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.
Not only can HR outsourcing help in significantly improving processes and reducing operational costs, but it also opens a world of opportunities for businesses to access various resources and get specialized professional help while they focus on core tasks.
To experience the full advantage of HR outsourcing, there are best practices you should adopt.
Detailed Process Documentation
While outsourcing firms have their own processes to help you achieve efficiency, these firms can also adapt to you own processes. Your HR processes must be well documented to help your outsourcing partner integrate their services into your company seamlessly. HR procedures, such as recruitment, performance management, and payroll are critical tasks that need to have process documentation.
Partner with HR Outsourcing Specialists
When making your decision on which outsourcing firm to go with, choose based on which firm is the best fit for your needs. It's not just who has the most attractive pricing, but who can fulfill your requirements efficiently from end to end and help you drive business growth. This means whether you are outsourcing a single or a few tasks or outsourcing your entire HR function, choose the right outsourcing partner that have diverse skills and resources to expertly handle HR activities with diverse complexities.
Leverage the use of HR software for end-to-end data management, as well as for easier tracking of all the procedures. Using HR software is ideal for outsourcing as it is done online and easily accessible to authorized parties. There are different HR software solutions on the market, so you need to make sure that your outsourcing provider can support your chosen platform.
Establish clear metrics that will help you measure the performance of your HR outsourcing process. From the get-go, you must have clear objectives, priorities, and expectations and make periodic reviews of the results.
by: Finella Kristle Panlilio
Tuesday, January 8, 2019 | Comments (0)
Category: Outsourcing Research / Trends
Depending on the scale of the work you are outsourcing, the selection process for choosing the right outsourcing partner can take up to 6 to 12 months. A significant part of the process is the RFP or request for proposal. This is where you can evaluate potential partners and select the right one for your business.
Preparing the RFP
At this point, you have requested for information from your prospects and have short-listed the qualified candidates based on information provided. In preparing the RFP, make sure that it includes clear and specific details of what you seek as well as requirements that would allow prospective vendors to state what they can do and how they do it.
In your RFP, define your business requirements in detail. Indicate the project's goal, required deliverables, and performance requirements. This will help your prospective vendor provide you with the most suitable resources and processes at accurate pricing.
Focusing on Customer Experience
Aside from the background checks and the online reviews and testimonials you've gathered about your prospective outsourcing partner, your RFP should include a request to get in touch with their past and existing clients. This way, you could hear from them their first-hand experiences with the outsourcing vendor.
Another thing that should be in your RFP is to confirm the scalability of your potential outsourcing partner to meet your current and future requirements. The right vendor should be able to provide you with personalized flexible solutions and resources.
Expectations and Key Terms
The RFP process serves as the right opportunity to lay down the scope of work and other expectations you have for the outsourcing vendor. For example, your RFP should indicate whether or not you will be expecting your vendor to communicate with customers, as well as the countries or languages they would be required to support. Furthermore, include key business terms and conditions, NDA, and other specifications, such as KPIs and service-level agreements in the RFP.
At your discretion, you can conduct test projects with your shortlisted prospective outsourcing partners to see if the partnership would be a good fit. The tests would allow you to see if the vendor delivers according to the proposal they sent. At this stage, you could also see how efficient and effective their processes are and review the quality of their output.
Ultimately, the RFP process lets you get to know your prospective outsourcing partners better. Hence, it is a crucial part of the vendor selection process. After all, business process outsourcing is a long-term relationship and you wouldn't want to get into a relationship with the wrong partner. Make sure that all the essentials, as mentioned above, are indicated clearly in your RFP.
by: Finella Kristle Panlilio
Thursday, November 15, 2018 | Comments (0)
Category: Outsourcing Research / Trends
Outsourcing your medical coding is a practical and cost-effective way to delegate a time-consuming and intricate process so you get to invest more of your time and money to provide quality healthcare services.
When finding the right medical coding vendor, you should look for the one that offers the right services and resources that you are looking for, along with competitive rates and scalable packages.
Ensure that you are looking for an outsourcing partner that employs a team of AHIMA- or AAPC-certified medical coders who are trained on ICD-10. Compliance with relevant quality assurance and security standards and regulations should also always be considered.
Scope of Service
It's better to outsource all your requirements to a one-stop shop. Claims processing consists of different stages, with each stage requiring specific skills and experience.
Look for a vendor that can provide you end-to-end revenue cycle management services.
Different vendors operate with different types of software programs. Compare the processes of each potential outsourcing partner and find out which one can easily be adapted to your operations. Most outsourcing firms allow you to specify the software and systems that you need and they will set up the resources. For transparency and accessibility, choose a service provider that uses online portals and cloud-based systems.
In addition to comparing service rates and pricing models, also find out if there are additional fees or if they offer add-ons. Are there installation costs or startup fees? If ever you decide to increase your practice’s size, will the rates be affected? Will there be additional costs for software upgrades?
Also, remember that cheaper isn't always better. Make sure to prioritize the quality of service and the scope of services that you need to meet your needs.
Make sure that you can access information and reports in real time, and that online databases and dashboards are easy to navigate. In addition to online access, ask the vendor the frequency of their reports and what will be included. You want to find a provider that will send you reports consistently, at least once a month. The reports that you want to be included are denial, operations, and data analysis reports.
Reviews and Referrals
Aside from looking for credentials and certifications, you must also consider what other customers think of the services and reliability of the medical coding provider. Look for providers that have clients that have the same nature of business as yours, with the same size and have outsourced the same medical coding processes that you require. It’s also best to ask other healthcare practices for their recommendation.
Medical coding and billing are crucial processes, so you must ensure you understand what the contract guarantees and that all the important details are indicated. Make sure you know what the minimum contract requirement is and that there is a clause noting how you can opt out if the provider is not meeting your expectations.
When you outsource your medical coding to a provider, find out what kind of support you will be receiving. Who will be your contact person? Will there be an account manager? What is the level of control you will have? Outsourcing providers will not only help you recruit and set up an offshore office space, they also provide support services such as HR management, IT support, facilities management, and finance.
When it comes to control, firms that have the traditional outsourcing model hold all operational control. But for businesses that still want to retain control over their offshore operations and take advantage of the benefits of outsourcing, there's also the managed operations model. This approach involves a local dedicated management team that will help you oversee your operations, but the KPIs, the processes, and the standards will be up to you.
Ultimately, don't rush your decision. The vendor selection process and negotiations can take time, but it will all be worth it once you find the outsourcing vendor you were looking for. For everything to go smoothly, ensure that all involved are in the loop and have clear communications.
by: Finella Kristle Panlilio
Tuesday, November 13, 2018 | Comments (0)
Category: Outsourcing Research / Trends
Even if you're well-versed in handling your own payroll for your company, many businesses are still choosing to outsource their payroll to save on costs and improve productivity. Think of it this way – payroll is a time-consuming process, and the time and effort you take in doing a non-core process could have been spent on figuring out how to improve your business and increase your revenue.
Just like any other services, there are things to consider in making sure you outsource your payroll to the service provider that’s right for your business. The guide below may serve as your checklist when choosing a payroll outsourcing partner.
Know What You Need
Before searching for options, you must know first what kinds of payroll services you need. So when you talk to outsourcing providers, you will be able to tell them what you are looking for. Identifying what you need will also help you find out the questions you need to ask and the answers you need to look for. Some services that payroll outsourcing providers offer include continuous payroll processing, adjustment management, tax filing, and analysis reports, among others.
While searching for payroll providers that offer the services you need, getting recommendations can help you narrow down the choices. Ask your friends or colleagues who work in the same field, look at reviews and testimonials, and hear what other companies with the same nature as yours have to say about their experiences, especially with accuracy and responsiveness.
Check the Provider's Credentials
Now that you've listed down the payroll services you need and narrowed down your candidates, the next step is to find out if the services fit your requirements and if the processes and systems are flexible. Payroll processing is time-sensitive, so basically, look for a provider that releases the paychecks on time, pays your payroll taxes on time, and files your payroll tax forms on time. You should also look for a provider that is accredited and complies with international standards. In addition to your list of services that you require, find out if add-ons are being offered and the costs that come with them.
Ask the Right Questions
As part of understanding the payroll provider and its services, prepare the questions you need to ask. Some providers have forms that you have to fill out with your project specifications. This helps the provider to know more about your business and work they can offer you. On your end, remember to ask specific questions like:
Get a Quote
Once you've chosen one or two potential payroll providers, get a price quote that breaks down all the fees for the services you require. Get a quote for your first year and for your second year to see if rates change over time. This will help you compare the options and see which package will stay within your budget.
Prepare to Outsource
Before or upon signing the contract, you also need to know what you need to provide so the outsourcing will transition smoothly. Prepare organized files that include necessary employee details and other assets or data the payroll outsourcing provider will need.
In summary, the key to choosing the right payroll service provider is to know what you need, know and understand the services available, and aim for the best match. Due diligence can be arduous and time-consuming, but it’s the best way to ensure that you get the best available service at the best possible costs.