Outsourcing to the Philippines has a Bright Future

Outsourcing business process to the Philippines will continue to grow in the near and short term, as more and more companies realize the benefits and tremendous cost savings.

Starting about a decade ago, outsourcing has had a tremendous impact on how business is done. To use the term “revolutionary” would not be an overstatement.

Business process outsourcing to the Philippines and other low cost nations has had a massive impact on how business is done.

But how does the future of outsourcing look? Will the advantages of outsourcing become diminished with rising costs? What does the future hold?

Business process outsourcing (BPO) experts, who have been studying the disadvantages and advantages of outsourcing, feel that the future of outsourcing will continue to remain secure mainly due to the various benefits that outsourcing brings-the most important of which is cost savings. Companies can routinely hire two or more people for the cost of hiring domestically. Companies are able to reduce their overall expenditures considerably by paying less than half the usual amount in salaries to their offshore outsourcing partners.

Another massive trend is CEOs are spending more time focusing on core business activities that generate real value. Outsourcing of IT services to the Philippines and other business functions allows CEOs to focus on doing what they do best, such as marketing, sales and strategy. The Philippines has an abundance of qualified professionals who have the skills, resources, and methodologies it takes to create superior results, so that CEOs can focus on adding real value.

Outsourcing companies are also beginning to standardization of their outsourcing solutions. The recent events of global economic crisis has led to companies favoring standardized outsourcing solutions over custom-made solutions which are more expensive. This has led to organizations outsourcing to Philippines and other countries more willing to move to a standardized way of working for non-strategic processes.

Despite a Bright Future, the Philippines BPO Industry Faces New Challenges, such as:

• The outsourcing industry is growing so rapidly that local infrastructure is struggling to keep up with demand. Telco’s are overburdened, traffic is getting worse seemingly monthly, electrical costs are sky high. This needs to be addressed.
• Rising cost of labor in Metro Manila and forcing many outsourcing companies to move to Tier 2 cities.
• Other countries are improving their position as alternatives to the Philippines. So expect foreign competition to increase.
• The Philippines has a white hot job market, and companies are feeling the increases in cost of labor and higher attrition rates than ever before.
• Political changes such as the US Presidential election might result in outsourcing restrictions being put in place so that jobs are brought back home.

Despite the economic headwinds, expect the outsourcing industry in the Philippines to continue to be the most dynamic and fastest growing sector of the economy for years to come.