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: Finella Kristle Panlilio
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. When a business fails, it's often, if not always, because of poor money management.
Accounting comprises time-sensitive tasks that should be always kept up-to-date. However, when you have limited time and resources, there will be a tendency to fall behind. A great way to ensure that you are always on top of your accounts is to outsource accounting.
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 an in-house staff, such as new hardware and equipment, employee benefits, and others. Outsourcing accounting work to the Philippines means lower labor costs. According to PayScale, as of writing, the average annual salary of an accountant in the Philippines is Php292,416. In the United States, the average annual salary of an accountant is $49,749 or around P2.6 million.
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 and be more productive with 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 Expert Skills
Making accounting mistakes can seriously damage your business and even your reputation. Outsourcing gives you access to highly skilled accounting professionals, ensuring that your accounts are always accurate and up-to-date. The Philippines has a 96.3% literacy rate and a strong education system. Accountants hired by outsourcing firms in the Philippines have a wide knowledge of tax codes and laws and the ins and outs of the industry.
Access to Advanced Technology
Third-party 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. By taking advantage of technology, not only would you save on operational costs, you would also be contributing to saving the environment. Many accounting providers 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.
Let MicroSourcing take care of your finance and accounting needs. From hiring highly-skilled accountants to setting up an offshore team for a financial services account, we can help.
by: Finella Kristle Panlilio
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: Finella Kristle Panlilio
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.