry about the obstacles put in their way. With employees like that, a business – and its products and services – should certainly stand out from the crowd!

Why? Because service improvement is more challenging to deliver, more dependent on inter-relationships with the client and more difficult to track (who knows what the service was really like before the outsourcing?)

Is it Possible?
However, if cost saving becomes a given, then the main reason to outsource rather than to remain in-house should surely be to access the innovation and the consequent service improvements which should be available from the major outsourcers. BPO suppliers are at the heart of an industry which talks innovation. They generally bring consulting and system integration skills to bear, and are delivering similar services to multiple-clients on a global basis, learning lessons and pushing the boundaries of innovation as they go…surely they can deliver innovative solutions which improve service as well as cutting costs?

The answer is that they can, but accessing innovation cannot be taken for granted by clients and is not straightforward to contract for. The reason for this is that BPO suppliers have no “secret sauce”. They use the same levers for change as are available to any organization – process improvement and standardization, offshoring, automation, management focus and sheer hard work and attention to detail. All of these require time and investment to have an impact – this has to be paid for. So when a client’s focus is primarily on cost savings, then the appetite for investment can be weak. And clients often confuse savings and improvement when they contract for services.

Commitments to “continuous improvement” sound as if they are focusing on the service, and are becoming more common in outsourcing contracts, but if they mean anything they tend in fact to mean “continuous price reduction” rather than “service improvement” because they are defined as year on year price cuts. The assumption (right or wrong) is that this will be delivered by underlying process improvements made by the supplier – even if this is the case, these are not the kind of changes which deliver improved services for the client.

How to Achieve It
For clients to get the most out of outsourcing relationships, and to really exploit the potential of a partnership with a major BPO player, they need to demonstrate three main behavioral characteristics which will underpin the deal.

Firstly, they need to recognize that outsourcing is a catalyst for change, not a solution in itself. As we have seen from above, outsourcers don’t bring anything that is not available elsewhere, except one thing – they are not you. This means they change the cultural balance, and can help to unleash potential for change.

This starts with the contract – suddenly there are real commitments on both sides, signed by top management and costing real money – this begins the process of bringing the customer/supplier relationship into sharp focus, which in turn provides the environment within which change and improvement is possible. It continues with the management of the relationship – top management on steering committees focusing on back office issues as they have rarely done before, interacting with BPO suppliers who, in the best capitalist tradition, have a range of ideas and services to sell. This creates a platform for innovative thinking, comparing best practice, and moving forward with what can work best.

Secondly, clients need to recognize that it takes two to make anything significant happen. Clients sometimes feel that once they have signed the contract they have done their bit – now it’s over to the supplier to deliver. But there is a real limit to the innovation and improvement that suppliers can deliver on their own—pretty much only process efficiencies which might, if they are lucky, fund the “continuous improvement” price commitments they have made. Real improvement means addressing the end-to-end process which is managed by both the client and the supplier – this means working together. It also means that is in practice difficult to offload responsibility for delivery contractually – results tend to be dependent on both parties.

One example from HRO should illustrate this. One of the key benefits of HRO cited by suppliers is the ability to access “business transformation value” far in excess of any direct cost savings available. This is achieved through the ability to manage resources more efficiently, for example by reducing overtime or absenteeism. But clearly the actual delivery of such benefits will depend on both sides working together.

The outsourcer may deliver the systems and information which identifies the problems, but it is client line managers who actually need to use the information to deal with the problem. Which is why of course it is so difficult to get outsourcers to guarantee the benefits, which although attributed to outsourcing are in fact delivered by the client using the information made available through outsourcing.

Examples from other functional areas demonstrate the interconnectivity of the relationship and delivery of benefits. In finance for example, a supplier may process invoices with a Purchase Order far more efficiently than one without – it will however be up to the client to make sure that the business has the discipline to use Purchase Orders and therefore access the benefits.

Lastly, clients must be prepared to pay for improvement and innovation. There is sometimes a belief that outsourcing means the supplier suddenly has the ability to deliver services for free – not, of course, the case. Most innovation and improvement comes from investment in new ideas and systems, and that investment has to be funded. Outsourcing can provide the “wrapper”, so that investments are amortized and cash benefits realized more quickly. However, outsourcing can’t change the economic reality, which is that change costs money. Even in the minority of business processes where outsourcers can provide relatively standard solutions to the market (e.g., payroll, utilities billing) the costs of transition, on-boarding, and configuration have to be absorbed and ultimately paid for by the client.

It is a common observation made by visitors to offshore outsourced centers that they expected the processes to be more advanced. And the response from the suppliers? Well, they would have loved to have improved the processes but the client wouldn’t pay – they just wanted what they had already for less cost. As in other areas of life and business: no investment, no improvement.

In Conclusion
Ultimately clients have to pro-actively manage the experience and capability of outsourcers to get what they want from them. If what they want is innovation and improvement, then they have to invest in that improvement and co-deliver the results. As outsourcing matures this may be becoming clearer to all involved: second generation contracts, where the cost reduction objective has already been achieved, tend to focus on innovation and improvement on renewal. This is the challenge for the suppliers - without that re-focus, the service might as well come back in-house.

The annual report from DTI indicates that the revenue of the country's outsourcing industry grew from $3.5 billion in 2006. Currently, the country's global leading in the outsourcing employs a total of 320,000 workers, which is higher compared in 2006 with a total of 235,000 employees.

This growth is inline with the campaign of the Philippine Government to boost this industry not only locally but its target among the international key investors. The Philippines is one of the frontline choices in terms of BPO, especially the call center which is the voiced account scheme.

Other than call center, the Philippines is also promoting its competency in medical transcription, IT (information technology), animation, among others. Earlier, positive reports from international business leaders in Davos, Switzerland lauded the country's huge growth in the outsourcing in the recent World Economic Forum.

Big and small companies are operating in the Philippines because of its cost-effective services and investor-friendly atmosphere. Philippine President Gloria Macapagal-Arroyo, in her previous statements posted at the Office of the Press Secretary (OPS), thanked the investors for lifting the country's economic activity. She added that the employment opportunities in the outsourcing industry are a way of supporting her campaign to have a "Strong Republic" nation.

Competition
Because competition is very high in the BPO, several countries in the Southeast Asia, European, and the United States are also boosting this industry to remain on the top.

The country today is no doubt to gain success in maintaining the industry alive. The serious thing to consider is to stay above because other countries are seriously promoting their BPO industry not only to gain revenues but also to be a global leader.

Oscar Sanez, head of the Business Process Association of the Philippines disclosed during Thursday's e-Services briefing that the country remains to be competitive.

Mr. Sanez said the voiced-based (call center) still growing in the country because of the English fluency of every Filipino. However, Mr. Sanez urged BPO firms to also strengthen the country's weaknesses in the accounting, finance, engineering design and IT services.

Meanwhile, DTI said that Filipino graduates with high knowledge on liberal arts, which is the studies focusing on general knowledge and intellectual skills, gives favorable advantage to the country as the preferred outsourcing destination rather than other offshore destinations like India.

DTI added that the higher fluency in English and with higher orientation in the customer services are among of the reasons why potential investors like the country.

Meanwhile, Richard Mills, an expert on outsourcing in the Asia Pacific disclosed that India is known to be a top producer of technical knowledge while the Philippines is focusing more on liberal arts.

Mr. Mills disclosed that locators around the world is putting their companies in the country such as animation, medical services, insurance processes, legal services, publishing and content enhancement. Mr. Mills is one of speakers during the Business Venture Track of e-Services Philippines Outsourcing Conference and Exhibition attended by BPO executives, businessmen, local and national politicians.

Every year, the country's graduates reached at 385,000 with strong background in the English language. The country is also producing more than 100,000 accountants and business-related college graduates every year.

To prove the best of the Filipino accountants, the US Generally Accepted Accounting Principles (GAAP) acknowledged the Filipinos skills in accounting. This is because Filipino accountants who passed the yearly Certified Public Accounting (CPA) exam are familiar with GAAP and International Accounting Standards (IAS) in terms of financial reporting.

The Philippines outsourcing will continue to deliver finest services to its clients worldwide and expected to grow to 12.4 billion dollars with 303,000 job opportunities in the next two years.