BENEFITS OF OUTSOURCING: TOO GOOD TO IGNORE OUTSOURCING

  • June 19, 2011
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The practice of using external firms to handle work normally performed within a company — is an everyday concept to many entrepreneurs. Small companies accustomedly outsource their payroll processing, accounting, distribution and some other essential functions — oftentimes because they have no other choice rather than that. Most large companies go to outsourcing to cut costs. In return, entire industries have emerged to serve companies’ outsourcing needs.

Researchers are now coming up with forecasts that the outsourcing trend will more likely grow substantially in the years to come. They also said that a share of companies that outsource will emerge as a big business.

The said reason for the climactic advancement is quite simple. Cost savings from outsourcing are way too much to put into disregard. The more convincing a company’s outsourcing strategy, the more profit it can save. Though risks might increase along with savings.
The appeal of offshore outsourcing is said to be particularly enticing, having so much money that can be saved. Also, the dynamics of offshore outsourcing are advancing rapidly. With the aid of some more improved technology, some companies are finding offshore operations just years ago can frequently be brought about relatively painlessly.

Network cutting edge developments in security, leased lines, and storage all help make offshore outsourcing painless for the IT manager who may have a tight budget.

Much earlier, networks seem to be not so sophisticated ? with the result that usually only the largest multinational companies could bear to promote offshore outsourcing in a very big manner. One of the notable changes is that companies with inadequate budget can now afford offshore outsourcing because its technology is much more thrifty and reliable.

Most of the IT managers have poor processes when it comes to their internal installations that enable to perform well even though the IT people may be operating in an unconventional manner. But this kind of situation can be a recipe for disaster when operations are moved offshore.

The applications that will most likely to be most successful in offshore outsourcing are indefinitely the easiest computing tasks–for instance, payroll, human resources, and benefits. Contrarily, more complex work are more obviously to function much better when kept in house. Apparently the strategically important IT tasks should remain in house.

When an IT installation seizes advantage of the repertoire of outsourcing available, many IT budgets can be cut partially. It won’t always be easy, but then it will be worth it in the long run.
The Philippines: a silent outsourcing star?

WHAT images do the Philippines are usually known for? More likely images of domestic helpers, palm and coconut trees, mail-order brides and most probably Imelda Marcos’ shoe collection.
Other than these, the Philippines means unimportant to much of the rest of the world. That is what you can say a pity, the country having almost 90 million citizens.

Most of it has to deal with its economy, mostly affected by its detrimentally-lead government which is suffering from a chronic inability to multitask.

Name it all. Corruption. Foreign firms disliking to invest. Murder of its messengers. The President having to face some vote-digging scandal as well as claims saying that her family profits from illegal gambling. Then recently last month, declaring a state of emergency, in response to alleged plots of destabilization.

What about outsourcing? Outsourcing is a very important earner for the Philippines. The United States accounts for at least half of the world’s potential outsourcing and the Philippines, known as a former US colony, is said to be well placed to benefit. It has a cooperative commercial code and about 95 per cent of its population speaks and understands English.

Having a high literacy rate, a large pool of IT professionals to draw from, and spotty, but cheap telecommunications infrastructure, makes the Philippines a competitive place for US outsourcing, stated in the fact the US companies account for about 90 per cent of outsourcing deals in the country.

Procter & Gamble, Delta Airlines, AIG, and Citibank have all outsourced some of their work to the Philippines. US engineering tycoon Fluor Daniel has much of its technical work to be done there by an almost a thousand-strong team of local engineers, architects and draughtsmen. And AIG’s Philippines business processing unit has now more or less than 4000 staff.

Medical transcription has eventually gone into a large business for outsourcing companies. Almost 7000 US hospitals are now required to convert their medical records into data format, a whopping $US15 billion market in the US. Some work has gone down to the Philippines, now a home to about 40 or more medical transcription companies, up from only nine in 2001.

The efforts of its government in attracting such work has now paid off. Local outsourcing firms report revenues of nearly $US4 billion, up from $US350 million in 2001, employing 230,000. India, outspokenly known as the world’s outsourcing giant, has employees of up to five times as many, but has 12 times the population, which clearly suggests the Philippines might be some kind of a silent star on the outsourcing business.

To most of the world, the Philippines is just a basket case. But mixing a metaphor, even this basket has a silver lining. The Philippines might deserve a second look.
Mainstream Contact Center Outsourcing: India. How about the Philippines?

Today outsourcing, particularly contact center outsourcing, is being intermediately adopted mainly by two deveoping countries India and the Philippines which aids the said countries in their campaign for economic growth, as they account for most of the world’s outsourcing services. Though still dominating the scene, India is now being threatened by the Philippines, chipping in some work to benefit its own market which is fast growing.

Outsourcing was developed and it turned out to be a very good alternate for some in-house services for companies around the world, not to mention third world countries such as India and the Philippines, which are considered the main hubs in the outsourcing world.
It is very important for the investors how to choose a location for their to-be-outsourced work. So as prolonging cost pressures force these companies to do more with less, the focus is now turning towards supply management, causing firms to concentrate more on their core business and then finding the best destination for such services requirements.

The USA is considered to be the forerunners of outsourcing and also is the main investor in the business. The Philippines, however, being an American colony for a long 50 years, and is still sharing cultural, business and legal practices with the US, had installed English in their curriculum, making children study the language for all of their school life. Meaning to say Filipinos are more fluent in speaking the language than its fellow outsourcing tycoon India.

Filipinos are also more culture compatible, as Filipinos are much more Westernized than any other neighboring countries here in Asia. This allows easy comprehension and adjustment.

Though India claims they offer cheap but good markets, the Philippines are proud to have competitive rates of about $6 to $10 per hour per seat, about one-fifth of US rates, making the country having the lowest labor cost for outsourcing employees in the world, thus, it is now being chosen by most foreign investors. Not only this, telecommunications infrastructure have been bettered in order to serve extensive outsourcing operations.

Convenient time zones were also a key consideration as Filipino customer care centers have very much worked intimately with its investors.

The competition is now getting neck-to-neck. Will India continue its reign as the Outsourcing Capital of the World or will the Philippines finally take the spotlight away?

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