How to form an industry association

What is the ABPOA?

The ABPOA (Australian Business Process Outsourcing Association) is a specialist association that has been specifically set up to look after the interests of companies who offer outsourcing services and companies who buy outsourcing services.

How was the association set up?

In June 2010, a number of leading industry people got together from the business process outsourcing (BPO) industry and decided to form the ABPOA.

Forming the ABPOA all came about fairly quickly, as we knew how to incorporate and we all decided to be on the board as the inaugural committee.

Representatives from forty major BPO players assembled to lend support to the association.

The organisation was registered as a not-for-profit industry association on 4 July 2010, and an inaugural board of directors was formed to guide the association through its early establishment and development stages, and to attract members.

What is business process outsourcing?

Outsourcing is often viewed as involving the contracting-out of a business function – commonly one that was previously performed in-house – to an external provider.

The world is changing as we live and breathe. Business concepts that were unimaginable ten years ago are now mainstream. However, there has been one constant on the business landscape: there is still a mandate within corporations to reduce internal operating costs and refocus on core business activities. Many companies are turning
to outsourcing as a way to improve service delivery.

BPO means examining the processes that compose the business and its functional units, and then working with focused service providers to both
re-engineer and outsource these processes at the same time.

BPO involves the full transfer of responsibility for functions such as transaction processing, policy servicing, claims management, HR, finance, and compliance to the outsourcing company.

The outsourcing provider then administers these functions on their own systems to agreed service standards and at a guaranteed cost. This is sometimes
referred to as business transformation outsourcing (BTO).

Typically, companies that are looking at BPO are hoping to achieve cost-savings by handing the work to a third party, which can take advantage of economies of scale by doing the same work for many companies. This is sometimes referred to as ‘lift and shift’. Cost-savings might also be achieved through outsourcing overseas, where labour costs could be lower due to different costs of living in different countries (labour arbitrage).

Why does the industry need an association?

Amazingly, the BPO industry in Australia has never had its own industry association, despite being valued at over $4 billion.

According to market analysts, outsourcing in Australia is expected to grow dramatically leading into 2011. We can see the evidence not only in outsourcing overseas, but also in the local market, as companies strive for competitive advantage by outsourcing
non-core business processes.

Further growth is predicted as organisations expand the range of business functions that they are prepared to outsource, not only as a way to lower operating costs, but also as a way to become more efficient and play to their strengths. After all, once companies take stock and realise what business they are really in, do they really need to be handling non-core business processes if an expert third party can carry out that same process for a lower price, and more efficiently?

The ABPOA was set up to provide a unified and cohesive front for organisations and individuals who participate in the outsourcing sector.

The main driver to form the ABPOA was a concern about being fragmented and not properly represented.

We also realised that for the industry to grow we need to get people talking to each other and to have common and consistent messages. Furthermore, we realised that we had to make outsourcing a mainstream business practice.

What services does the ABPOA offer for the industry?

The ABPOA has been established to:

• Promote, nurture and support the BPO sector in Australia
• Strengthen the brand equity of the BPO sector in Australia as a professional and integral part of the business landscape.

The ABPOA services will include:

• Advocacy on public policy
• International trade development
• Research and market intelligence
• Access to an international network of outsourcing associations across the globe
• The improvement of BPO performance standards and outcomes through the establishment of a Code of Conduct to detail acceptable behaviours and practices
• The development of an accredited training and development program for industry practitioners.

Martin Conboy is president of the newly-established Australian Business Process Outsourcing Association.