More than decades ago, companies started outsourcing their business processes and functions to offshore locations, primarily to cut down on costs and focus on core business activities at home. Since then, the global outsourcing industry has come a long way.
Advancement in technologies has made it much easier to perform work from a remote location, and consequently, the offshore outsourcing industry has grown tremendously. Research studies have been conducted to provide insights and statistics on popular outsourcing destinations and the outsourcing providers that offer their services to customers from all over the world.
We've compiled the ultimate list of outsourcing statistics to help stay up-to-date with the trends. Check out this infographic and read on to learn more about the global outsourcing industry.
The Global Outsourcing Industry
According to Deloitte's 2016 Global Outsourcing Survey, 78% of respondents claim that they feel positive about their outsourcing relationship.
When asked about the reasons for outsourcing, 59% of businesses cited cost-cutting as the primary reason, while 57% claims that it enables them to focus on core business functions. Another 47% of businesses claim that outsourcing solves business capacity issues.
Other reasons for outsourcing include the enhancement of service quality, critical to business needs, access to intellectual capital, business environmental management, and wider transformational change.
This is why more industries are outsourcing their business processes, especially IT and customer service. Outsourcing sectors include IT-BPO, healthcare and pharmaceuticals, energy, travel and transport, telecommunications, and media.
In KPMG's recent Global IT-BPO Outsourcing Deals Analysis, telecommunications sector consistently remains one of the top contributors to the outsourcing industry. It's because this sector is increasingly leveraging information and communication technology as well as social, mobile, analytics, and cloud technology.
Adoption and Revenue
Another study revealed that since the Great Recession in the United States, the country had outsourced more than 2.4 million jobs. In fact, 57% of companies in the United States increased their use of outsourcing, while 34% significantly restructured outsourcing agreements and only 9% terminated their outsourcing agreements.
When KPMG analyzed the deals closed in the first quarter of 2017, they found that albeit decreasing, the Americas is continuing to be a major outsourcing region that contributes 42% of the total deal value (from 68% the previous quarter). Of these, 41.5% came from the United States alone.
Meanwhile, the EMA (Europe, Middle East, and Africa) and ASPAC (Asia and Oceania) regions are not far behind and have increased their adoption of outsourcing. In the previous quarter, EMA contributed 27% of the total deal value, but during the first quarter of 2017, their contribution increased to 35%. Of this percentage, 22.07% of deals came from the United Kingdom.
ASPAC, on the other hand, contributed 23% this quarter as compared to only 16% in the last quarter. Australia and India were also identified as a key outsourcing market in the same report.
Since the advent of outsourcing, revenue has almost doubled. In 2000, the global market size for outsourcing was at 45.6 billion U.S. dollars and that number has continued to grow until it reached 88.9 billion U.S. dollars in 2015. However, the same source reported that last year, the global market revenue went down to 76.9 billion U.S. dollars.
Automation and Outsourcing
The global outsourcing industry has evolved, as automation technology is taking over much of business processes. Traditional IT-BPO offshoring models are evolving. In the past, operations of an entire business function are contracted. Today, specific services can be contracted and delivered across distributed environments in the world.
But, because automation is a relatively new technology, it still needs to be closely monitored. As a result, new jobs are created as human decision-making and critical thinking are still required in creative and more complex processes. These new positions require more advanced skills for the building, training, management, troubleshooting, and improvement of the technology. In effect, the demand for low-skilled jobs in offshore BPO companies is declining, and the demand for higher skilled workers that can manage and improve automation technology is rapidly increasing.
As such, new offshore positions are being created in rhythm with the trend of outsourcing higher-skill jobs, and creative tasks that cannot be automated is rising. According to MicroSourcing, the most common business processes that companies nowadays outsource are for small or one-time projects, photography services, administrative tasks and repetitive processes, accounting and bookkeeping, and graphic design projects.
The Philippines as a Top Outsourcing Destination
Because SMAC and automation technology is rising, A.T. Kearney took digital competence in consideration to identify the top outsourcing destinations in its Global Services Location Index (GSLI). Along with this, they used 38 metrics surrounding financial attractiveness, people skills and availability, and business environment. In this GSLI, the Philippines ranks as the 7th best offshoring landscape.
Meanwhile, the Tholons Services Globalization Index added digital innovation this year as one of the metrics in coming up with the top outsourcing destinations in the world. It places the Philippines 3rd on its list of top digital nations. Manila is also ranked 4th on their list of top super cities.
These rankings confirm that the country is holding steady as an industry leader in outsourcing. As one of the world's largest English-speaking nations with a 95% literacy rate, the Philippines is an undisputed leader in customer service and BPM (Business Process Management). In fact, 16 of the top 20 offshore call center projects in 2016 were located in the country.
More importantly, the Philippines is gaining ground in high-value fields including legal-BPO and engineering. The country is constantly updating the skills and knowledge of their talent pool to keep up with the evolution of outsourcing trends and automation technology.
Digital forces such as robotics, AI, cloud storage, social media, mobile technology, and big data are shaking up the traditional model of outsourcing services. As such, the global outsourcing industry is becoming increasingly competitive, with Canada, Chile, Israel, and Brazil disrupting its landscape. Outsourcing companies and third-party providers need to innovate and re-invent their services to keep up with evolving demands.
At MicroSourcing, we enable organizations and enterprises to get the most value for their money and grow their business exponentially in response to today's digital demands. Whether you're a startup company or an established enterprise, we make sure to offer a strong outsourcing option to help your business thrive.
by: Sidney Liquigan
Tuesday, April 17, 2018 | Comments (0)
Category: Outsourcing Research / Trends
Outsourcing back office operations is efficient and beneficial to any business, especially startups and SMEs that have limited resources. It reduces operational costs and allows you to focus on core business functions.
But to give you an idea if your company is suited for outsourcing back office operations, here are examples of businesses that can reap the full benefits of back office outsourcing.
Banks and Financial Services
Tasks in the businesses in the banking and finance industry involve a lot of paperwork that are time-consuming. There is also a wide range of regulations to follow in this competitive industry. Not keeping up with all the regulations and not completing the required paperwork within a given time can make them fall behind, potentially resulting in serious mishaps. Further, the regulations constantly change and evolve, requiring banks and financial businesses to keep up and change their entire business model as well. How can they do this in the most efficient way and at the same time keep their clients, stakeholders, and investors' best interests in mind?
Keep up with strict regulatory compliance by being more flexible to change. Outsourcing back office tasks gives businesses more time to focus on core functions and making their operations more resilient.
Producing entertainment and other publicity materials have long turnaround times and come with big expenses. The digital era continuously evolves and creates more channels where people can access ads, videos, information, news, etc. Thus, these companies need to diversify their materials to become accessible through all channels, both traditional and digital.
To cut costs, these companies outsource their back office operations to offshore third-party providers. For a faster turnaround, they also get extra help by outsourcing their production and marketing tasks, such as online marketing, video editing, and graphic design, among other creative services.
Retailers and Manufacturers
Retail and manufacturing businesses always need to find more innovative and efficient ways to meet the ever-changing demands and trends among the consumers and within the industry. To keep their competitive edge and become market leaders, they must take advantage of outsourcing their back office operations. Reduced expenses will result in increased profits and lower costs of goods. Outsourcing also means you can provide more dedicated and higher quality service as well as improved efficiency and responsiveness.
Outsourcing companies offer flexible solutions that are customizable to fit your business needs. To know more about how you can make the most of outsourcing, get in touch with MicroSourcing today. We'll help you identify your pain points and advise the best delivery models for you.
The ideal tasks to outsource are back office functions, as these tasks don't usually require an employee to be physically present to deal with clients. They can also be handled efficiently by an outsourced individual or team who have the right skill set and resources. Outsourcing back office functions can significantly improve your business operations and its strategic scalability as well.
Many outsourcing companies offer virtually any service that can be outsourced, but to give you an overview, the most outsourced back office functions include:
If you are looking to outsource more than one function mentioned above, it is best to go with a one-stop outsourcing company so you don't have to outsource to and deal with different points of contact. MicroSourcing is a BPO company in the Philippines that specializes in various outsourcing disciplines that fit your business model and are adaptable to your own internal processes and requirements.
by: Sidney Liquigan
Thursday, March 29, 2018 | Comments (0)
Category: Outsourcing Research / Trends
With a limited number of in-house employees with each having their respective tasks, startups can greatly benefit from outsourcing some of their business processes, including customer service. Not only will outsourcing save you on costs and resources, it also frees your in-house team from having to multitask and allows them to focus on their actual jobs, therefore improving your startup's operations. Additionally, outsourcing also gives you access to manpower and resources that specialize in the outsourced part of your business.
Before you outsource customer service, you should know that different outsourcing services offered by different outsourcing companies are not one-size-fits-all solutions. Customer service is a function that directly interacts with your customers; therefore, you should consider your options carefully to find the right outsourcing company that will handle your customer service tasks.
Here are some things startups should know and understand before outsourcing customer service. These will help you know the best practices in outsourcing customer service.
What Your Customers Need
Identifying the kind of service your customers need and find lacking in your current customer service efforts will help you identify what you need to outsource. Are you able to provide 24/7 real-time customer support? Would your customers benefit from 24/7 support? Outsourcing companies offer customer support services at any time you require. Outsourcing companies can build teams of customer service agents on day, night, and graveyard shifts to ensure your customers receive real-time support at any time.
Observe and take your customers’ feedback seriously to help you identify the right customer service outsourcing option for you, or if you should consider outsourcing customer service at all.
Do you receive a large volume calls and inquiries from your customers? Make comparisons on the costs of outsourcing customer service versus having an in-house customer service team. Consider how long the set-up will take and the costs that come with it – construction, hardware, software, training, compensation, and maintenance. If you are receiving a large number of calls and messages from customers on a daily basis, it may be more efficient and cost-effective to outsource.
How Your Customers Communicate
While it's better to have all channels of communication open, identify the ones you actually need from the ones your customers don't use. From call centers, customer service outsourcing has evolved to offer customer support via different channels. Observe if your customers reach you by calling, by sending a message or posting a comment on your social media pages, by emailing, through chat, or through website orders and queries.
Language is also something you should consider when outsourcing customer service. With English being a universal language, look for an outsourcing partner that can provide you with customer service representatives who have excellent English communication skills. When outsourcing to offshore BPO companies, consider the Philippines for its workers who are known for being professional, hospitable, and are strongly affiliated with Western culture. But aside from English, there are also outsourcing companies that can provide you a team with multi-lingual capabilities.
Many outsourcing companies offer add-on services besides the actual outsourced customer service. When choosing a potential customer service outsourcing partner, compare each candidate’s service features, add-ons, and costs to help you identify where you can make the most out of outsourcing customer service and improve your ROI. Add-ons can include analytics, call recordings, and transcription.
Canvass the prices and see if it is better to acquire the features from one outsourcing provider or from multiple vendors. Also, consider what you only need. A package deal may seem appealing but consider first if your startup really needs all the services in the package.
Training and Onboarding
One measure of the effectiveness of your outsourced customer service team is how well they know your business, brand, and products or services. Choose an outsourcing partner that is flexible to absorb all the knowledge and skills required for upholding your business. Look at the outsourcing company's training and onboarding processes, as well as the resources (hardware, software, communication technologies) they have. This is important, especially for startups who require a team to learn a lot of technical knowledge. Don’t be in a rush to outsource and compare and consider your options carefully.
by: Sidney Liquigan
Tuesday, March 27, 2018 | Comments (0)
Category: Outsourcing Research / Trends
If you're looking to outsource your customer support and not sure whether it will be beneficial for your business or not, looking at the pros and cons might help you decide.
Having your in-house staff to handle customer support can be counterproductive. They could have been spending their time on core business tasks, but instead, they are stuck in solving customer issues. This can affect your business’ profitability. Building your own in-house customer support department can also be expensive.
On the other hand, outsourcing your customer support gives you access to different flexible solutions at competitive rates, as well as access to a pool of talents with the right customer support expertise. Furthermore, outsourcing to offshore BPO firms in countries with lower labor costs can save you money.
Immediate Customer Support
Handling customer support on your own cannot assure that you will be able to attend to each query immediately. Considering you have other things to focus on, you may not be able to prioritize getting back to customer issues, which may affect the overall customer experience.
Outsourcing your customer support ensures that you have a team fully committed to providing your customers the help they need right when they need it, even if it's after business hours. With an outsourced customer support team, your customers will be happier not only with your main product or service, but also with how you engage with customers.
Not only do you get high-quality service at a lower price, you also don’t have to worry about the training and onboarding processes. From recruitment to employment, your outsourcing partner will handle everything according to your requirements. This can free you from stress and save you time and money.
Contact centers have the right tools and resources to ensure the effectiveness of its customer support agents and its services. They have KPIs and analytics in place to measure employee performance and monitor activities. This way, your outsourced customer service team is well-facilitated, giving you a peace of mind and allowing you to allocate more time and money on core business activities.
Language and Cultural Barriers
Offshore customer support representatives may lack the fluency and cultural knowledge to communicate effectively with your customers. When outsourcing your customer support, remember to include in your requirements that you would need someone who can speak a certain language fluently or is multi-lingual and has a neutral accent. Choose an outsourcing partner that has language and communication skills exams as well as accent training.
Many foreign businesses outsource to the Philippines for the Filipinos' familiarity with Western culture and proficiency in the English language.
Customer support agents located in offshore contact centers may tend to be detached or unfamiliar with your company culture and values. This can affect the level of commitment and service they provide to customers. However, a good outsourcing company will always make sure that the service level is always in line with your company standards and has policies in place that reflect your company's culture and values.
Often, agents are only given scripts for basic and common inquiries. While this will help them know how queries are answered, it is also important that they have enough knowledge about your company, product, and service to effectively deal with situations that are not in the script, such as technical or complex issues. To minimize escalation and the waiting time for a customer issue to be resolved, you must collaborate with the outsourcing company to provide guidance and necessary information for the agents' training and skills development.
Outsourcing your customer support may have its cons, but they are not total deal breakers and the pros can mitigate them. Keep your outsourced team in the loop as much as possible, such as sending them periodic company updates. This will let them become more familiar with your company. Keeping in touch with your offshore customer support team allows both parties to keep track of activities and also helps you identify the team’s strengths and areas for improvement.
Outsourcing gives you the best of both worlds – that is, getting high-quality service at competitive costs. But in order to reap the benefits, you must consider carefully if this is something that will work best for your company. Know what you need and what your customers need and look for a customer support outsourcing partner that is flexible and scalable enough to cater to your requirements.
by: Sidney Liquigan
Tuesday, March 13, 2018 | Comments (0)
Category: Outsourcing Research / Trends
Whether you have a B2B or B2C business, customer service is an important part of your business. It drives customer retention and loyalty, as well as profitability. No matter how minor, customer service mistakes should be taken seriously and addressed immediately. A mistake may not be impactful at first, but if it persists, it could be a reason for your customer to refuse to renew with your company and switch to a competitor instead.
To keep your customers happy and loyal, be aware of the customer service mistakes that you didn't know affect your business.
Handling customer concerns may tend to be delayed or neglected when you are focused on the core aspects of your business. To make sure providing an excellent customer service experience stays a priority, you can outsource a team of customer service representatives or contact center agents to focus on providing undivided attention to your customers and giving them realistic and effective solutions. Be proactive and avoid customer service mistakes, or fix them immediately as they happen. Don't wait until your customers choose to switch providers or give you a bad review.
A lot of startup companies are sprouting left and right, but most of them do not survive. Some built a product people didn't want, some may have an uncertain business objective, while others may have jumped the gun too soon. But, one of the top reasons that small businesses fail is poor management stemming from lack of expertise in the different areas important to running a business.
In a typical startup setup, pioneer team members try to do everything at the same time due to limited budget and resources. However, even the most promising startups or SMEs can't do everything on their own, and it's often a recipe for disaster when they try.
Startups fail to expand or even survive in a highly competitive business environment because of lack of funding, expertise, and other resource constraints. Business outsourcing can help them do more with the limited resources they have and focus on improving their business by outsourcing non-core activities.
Why Startups Should Outsource
Most startups are composed of a small team with only key employees, and for some, just the proprietors and founders. Because they're just starting out and are being cautious about costs and expenses, they avoid hiring new people and try to do everything by themselves. As a result, the workload becomes unmanageable. With this, lead times are prolonged, and quality of work starts to suffer. The probability of errors is high because they're trying to complete business functions that are outside their expertise.
When processes start to become strained, or deliverables start getting delayed, you know it's time to outsource. Otherwise, the quality of your products and services will continue to decline. As a result, you may lose clients and customers. Worse, it will contribute to the destruction of your brand reputation.
Additionally, startups have a limited amount of cash at their disposal. Avoiding big capital expenses and lowering operational costs can help them stretch their startup capital and give the business more time to establish a footprint and grow.
Common Costs When Starting a Business
A substantial amount of money is needed to fund your initial business operations. Whether you're selling physical goods, technology, or even downloadable software, your startup needs to allot money for office space, employees, and IT infrastructure.
You also have to consider the hardware and technology needed to create your product and keep the daily business operations running smoothly. You also need to spend on overhead and administrative costs, as well as professional fees and employee benefits.
If you plan to do everything in-house, you also need to allot budget for your hiring and recruitment costs, as well as the time it takes to fill an empty seat.
Benefits of Outsourcing for Startups
Startup companies and SMEs who invest in business outsourcing can reap advantages that help their businesses expand. Most businesses are now warming up to the idea of outsourcing administrative and creative processes. In fact, a Deloitte survey revealed that 66% of companies outsource certain business processes to other companies.
When you try to ask employees to perform tasks outside their skill set, you will inevitably compromise quality. On the other hand, you'll get field experts and professionals for a specific task when you outsource.
Ultimately, outsourcing business processes will save you from a lot of costs and will let the key members of your team focus on growing the business, as opposed to feverishly jumping from one role to another.
Areas to Outsource
Business functions and operations can differ, but most companies have similar processes that easily be outsourced.
Things to Remember
Before you start looking around for outsourcing companies, make sure you know exactly what business process or function you want to outsource. Outline the processes in your company to determine what the most important ones are, and the tasks that need to be completed by your small team specifically.
Once you've decided to outsource, make sure to choose an outsourcing company that can help your business grow instead of those that offer offshoring and outsourcing services that make it hard for you to take over eventually.
Get the best outsourcing services from an outsourcing company that knows how to help startup businesses and SMEs. MicroSourcing has helped startups from all over the world get their business off the ground and grow at a rapid rate.