Is the Luster of Outsourcing Already Rusting?

  • March 26, 2011
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By Roy Jonathan del Rosario

We have witnessed its luster and its continuous gleam over years, but is it really rusting now? Offshore outsourcing has been prevailing in the business world for years. It has also been one of the best contributors of great economic revenues for the deteriorating Philippine economy. And as predicted by a number of economists, it will continue and will grow further on the next years to come. But this is not a sure thing as circumstances can be changed by fate. And now here we go. As the number of benefits it brings to the business industry grew day by day, so as its negative outcomes which somewhat hinder the industry for continuously growing. But according to an informal website survey conducted by Computer Economics, these negative impacts of outsourcing are not having any negative effects in the use of outsourcing by business. In the survey’s results, 33 percent of the respondents are already outsourcing offshore and intend to do more in the coming years. On the other hand, 50 percent of the respondents have no plans yet of doing it at this time. Moreover, 11 percent of them are not doing so but are preparing and planning to in the future, while the remaining 6 percent of the respondents are planning to do less outsourcing.

As the sponsoring website indicates, business will follow further offshore outsourcing in the future. On the other hand, the outsourcing opponents should look at the 2005 Deloitte study, ” Calling a Change in the Outsourcing Market”, which discloses that a number of enterprises are taking a closer look at outsourcing after experiencing less than stellar outcomes. As the study shows, 70 percent of the respondents surveyed testified off-putting experiences with outsourcing projects; 25 percent say they brought outsourced functions back in-house, while 44 percent did not get the expected costs savings from their outsourcing projects. Why does this happen? While 70 percent of the respondents who have been surveyed said cost savings as a propeller for grasping outsourcing, 38 percent of these respondents said they paid additional, hidden costs for services which are not include in their contracts. The 57 percent of the respondents who told the necessity to put into practice the standard, quality and advancement when building outsourcing relationships responded at a 31 percent clip that once a contract was signed, outsourcing salesmen become contented.

There are also other problems cited which include too much inflexibility from binding contracts that prevent flexibility when amendments are needed and the findings that salesmen have not gotten the capacity to give the level of costs savings and quality expected by the clients availing the outsourcing services. It is clear from the fact that the quality of the standard that the outsourcing services are showing right now is gradually deteriorating. Therefore, the industry should take appropriate measures to improve the nearly stinking, once-quality-approved service provider available at hand. Let us not let the once-gleaming outsourcing industry take its way to the junk, instead, repaint it with sure hopes by doing what it is proper to be done.


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