WHY YOU CAN’T LOSE WITH OUTSOURCING

There are many reasons why outsourcing is a good idea for businesses. It can save the company money, time, and resources. It can also help the company to focus on its core competencies and leave the non-essential tasks to someone else.

When done correctly, outsourcing can be a win-win situation for both the company and the service provider. The company gets to save money and focus on its core competencies, while the service provider gets to earn a profit.

In recent years, however, outsourcing has been scrutinized and criticized for sending employment overseas, hindering customer service, and even harming domestic economies. However, outsourcing has withstood the criticism because, ultimately, it works for companies that have adopted it as a cost-cutting technique and for the additional benefits it provides to the organization.

What is outsourcing? Offshoring?

Outsourcing and offshoring are two terms that are often used interchangeably, but there is a difference between the two. Outsourcing refers to the process of hiring a third-party company to handle a business function that is typically performed in-house. Offshoring, on the other hand, is the process of moving a business function to a different country.

There are several reasons why companies choose to outsource or offshore certain business functions. Cost savings is often a major factor, as companies can often get the same work done for less money by outsourcing or offshoring to a different country. Additionally, companies may choose to outsource or offshore in order to focus on their core competencies and leave non-essential functions to someone else.

Outsourcing and offshoring can be controversial topics, as they can lead to job losses in the country where the work is being outsourced or offshored. However, there can also be benefits for the country where the work is being moved, as it can create new jobs and help to boost the economy.

Overall, outsourcing and offshoring are complex topics with pros and cons for both businesses and countries. Careful consideration should be given before making the decision to outsource or offshore a business function.

Presently, firms are increasingly resorting to countries such as the Philippines to get services at a rate that is cheaper than what they already pay their employees in their own countries. By collaborating with companies in these countries, businesses can gain access to a wider pool of skilled people and enter new markets.

Why has outsourcing in the Philippines exploded?

The Philippines has a large pool of English-speaking workers, making it an attractive destination for companies looking to outsource customer service or other call center-type operations. The country also boasts a lower cost of living than many developed nations, which translates into lower wages for employees. 

However, cost-saving is not the only reason a company may embrace offshoring to nations like the Philippines or Mexico. In recent years, the Philippines has developed a reputation for being a reliable and cost-effective provider of a variety of business services. This has led many companies to view the Philippines as a viable option for outsourcing a variety of operations, from accounting to software development.

The time difference between the Philippines and many developed nations is minimal too, making it easier for companies to coordinate operations.

In addition, the Philippines has a large pool of highly-skilled workers, making it an attractive destination for companies looking to obtain high-quality services at a lower cost.

By establishing agreements with colleges to offer BPO-specific coursework and curricula, the Philippine government has helped to strengthen the country’s outsourcing economy. The country has granted tax and non-tax incentives to attract foreign investment and has devised a voucher system to assist with call center training. 

Numerous corporations in the West have been impressed by the skilled labor force that gives quality at a price that is comparable to a bargain. Due to the fact that Filipino workers are trained for certain vocations in the outsourcing industry, they can claim highly-skilled manpower that is appealing to Western corporations seeking a back-end, operations, or logistics partner overseas.

What naysayers say about outsourcing.

There are a number of criticisms that have been leveled at outsourcing. Firstly, it has been argued that outsourcing can lead to a loss of control for companies. This is because they are reliant on external suppliers to provide key services or products. This can create risks if the quality of the outsourced products or services declines or if the supplier encounters financial difficulties.

Secondly, outsourcing can also lead to a loss of jobs within a company. This is because the work that is outsourced is often carried out by cheaper labor in another country. This can lead to job losses and a decline in wages for employees who remain with the company.

Thirdly, outsourcing can create environmental problems. This is because companies are often outsourced to countries with weaker environmental regulations. This can lead to increased pollution and environmental damage.

Finally, outsourcing can also lead to social problems. This is because it can lead to a decline in the standard of living for workers in the country where the work is outsourced to. This can create social unrest and can damage the reputation of the company.

Economic importance of outsourcing in the Philippines

The BPO industry in the Philippines began in the 1990s. Its expansion was helped by the positive support of the government. It is now the largest contributor to the Philippine economy, surpassing even migration-related remittances. 

The sector supplies the country’s previous colonial power, the United States, as well as Europe and its immediate neighbors, Japan, New Zealand, and Australia. Recent technological advancements have facilitated freelance work. As a result of grading systems and worldwide competitiveness, this industry is very competitive and uncertain. On these networks, there are an estimated 1.5 million Filipino freelancers.

The advantages and disadvantages of outsourcing

Outsourcing could be one of the best ways to grow your business but it does come with its risks and challenges. Business owners need to be sure that they understand the advantages and disadvantages before deciding whether or not to outsource. 

Pros

1. You do not need to hire additional employees.

When outsourcing, you can pay your employees as independent contractors. This enables you to avoid hiring a new employee, saving you money on benefits and training.

2. Access To An Expanded Talent Pool

You may only have access to a narrow local talent pool when hiring employees. This frequently requires compromise. Numerous businesses have discovered that outsourcing gives them access to talent in different regions of the globe. If you require expert assistance, it is generally prudent to broaden your search.

3. Reduced labor costs

Each business has its own reasons for doing so, with the majority pursuing cheaper labor expenses. You don’t want to sacrifice quality for cost, yet outsourcing frequently affords you the best of both worlds. By exploring a global talent pool, it is simpler to identify the appropriate talent at the appropriate cost.

Cons

1. Lack of management

When you outsource, you give up some control, despite the fact that you can provide direction on the tasks at hand.

There are numerous reasons for this, including the fact that you often hire an independent contractor rather than an employee. And because the individual is not physically present, it might be challenging to retain the desired level of control.

2. Communication Issues

This is not always an issue, but it is one of the largest possible disadvantages. Things you need to carefully consider are the time zones, language barriers, and the internet connection.

3. Problems Regarding Quality

Despite all the advantages of outsourcing, it is only beneficial if you receive the expected quality. Anything less than this would be a letdown.