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
Monday, September 17, 2018 | Comments (0)
Category: Outsourcing Research / Trends
There is much more to medical billing and medical coding than their names suggest. Collectively referred to as revenue cycle management, the process involves eligibility, payment, coding, charge posting, along with other critical tasks that are reliant on each other and are all necessary to receive your payment accurately and on time.
In order for medical practices to perform core duties better, outsourcing medical billing and coding is a great way to make sure that you have the right resources to stay on top of your billing. There are a few questions you need to ask your service provider when looking for a potential outsourcing partner.
What is the level of experience of the provider's employees?
Medical billing and coding is a complex process and should be delegated to professionals who have the right experience. It is important to know if the provider has the specialties you are looking for and if they have enough experience to handle your requirements. When you outsource to managed operations providers like MicroSourcing, it will be up to you to set the requirements or job descriptions, so make sure to tell your provider the level of experience and technical capabilities you require.
What are their credentials?
Usually, you can see on the provider's website the list of certifications and licenses they have. However, knowing this does not always guarantee that they can meet all your requirements. For outsourcing providers, ask if they have the capability to host HIPAA-compliant operations.
Medical billing and coding involves handling sensitive and confidential information. Ask the provider about the procedures they have to protect privacy of information. Ask about their data security standards like ISO 27001 and their experience and certification for these standards. Make sure that their technology and communication channels are secure and consistent with compliance requirements.
How adaptable are their services?
Ask them about their ability to work around your processes and if they have the flexibility to do so. Minor changes can take place, but the medical billing provider should be able to adapt to the processes that you already have in place.
What is their contingency plan?
Every business should have risk management plans in place. Ask the provider about their Business Continuity Plan and run through a number of scenarios to make sure that the BCP capabilities of your potential outsourcing partner match those that your business needs.
Can they provide you with references?
Some providers will show you case studies on previous clients and how their processes and services were executed. You can dig deeper by asking for references that you can contact to ask about their experience with the provider. You can also look around online to find reviews and testimonials.
MicroSourcing's managed operations model allows you to outsource your medical billing and coding work to the Philippines and have full control over the operations at the same time. The processes and resources will be up to your specifications, while we provide all the support services and assets that your account will need. We will help you manage your Filipino medical billing and coding team.
Needless to say, it's always a good thing to have a fast-growing business. Your hard work is finally paying off and now it's time to expand to meet increasing demands. However, dealing with the growth can also easily get out of control. It’s important to have a growth plan in place and prepare in advance for the challenges ahead.
The first step that you could take is to be aware of the common mistakes that fast-growing businesses make and know how to avoid them through outsourcing. Recognizing what could go wrong makes planning easier.
Problem #1: Limiting Expenses by Keeping Everything In-house
When you are a growing business, you want to keep track of your company’s expenses and make sure that the money that goes out to third-party service providers are kept at a minimum. Because of this, businesses tend to hesitate to outsource some of their processes and choose to do everything by themselves. In reality, this is a lot more expensive and counterproductive.
How Outsourcing can Help: Do More with Less
Fast-growing businesses have limited financial resources which could put a strain on the growth potential of your business. Outsourcing enables you to increase capacity without having to invest in office space and infrastructure. It turns the usual capex items into opex, enabling your growth to be self-funding.
Problem #2: Multitasking
Fast-growing businesses have a lot on their plates, so it is inevitable for them to handle more than one task at once. Contrary to the intention of shooting two birds with one stone, multitasking actually hurts your productivity. Instead of giving your 100% to core operations, your attention is divided and therefore wasting 25-50% of your time on something you could have delegated.
How Outsourcing can Help: Focus on the Core Business
The owners and top management of fast-growing businesses need to focus on their core product or service offering and expanding their market share. Outsourcing can help top management stay focused by taking care of the infrastructure and overhead needs of your growing business. In the case of MicroSourcing, we enable our clients to focus on their core business by taking care of their office space and IT infrastructure requirements and by providing all the overhead and business support services they need to have a smoothly operating overseas operation.
Problem #3: Skills Mismatch
With limited financial and human resources available, local businesses tend to settle for what they can access and afford. Don’t settle for less; outsourcing opens up a wide range of flexible, specialized solutions that won’t break the bank.
How Outsourcing can Help: Access to Qualified Personnel
It can be difficult for a small but fast-growing business to attract the best talent in the marketplace. This could be due to the limited availability of talent in their own location or because the company is too small to attract the best people. Outsourcing companies can help by opening up a much larger talent pool to your business. In offshore locations, salaries will furthermore be much lower.
Going through the growing pains of a fast-growing business will be easier with an outsourcing partner. Contact us to learn how the managed operations model of outsourcing benefits businesses of all sizes.
by: Finella Kristle Panlilio
Tuesday, August 21, 2018 | Comments (0)
Category: Outsourcing Research / Trends
Technology plays a big role in business operations. As it evolves, businesses also strive to evolve and adopt new technologies to stay relevant and competitive. Besides, technology is always advancing to improve everyday processes, so it's definitely a smart move for businesses to take advantage of these innovations.
But not all companies have or can afford a robust in-house IT department. An efficient and cost-effective way to have the support you need is to outsource IT. There are also many other great benefits that you can get from investing in IT outsourcing.
Lower IT Costs
The fixed IT costs of installing an IT infrastructure are a huge investment that can be at risk of going to waste if ever you decide to restructure. Having your own IT infrastructure is very expensive, plus the maintenance costs. And subsequently, you would need to hire IT specialists and pay for their overhead. IT outsourcing offers flexible options at varying costs, which you can customize according to your needs and budget. This service is also easily scalable, with no loss on your end, whenever you decide to either upgrade or scale down.
Seamless Technical Support
Outsourcing to professional IT service providers ensures that you receive comprehensive and secure hardware and software management solutions. They have all the resources and experienced specialists to provide you with an uninterrupted flow of service. Most IT service providers operate 24/7, enabling them to support your business around the clock.
Peace of Mind
Delegating the work to IT professionals gives you a peace of mind that complex tasks and issues are handled competently by qualified experts. Moreover, most IT outsourcing providers can work within mutually agreed service level agreements.
Most businesses find it difficult to comply with industry and other governing standards and put comprehensive quality control procedures in place. Outsourcing to specialized providers will ensure adherence to international standards for data security and quality control.
You can choose from different IT outsourcing models depending on what fits best with your company's processes and needs. A traditional IT outsourcing model is where you outsource all or large portions of your IT operations to a third-party provider. In this model, the external provider has full control of the functions and entails multi-year commitments. There is also the partial outsourcing where you can outsource individual IT processes. Compared to complete outsourcing, partial outsourcing is easier to roll back or assign different areas to different specialized providers. And then there's the managed operations model. This approach combines incorporating and outsourcing in a way that you get to outsource your IT operations but retain full control. MicroSourcing's managed operations model gives more direct control to the client company and keeps costs at an absolute minimum.
Aside from the employees, your company's data is your most important asset. It should be handled with care by well-equipped IT management providers. Take advantage of readily available resources by outsourcing your IT to offshore managed operations providers. Contact us to learn more.
by: Finella Kristle Panlilio
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.