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
Thursday, August 9, 2018 | Comments (0)
Category: Outsourcing Research / Trends
The Philippines has a fast-growing call center industry, which has shown consistent rapid growth since its start back in the 1990s. The demand is driven by foreign businesses choosing to outsource their customer support to the Philippines and by the continuous entry of foreign investors setting up call center companies in the Philippines.
According to the Information Technology and Business Process Association of the Philippines (IBPAP) the BPO industry generated $23 billion in revenues and employed around 1.5 million Filipinos in 2016. With voice-based services, or the call centers, as the main stars of the BPO industry, foreign investors from all over the world consider the Philippines as the top destination to establish their call center operations.
Offshore outsourcing generally provides great advantages to businesses. But why are foreign investors specifically attracted to the Philippine call center industry? Aside from the Filipinos' high proficiency in English and their strong affiliation to Western culture, here are the other five main reasons.
When you are offshoring your business operations, finding a strategic location is an important part of the process. The Philippines is an ideal location for investors to set up their operations because the country’s geographic position in the heart of Asia makes it easily accessible and serves as a point of entry to other locations on the continent.
Amidst the reported challenges of automation and artificial intelligence, outlooks towards the call center industry in the Philippines remain positive. A report by Dezan Shira & Associates saw the growth of the Philippine BPO industry to reach $40-55 billion in total income by 2020. By that year, the firm also projected that the industry would provide around 1.3-1.5 million jobs. The Philippines has overtaken India as the leading call center destination, with the call center industry expected to continue to be the largest contributor to the economic growth of the country.
Lower Operating Costs
Real estate developers continuously develop new BPO-specific office spaces all over the Philippines, keeping office rental rates reasonable and availability high. Operating costs in the Philippines are generally lower due to lower labor costs and lower rental and overhead costs. Setting up a managed operations business outside Metro Manila is just as attractive to investors – they get to spend much less and have the advantage of an equally highly-skilled workforce.
As a rapidly expanding industry, the Philippine government is also providing an increasing support to the call center industry to further invite investors. Existing government programs include tax holidays, tax exemptions, and simplified import and export procedures. Moreover, Senator Bam Aquino is also pushing for the retraining of call center employees and upgrading their skills to counter the threat of AI to over 1.4 million BPO jobs in the Philippines. Universities and training centers are also offering courses on customer service training and other programs for would-be BPO workers.
Offshoring opens various options and opportunities to investors and company owners that will best fit their requirements. In the Philippines, there is a middle ground between outsourcing and incorporating. MicroSourcing's managed operations model provides the best of both worlds. Through the managed operations model, foreign clients have a Philippine partner that will help establish, host, and manage their call center operations here. They get to enjoy the perks of outsourcing and at the same time, have full command over the level of control they want to take or turn over.
Contact us to learn more about the managed operations model and how we can help you set up your call center operations in the Philippines.
by: Sidney Liquigan
Wednesday, May 2, 2018 | Comments (0)
Category: Outsourcing Research / Trends
Regardless of the size of your company, whether you own a startup, an SME, or a large enterprise, financial management plays a big role in the success of your business.
Accounting outsourcing has existed for a long time, with many firms from different parts of the world already outsourcing their accounting or auditing functions to a specialized outsourcing provider. Technological advancements, particularly in IT, has made offshore accounting outsourcing easier and more accessible even to small businesses.
One of the top outsourcing destinations is the Philippines. With BPO as one of its most dynamic and fastest-growing industry, more and more foreign companies are looking to outsource their business functions, including accounting and finance, to the country. In 2017, Manila placed fourth on Tholons' list of top global outsourcing destinations.
The strength of the BPO industry in the Philippines is driven by the benefits it offers. When it comes to outsourcing accounting to the Philippines, here are some of the advantages that businesses worldwide can get.
Save on Costs
Outsourcing, in general, helps you reduce overhead as you don't have to worry about the expenses that come with having in-house staff, such as new hardware and equipment, employee benefits, and other operating costs. According to PayScale, as of writing, the average annual salary of an accountant in the Philippines is Php292,416 (or around $5,464). In the United States, the average annual salary of an accountant is $49,749 or around Php2.6 million. You can save around 89% annually.
Save on Time
With accounting as one of your time-consuming back-office functions and not the main focus of your business, then it would be more efficient to outsource accounting tasks. This way, you can have more time to focus on your core business functions. Outsource accounting work such as payroll and bookkeeping to accounting outsourcing firms so you can focus on day-to-day operations and growing your business.
Access to Professional Expertise
Outsourcing gives you access to highly skilled accounting professionals. The Philippines has a 96.3% literacy rate and a strong education system, making it a great location for foreign companies to outsource their accounting requirements. Accounting outsourcing in the Philippines is a fast-growing industry, with many big international accounting firms already operating in the country for many decades now. Furthermore, it is not difficult to find accounting specialists in the Philippines who are well-versed in the accounting standards of many different countries.
Access to Advanced Technology
Outsourcing providers that specialize in accounting use the latest accounting tools and applications and have training courses to update their skills in using these tools. When you outsource, you instantly get to take advantage of these technologies without having to purchase them. Many accounting providers also use cloud data storage, hence, reduced paper use.
Data Privacy Act
Many businesses are hesitant to outsource their accounting work because it involves sharing confidential data. But outsourcing to the Philippines gives you the peace of mind that your data is protected under the Data Privacy Act of 2012 that prohibits unauthorized access and use of personal and confidential information. Moreover, most accounting outsourcing firms have internationally recognized security standards in place.
Let MicroSourcing take care of your finance and accounting needs. Whether you need to outsource your accounting department or looking for a place to set up a managed operations accounting firm, we can help.
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.
To give you an idea how your company can benefit from back office outsourcing, here are good examples of businesses and the benefits they get from these services.
Banks and Financial Services
Tasks in the businesses in the banking and finance industry involve a lot of paperwork that are time-consuming. These companies deal with a lot of data, which in most cases are very time-sensitive. They outsource their back office operations so they can dedicate their undivided attention to their core tasks. Furthermore, outsourcing data management, a type of back office operation, allows for faster turnaround time as most of the data is digital and can be accessed and processed remotely.
The digital era keeps on transforming the industry, creating more channels where people can access multimedia content and opening new growth opportunities for media companies. The ongoing digital transformation prompts media companies to outsource non-core business functions as a way of boosting revenue while reducing costs. At the same time, outsourcing also helps them effectively engage with their audience and boost their reach in both traditional and digital platforms. While they focus on producing and distributing multimedia content to grow their community, they engage with outsourcing providers to handle content moderation, community management, online marketing, and analytics.
Retailers and Manufacturers
Retail and manufacturing businesses need to compete globally and their margins are under constant pressure, so cost savings are essential to their survival. To keep their competitive edge, they cut costs by outsourcing their back office operations. Reduced expenses will result in increased profits that they can allocate to improve their products and level up their business strategies. Furthermore, many manufacturers already work with a global supply chain and may already have production facilities overseas. With that said, establishing an offshore operation for handling their back office is not going to be a big challenge to them.
Outsourcing companies offer scalable solutions that 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 you are not sure whether it will be beneficial for your business, looking at the pros and cons might help you decide.
Having your in-house staff to handle customer support can be expensive and 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. The cost-effective solution to this is to have an offshore managed operations.
Through outsourcing, you get access to a pool of talent with the right customer support expertise. Outsourcing to offshore BPO firms in countries with lower labor costs can save you money. Having your own operations in the Philippines would mean reducing 60-80% operational expenses in salaries and at least 50% in office rental and overhead costs.
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.
Unlike building your own customer service department, an outsourced customer service operation is much quicker to establish. Your chosen provider will already have the infrastructure, people, and processes in place to get you up and running in no time.
As your company grows and increases its customer base, your customer support also needs to be more productive. Whether you are expanding your contact center company or forming a customer support department for your business, outsourcing is a scalable solution that saves you from the hassle of setting up and spending more money for additional assets and office space. Outsourcing can help your business grow faster. And when you need to scale down, having an outsourcing partner also makes downsizing easier.
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. With existing processes ready to be integrated with your operations, you don't have to reinvent the wheel and start from scratch. You are assured that 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
Some businesses are hesitant to outsource their customer support to offshore companies as they fear that offshore customer support representatives may lack the fluency and cultural knowledge to communicate effectively with your customers. This concern can be easily avoided by sending clear and specific requirements. 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. Also, choose a partner that gives you control of the screening process and allows you to conduct additional processes, such as accent training.
Many foreign businesses outsource to the Philippines for the Filipinos' familiarity with Western culture and proficiency in the English language.
Another concern among clients is that customer support agents located in offshore contact centers may tend to be detached or unfamiliar with their 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. Choose an outsourcing provider where you can be directly involved in operations and heavily engaged with the employees.
At MicroSourcing, we follow the managed operations model. It is different from traditional outsourcing in a way that the managed operations model gives you full control of your offshore operations with us. It's having the best of both worlds of outsourcing and incorporating. With this model, you are partnering with us to provide you with facilities, assets, and HR and recruitment, among many other services, while you keep full control of the operations. This way, you are involved in hiring the best customer support agents and you get to implement your own systems and policies.
Outsourcing customer support does come with a few risks, which can easily be mitigated by making sure to give your outsourced operation the time and effort it requires to make it an integral part of your business. The advantages far outweigh the disadvantages, which is one of the reasons why the customer service outsourcing industry in the Philippines remains strong.
With the managed operations model, you can ensure that your outsourced team is being effectively managed both by you and by us. Being directly involved 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.