Weighing in on the impact of outsourcing functions to onshore jobs

Does outsourcing take away local jobs?

No, outsourcing does not take away local jobs; with good management, it frees onshore staff for higher-value work, fills talent gaps, and helps companies grow and create more jobs at home.

• Outsourcing lets firms move routine tasks offshore and keep skilled roles onshore.
• It fills talent gaps that developed markets struggle to cover.
• It keeps businesses running through downturns, which protects jobs on both sides.

Overall, there is no doubt that outsourcing offers great benefits to companies. In short, it makes them more efficient by handing certain tasks to a cost-effective, high-quality workforce.

Outsourcing also keeps businesses afloat during tough times. As a result, it helps firms create more jobs and support both their home economy and their outsourcing destination.

Still, there has long been an adage of outsourcing taking away jobs for locals by sending them to countries like the Philippines and India. Because of this, some countries have moved to “take back jobs” by pulling their offshore work home.

Meanwhile, in recent years, many companies have come to see how vital outsourcing and offshoring are to their business and their economy. Charles Allnutt of MicroSourcing and Derek Gallimore discussed this in episode 352 of the Outsource Accelerator podcast.

How perceptions in outsourcing changed over time

With new technology and more globalization, how companies view outsourcing has shifted. This became even clearer during recent economic shocks.

As Charles noted, it even “removed a lot of the perceived obstacles that businesses had when they were looking at outsourcing.”

Some of these shifts include the following:

• The landscape of outsourced services. Outsourcing is no longer limited to call centers and customer service. Firms can now hand off back-office work like data entry, human resources, and accounting to experts who handle it well.
• Views on remote work. Decades ago, telecommuting was almost impossible, let alone offshoring a whole department. Today, work and collaboration happen online with the help of online tools.
• The growing affordability of outsourced work. In short, technology made outsourcing far more available to small businesses. So the idea that only large firms can afford it no longer holds.
• Shifts in priorities. As Charles implied, more companies now treat outsourcing to the Philippines as a priority, not just a way to cut costs. In short, they see clear reasons to outsource in the Philippines now.

Outsourcing’s impact on jobs

Indeed, the industry has made a real mark on both the destination economy and the client. For a fuller view, see our guide to the benefits of outsourcing.

For example, BPOs have created millions of jobs in countries like the Philippines. As a result, many Filipinos have raised their quality of life. In fact, the Philippine IT-BPM sector now employs about 1.9 million people and earns around $40 billion in export revenue each year. This advantage was also flagged in the 2019 World Trade Report on the service sector.

What’s more, outsourcing kept businesses going during the 2008 financial crisis and later downturns. Because BPOs are countercyclical, they managed to grow and keep serving clients through these shocks.

This, in turn, helped companies cut costs, create more local jobs, and support their economies.

Does the industry take away jobs?

As noted, countries like the US and UK moved to pull offshoring functions back and to regulate firms that use the model. This came with the adage of offshoring taking away local jobs.

In reality, outsourcing does not take jobs away. Rather, with the right management, it helps firms support local job creation in two ways.

• As Charles noted, it will not hurt onshore jobs. Instead, it lets firms allocate more “high end, specialized profiles that may not be in the talent pool in the Philippines at this point”.
• Outsourcing also helps to fill the talent gap that developed countries face. With low unemployment rates, firms often struggle to find the right people for non-core work.

These dynamics are now a steady feature of global outsourcing trends.

How can companies make their onshore staff comfortable with offshoring

One way to be successful in outsourcing is to help onshore and offshore staff complement each other. So here are several ways to make onshore employees comfortable with the change.

Orienting employees beforehand

First, companies should brief their teams early on any outsourcing plans. For example, gather the team, explain the change, and tell them what to expect.

Introducing onshore and offshore teams

Next, set a time for onshore teams to meet their offshore counterparts. For example, a hybrid Zoom call can bring everyone into one space.

Encouraging collaboration between teams

Both teams can also work on a single project together. As a result, they build trust and a better working relationship.

Treating outsourced teams like an extension of the company

Finally, gone are the days when outsourced teams simply rendered work for clients.

Today, successful firms treat their offshore teams as part of the company. So both sides work hand in hand. Many firms that are new to the model start by reading up on outsourcing to the Philippines before they hire.

How MicroSourcing brings modern outsourcing

Founded in 2006, MicroSourcing helped bring modern outsourcing to the country. In fact, they are pioneers of staff leasing in the Philippines, with small and medium-sized enterprises (SMEs) as their main market.

Unlike traditional outsourcing, the MicroSourcing model is more scalable. For example, firms can start with a small team or even a single employee. They also learn each client’s needs and strengths to tailor their services.

Check out their website and listen to episode 352 of the OA podcast here.

Frequently asked questions about outsourcing and jobs

A few questions come up often when firms weigh outsourcing against local hiring.

Does outsourcing reduce jobs in the home country?

Not usually. Instead, it shifts routine tasks offshore and lets onshore staff focus on skilled roles. In many cases, that growth creates more local jobs.

Why do companies outsource work offshore?

For example, they outsource to cut costs, access skilled talent, and fill gaps at home. It also helps them scale fast without heavy overhead.

How many jobs does outsourcing create abroad?

The impact is large. In the Philippines alone, the IT-BPM sector now employs about 1.9 million people and keeps growing each year.

Is outsourcing stable during a recession?

Yes, often more than most sectors. BPOs are countercyclical, so they tend to grow when clients look to cut costs and stay lean.