The Benefits of Offshore Outsourcing
Offshore Outsourcing-- the process of hiring an external organization to handle certain business functions in a foreign country-- is a common practice to many companies across the world, mainly to save money. But what began as a cost- cutting measure has now evolved into an industry where small- scale entrepreneurs and major companies alike turn to for reasons that go beyond pricing. While cost is still a key benefit of outsourcing, more and more companies are looking at it as a strategic planning and business outcomes tool.
Here is a closer look at the major benefits of outsourcing:
- Better management of capital costs. Cost-cutting may not be the only reason to engage in offshore outsourcing, but it's definitely a primary factor. Outsourcing reforms fixed costs into variable costs, recreates capital for investment in some other areas of your business, and enables you to do without huge expenses in the early stages of your business. Offshore outsourcing can also make your firm more appealing to other investors, since you're able to provide more capital directly into revenue-producing activities.
- Improved productivity. Businesses which try to do everything themselves have much higher research, development, marketing, and distribution costs, which result to higher pricing since these expenses must be passed- on to end- buyers. An outsourcing provider's frame of cost and measure of economy can provide your company a significant competitive edge.
- Decreased human capital development cost. Recruiting and the subsequent training of personnel for marginal or temporary projects can be very pricey, and short-term employees don't always deliver as you expect they would. Offshore outsourcing allows you to concentrate your human resources where you need them most.
- Faster Jumpstart of new projects. An ideal outsourcing partner has the necessary assets to start a project quickly. Managing that same project within your core operation could take weeks or even months to find the right people and get them ready for the tasks ahead. And, should a project require considerable capital investments (such as additional equipments, infrastructure, etc.), the start- up can even take longer.
- Reduced risks. Business endeavors involve some amount of risk. Market trends, business rivals, economies, and technologies all change on a regular basis. Offshore outsourcing providers are generally much better at deciding how to avoid risk in their areas of expertise so you won't have to.
How to Profit Greatly from Offshoring
Many of today's small to medium- sized businesses profit greatly from offshore outsourcing service suppliers in various ways. Hiring an external company to handle certain continual functions of your business like after sales services, benefit claims, accounting and payroll, data processing, among other repetitive tasks, could do so much more than just trim down your operational costs. Outsourcing is also a proven method of increasing your actual profits and elevating the over- all quality of your business.
What follows are several ways you could benefit from offshore outsourcing:
- Cut- down your capital expenses.
- Lessen your overhead budget.
- Diminish the need to purchase costly equipment.
- Let you concentrate in the areas of your business which needs your attention the most.
- Allow your human resources to focus on core functions.
- Give you access to highly- specialized skills which directly affect the efficiency, speed, and more importantly, the quality of your output.
- Improve the level of your customers satisfaction.
- Enable you to offer better services without spending more.
- Extend your knowledge base in handling difficult business issues.
- Give you a competitive edge over your competitors.
- Reduce your risks.
- Allow you exercise and maintain absolute projects control while decreasing managerial responsibilities at the same time.
- Decrease the need to continually spend on technological advancements.
- Eliminate the need to accommodate more staff during peak seasons.
Outsourcing in the Philippines
The business process outsourcing industry is considered as one of the fastest business sectors in the world. The strong demand for outsourcing services is predicted to reach as high as $180 billion in 2010, with finance and accounting, customer support, human resource management, and back- end support services getting the most shares. A trend in primary business requirements is also foreseen, market analysts believe that there will be shift from practicality and cost reduction mentality to service quality and consistency. This reinforces the Philippines' position as one of the top BPO destinations.
What started as an answer to the tremendous demand for offshore call center services, the Philippine BPO industry has become one of the leading global BPO service providers in the world. At present, an estimated number of 200,000 Filipinos work in BPO companies, not only in Manila but in regional areas like Clark, Angeles City, Cebu City, Davao City, and Cagayan de Oro City. While call centers still hold the largest share of the country's offshore outsourcing sector, the current surge in the industry is powered by a more specialized and higher- end outsourcing demand such as software development, web design, content writing, SEO, flash animation, data and billing entry, legal and accounting services, and medical, as well as, technical transcription.
Among the major companies that already operate in the Philippines include AIG, AOL, Barnes & Noble, Chevron, Citigroup, Dell, HP, HSBC, IBM, Intel, JPMorgan Chase, Motorola, Procter & Gamble, and Siemens AG.
A survey conducted by a reputable international investment consultancy firm revealed that the Philippines ranked 1st in the availability of knowledge-based jobs and skilled workers worldwide, and ranked 4th among Asian nations in terms of labor quality. The Philippines' ideal location, the availability of considerably cheaper prime real estate locations, and a growing number of reliable ICT infrastructure only fortifies the country's bid for BPO excellence.