The Business Process Outsourcing Industry
Can you imagine the world today without outsourcing? If you are an owner of an enterprise and planning to outsource some of your processes, you should know what to expect in looking for a business partner.
As time passes by, things innovate and people continuously invent new materials, strategies, and a lot of other things to make life more convenient. Even for ventures, people created an effective approach towards a faster and more affordable way to make things done through outsourcing.
What is Outsourcing?
It is a business practice in which the non-core processes of a firm are being performed by outside parties on a contract basis. Companies do this as a cost-cutting measure as it is more cost-efficient compared to hiring your own people to do specific tasks.
Brief History of Outsourcing
The thought of outsourcing started when companies began to think of competitive advantage to increase their market and profit. They continued to expand, which required them to have multiple layers of management that caused burden. It was officially identified as a business strategy in the year 1989.
Brief History of Outsourcing
Legal and Accounting Industries
Outsourcing Industry Today
It was during this period when enterprises started to outsource a few services. Independent companies opened their doors to serve clients. Back then, business owners deal with companies in the same area where they are located.
By the 1970s, manufacturing companies outsourced manpower to foreign countries as a step towards cost-saving measures. Manufacturing businesses found out that they could also outsource some of their functions to other countries and that it is beneficial as it can lower the market price of the products.
The first ones to outsource their payroll services were the computer companies. In the 1980s, they began to outsource legal services and other accounting and finance operations also to save costs. It became common for companies that wanted to effectively focus on their core functions without distraction.
Now, outsourcing of many corporate functions such as data management and solutions, IT services, customer service, mail distribution, security, maintenance, housekeeping and other non-core processes is undeniably common. Almost every business chooses it to keep costs manageable. It is also prevalent to outsource from foreign countries today as it is much more cost-efficient.
Common Services Outsourced
|Inbound||Outbound||Data Services||Other Popular Services|
|Call Center||Telemarketing||Data Entry||Virtual Assistant|
|Technical Support||Lead Generation||Data Mining||Ecommerce Services|
|Telephone Answering Service||Surveys||Data Cleansing||Marketing and Online Marketing|
|Order Taking and Order Processing||Data Management||3D Animation|
|Reservations and Booking||Website Development|
|Web Form Management||Software Development|
|Live Chat||Helpdesk and Remote IT Services|
Some of the Biggest Outsourcers
- United States
- United Kingdom
Top Outsourcing Destinations
Filipinos have an excellent command of the English language as it is one of the primary mediums of instruction. They possess a neutral accent that is easy to understand. In comparison to other countries, the Philippines offers more affordable call center services.
The country also provides low-cost call center services. They have a congenial business condition with a huge pool of human capital and is popular for their software and computer engineering industry.
One of the reasons why some businesses choose to outsource in this country is because of the possible connection to the APAC region. With its massive hub of manufacturing sector, it is just normal to outsource in China.
Having a stable business environment, companies from other countries choose to outsource here. The country is poised to be a global in the call center industry with its growing investor interest.
The country has a fast growing economy that offers a high literacy rate. They have an experienced and mature workforce who can work with international companies.
Average Employee Compensation in English-Language BPO Solutions Companies
|Country||Average Monthly Compensation||Cost Per Hour||Annual Compensation|
|Philippines||$340-$400||$2.13-$2.5, where $1=Php50||$4,080-$4,800|
|India||$263.44-$436.62||$1.65-$2.73, where $1=₹71||$3,161.28-$5,239.44|
Government Support to Outsourcing Industry
The Indian government launched the Startup India to support entrepreneurs and build a friendly environment to startup businesses. Another program is the Make in India to boost self-reliance, enhance skills, develop infrastructure and innovate. In addition, they also created the Digital India project which focuses on empowering the digital age in the country.
The government of China showed its support to the industry by pouring resources and creating major projects such as the New Industrial Chengdu Tianfu New Area that focuses on modern manufacturing and high-end services.
The Philippine government strongly supports the outsourcing industry as it is one of the industries that has a greater contribution to the country’s continuously growing economy.
Back in the 2000s, the administration granted tax incentives through the Philippine Economic Zone Authority (PEZA). Today, almost a decade later, the second tranche of the Tax Reform for Acceleration and Inclusion (TRAIN) law could alter these incentives. Under the proposed TRAIN 2, the companies that are registered as a business process outsourcing as well as all other companies enjoying the 5% Gross Income Earned (GIE) incentives, will be saddled with net income tax of up to 25%.
Although the incentives mentioned above have now been altered, the government continuously helps the call center industry in some other ways, such as welcoming foreign investments and providing for better infrastructure, technology and other things that would benefit the industry.
Outsourcing Industry in 2022
Outsourcing offers great value of work, which made it as one of the fastest growing industries in the world today. The rising competition of businesses around the world is what made this industry emerge and become a necessity for companies. It is poised to create more jobs by the year 2022.
As of this day, the outsourcing industry has no signs of slowing down. With its beneficial effect to businesses and even to various countries and the constantly growing number of companies choosing this practice, it is expected to grow and continuously thrive to become a global leader today and for the next years to come.