Exploring evolution and future of BPO

What is the future of business process outsourcing (BPO)?

The future of business process outsourcing (BPO) is a shift from simple cost-cutting to full-service partnerships, where providers run whole functions and share in client outcomes.

• Clients now want outcomes, not just hours or seats.
• Strong infrastructure and talent keep the Philippines a top hub.
• Long-term value and trust matter more than a quick fix.

Australian outsourcing company TBS Global co-founder Sohan David shares his thoughts on BPO operations in the Philippines and the changing needs of clients.

Sohan David co-founded TBS Global, an outsourcing company in Sydney, Australia. After six years, setting up an offshore operation became a necessity. In a podcast interview with Derek Gallimore of Outsource Accelerator, he shares why he chose the Philippines. He also reflects on how business process outsourcing (BPO) has evolved. For context, our look at the history of outsourcing shows how far the model has come.

Politics and the BPO

Cost and scalability are the backbone of the outsourcing industry. Still, other factors make a country a good fit, or not.

“The infrastructure system, the banking system, the general resource management,” Sohan said. “I think they are all geared towards outsourcing.”

For years, the Philippines has backed policies that make it easy to start a BPO operation. The government sees the sector as vital to the economy and to Filipino livelihoods. As a result, it keeps working to support further growth.

Infrastructure still has room to improve. For example, steady investment in telecom and broadband has widened network capacity across the country. For the average Filipino, that means better connectivity, faster speeds, and lower costs. In turn, a stronger network is the foundation for the industry’s continued growth.

TBS Global chooses the Philippines

Most companies that outsource come from the United States, Australia, Canada, Japan, and Europe. A tiny niche needs Filipinos who speak foreign languages. Still, the vast majority of work is in English.

However, language alone does not make one country the best choice. In fact, there are almost 60 English-speaking countries worldwide. “The reliability of the infrastructure, and the people and the experience, and just the general nature of people were amazing for us to set up shop,” Sohan explained. Of course, he is not alone, as many others chose the Philippines for the same reasons. Our guide to outsourcing to the Philippines covers these factors in detail.

The country is not only strong on technology. In fact, the level of government support also makes for smoother operations. Even so, the most cited factor is the nature of the Filipino people. There are cultural differences. Still, learning to adapt unlocks real potential, much to the benefit of clients.

As a cultural melting pot with a heavy American influence, Filipinos adapt easily to other nations. As a result, companies enjoy a smooth transition when they set up in the country.

A lower average income does not mean less skill. In fact, Filipino traits are often an invaluable asset. For example, they are among the most hospitable people on earth. Despite tough circumstances, they are also among the happiest. So they bring real patience, even with the most difficult customers.

Providing solutions

The sector now earns more than $40 billion a year. Even so, many still describe it as early-stage. At first, that seems hard to square.

In part, it reflects the huge growth still ahead. In other words, today’s figure looks modest next to where the sector could be in 10 or 20 years. However, a stronger reason is the ever-changing nature of the business. For a current snapshot, see where the Philippines BPO industry stands today.

The concept of outsourcing is simple. Companies hire the staff, and the BPO provider manages the rest. For example, it handles training, monitoring, and the workplace, equipment, and other infrastructure.

Many people still picture the BPO industry as call centers. Perhaps many firms did start that way. However, the work has grown to cover many other parts of a business.

Sohan describes TBS Global as a hybrid. In short, they do not stick to the idea that a BPO is either a voice or non-voice provider.

“We knew that there were elements of call center requirements that our customers needed as well as a large component of back-office administration and financial services,” Sohan said. By not limiting themselves to one service, they opened up more opportunities. First, they learn the client’s needs. Then they build holistic solutions.

Evolution of the BPO

Most clients buy outsourcing and pay by the hours worked. In recent years, though, the transactional model has grown. Here, clients pay per task, such as calls made or emails sent.

As more small and medium companies learn about outsourcing, their needs have diversified. In fact, some of the solutions they seek stretch the very definition of traditional BPO. These shifts point to the benefits of outsourcing that draw new firms in.

For example, instead of generating sales leads, some clients want to pay based on actual sales. In short, there is a growing niche where clients outsource a whole department, not just part of one. Whatever the pay model, this is uncharted territory. So it brings both challenges and new opportunities.

As Derek noted in the podcast, someone could, in theory, start a company and outsource every department.

Sohan, though, sees this as risky. For one, there is no guarantee it will work. Integration can be tricky. Also, a clear grasp of the business goals can be a hurdle too.

For an outsourcing setup to succeed, clients must bring key people in. That means sharing sensitive company information and plans. Unfortunately, many clients prefer to compartmentalize. As a result, it is harder for a BPO to understand the needs and deliver the best solutions, let alone run a whole department.

Solutions provider and not a savior

Outsourcing is not only a way to cut costs. By tapping the skilled workforce and strong management of BPO companies in the Philippines, firms can also improve or optimize a function.

Even so, some clients outsource mainly to protect their profit. In fact, some look into it only once the business is in trouble. Certain functions can benefit a lot from a third-party provider. However, it should be a long-term solution, not a temporary fix.

As Sohan put it, “We talk about a long-term sales strategy rather than depending on that savior mentality.” That is the approach TBS Global takes to raise the odds of a win-win. In the process, they reach new heights, and they bring their clients along with them.

Final thoughts

New business models often move faster than the rules around them. Ride-sharing is one example, where local laws took time to catch up with the new way of working.

In the same way, some see a gap in regulation for the outsourcing industry. Derek drew an interesting analogy here. He compared outsourced services to export goods in manufacturing, except that the product is information-based.

The country has worked hard to attract new BPO operations. So further rules may still come in time. As noted earlier, the industry keeps changing. Still, the outsourcing industry is on track to become a top revenue source for the Philippines. For that reason, policymakers may well make it even more accessible. To see where things head next, read our take on the future of outsourcing.

For now, there is rarely a better time to start an offshore operation in the Philippines. If there is one key lesson from Sohan and the direction of TBS Global, then it is value.

“It is about adding value to our clients in the areas that are relevant to them rather than just rolling out a solution for the sake of it,” he explained.

Click here to listen to the full podcast of the conversation between Derek Gallimore and Sohan David.

References:

https://www.outsourceaccelerator.com/podcast/episode79/

Frequently asked questions about the evolution and future of BPO

What does BPO stand for?

BPO stands for business process outsourcing. In simple terms, a company hires an outside provider to run a task or function. For example, this can be customer support, back-office admin, or finance work.

Why do companies choose the Philippines for BPO?

The Philippines offers strong infrastructure, a large English-speaking workforce, and real government support. In addition, Filipino workers are known for adaptability and service. As a result, the country remains a top outsourcing hub.

How is the BPO industry changing?

The model is moving beyond call centers and hourly billing. For example, more clients now pay per task or per outcome. Meanwhile, some outsource whole departments rather than single tasks.

Is outsourcing only about cutting costs?

No. Cost savings are one benefit, but not the only one. In practice, the best results come when firms use outsourcing to improve a function for the long term.

How big is the Philippine BPO industry today?

The sector now earns more than $40 billion a year. Still, industry leaders expect strong growth ahead. So its share of the national economy keeps rising.