The bigger the company, the larger the expenses. How do major international corporations handle the extra expenses and management efforts that come with expanding an already huge company?
The answer is offshore outsourcing.
Offshore outsourcing is transferring some of your business operations to a far-off country, most commonly in top outsourcing destinations like the Philippines. By outsourcing, companies enjoy larger and more diverse workforces, international branches, dedicated teams and employees, at cost-effective pricing structures.
The Business Process Outsourcing (BPO) industry is one of the leading businesses today. According to Statista, the worldwide BPO industry’s revenue amounted to $24.6 billion in 2017. Here are some real-life examples of successful outsourcing.
Outsourcing in the Philippines
The Philippines is considered as one of the top outsourcing countries in the world, and for many good reasons. It could be the outsourcing industry’s affordable and scalable costing, young and talented demographic, strong government regulations, high-quality output and deliverables, and/or the Filipino people’s excellent communication skills and English proficiency. We feel like Philippine outsourcing has gained quite a reputation around the world, hopefully all good, so we’re not going to bombard you with all the many benefits of outsourcing.
However, many business owners and employees alike have this misconception that outsourcing is mostly for call centers and customer service support only. That is far from the truth. While Filipinos’ English proficiency, neutral accents, and naturally friendly and optimistic attitude make them the perfect staff for call centers, the Philippine outsourcing industry has proven itself to be more than customer support centers in the past several years.
Outsourcing success stories
Below is the story of 16 successful outsourcing ventures. We provide examples from the small business sector and entrepreneurs, big business, and the outsourcing employees themselves:
- Jack Ma of Alibaba: The secret to his success
- Noah Kagan: How outsourcing helped his business
- Mark McRae: Multi-millionaire entrepreneur with 30 businesses
- Vivek Wadhwa: the passionate educator on crowdsourcing
- Brenda Orth: The CIO’s IT outsourcing success
- Myrna Padilla of Mynd Consulting: Through the eyes of an OFW
- Procter and Gamble: Outsourcing increased their innovation
- Skype: From outsourced developers to business partners
- Unilever: Saving operational and labor costs through outsourcing
- Nestlé: From 0 to 5,000 Filipino employeesFrom 0 to 5,000 Filipino employees
- The Coca-Cola Company: Outsourcing’s role in the beverage company’s success
- Johnson & Johnson: One of the world’s most valuable companies
- Toyota: Expanding beyond Japan
- J.P. Morgan Chase Bank: Outsourcing banking and finance
- Lori Llanes Flores: A mother of two beautiful kids
- Ms. Rodriguez: A single mom of a five-year-old boy
Real life examples of outsourcing
Many working-class people resort to this industry for various reasons like career growth, intellectual stimulation, and customer service, among many. If you worked or are currently working in the BPO industry, then you will agree with this.
BPO companies also provide flexibility to its employees. By having a variety of accounts that its employees can be assigned with, it is not difficult for both the employer and employee to maximize the latter’s potential.
BPO companies provide job opportunities locally and globally. From single to married and people who have families, BPO companies have offered great help and support and have had great outsourcing success stories.
One example is the BPO industry in India. In this country, it continues to thrive over the years. Here are some of the reasons behind its success:
- Competitive workforce
- Human resources that are equipped to cater to global market demands
For employers and entrepreneurs, outsourcing has driven significant positive outcomes concerning growth and expansion, which will also be discussed here through the lens of real people and companies.
To understand how outsourcing contributes to the success of various companies and individuals alike, here is its definition.
Definition of outsourcing
Outsourcing is a term used when a company hires experts in a specific field to do job-specific tasks that used to be done by its employees. It is done so the company management can focus on the more immediate areas it needs to address.
It is the central theme of this discussion that drives companies to the top.
For example, Company A will hire Expert A (most likely another company), who is an expert in the algorithm to work on the I.T. Department for the programming stuff. In this way, Company A removes the burden of having to deal with programming issues and can now focus on the primary expertise of the business. Usually, businesses outsource tasks like payroll, HR functions, IT activities, and building management.
There are various reasons why companies outsource. Cost-cutting is one of the good things about outsourcing. Even if it means hiring someone, sometimes at a higher price, it gives a good return on investment. Plus, with the quality performance by experts and added human resources brought about by outsourcing, customers become more satisfied with the services that a company offers.
Is offshoring different from outsourcing?
Why do companies outsource overseas? In the BPO industry, offshoring is also a common word that is closely linked to outsourcing. Offshoring is primarily expanding its manpower talent by getting people from other countries. Often, companies use offshoring to do what they are most knowledgeable about and contribute to the company’s growth and expansion. This is one of the main offshoring benefits.
Some of the benefits of offshoring are:
- Reduced risks because of a diverse pool of talents
- Complementing existing staff with an offshore team
- Significant growth in business because of cost-cutting
- Greater operations coverage because of different time zones
These are to name a few. The most significant impact of offshoring is how it changes lives.
How does Business Process Outsourcing (BPO) change lives?
The BPO industry continues to change lives today, not only for the entrepreneurs and companies but also for the employees.
- For entrepreneurs and companies, outsourcing generates more people, which increases productivity and workforce, thereby generating more profit.
- Outsourcing also helps companies establish a reputable image to their clients since they delegate certain tasks to experts. These experts provide services more efficiently and professionally.
- Outsourcing also lets its employees focus on tasks they are most knowledgeable about while leaving the areas they are unfamiliar with to certain experts in the field. It also reduces the tendency of burnout due to overwhelming workload.
- Outsourcing provides a proper delegation of tasks. It increases the efficiency of the people, thereby giving higher satisfaction to clients that companies cater.
- For employees, the BPO industry gives generous compensation, not only for them alone but also for their families. Plus, there are variations on shifts, so an employee can choose what fits his/her lifestyle best.
- They also provide training so that people who lack a particular skill necessary for the operation can keep up.
- The BPO industry serves as an avenue for connecting different nationalities across the globe. Furthermore, it provides work opportunities and career growth in second and third world countries as big companies do offshoring.
Since the rise of BPO industry, the world has never been well-connected.
Why do people choose the BPO industry as their first career choice?
Reasons for choosing the BPO industry as a career vary from person to person. Single people may prefer this career for advancement; married people or individuals who have kids may choose this career for the compensation and benefits.
Regardless, here are the most common reasons why people, single and married alike, choose BPO:
BPO companies offer competitive salary packages and benefits
There’s no denying that one of the highest-paying jobs is in this industry. Saving money becomes more comfortable because of this.
Aside from the monthly salary, there are also other benefits like performance appraisal, incentives for reaching a target quota, or even for complete attendance. BPO companies continue to exemplify generosity when it comes to benefits and compensation. How are they able to do it even if the population in the industry continues to rise?
There are different reasons for different companies. If employees get to enjoy the perks that the company offers, then this is a great picture that the company is successful. Most BPO companies are very generous regarding benefits. Life insurance, health benefits, family day, scholarship programs are just some of the many they offer.
BPO companies have great facilities for their people
Work does not have to be burdensome. BPO companies are known to have excellent facilities that offer relaxation to their people. After a shift, employees can enjoy amenities like gym, sleeping quarters, shower room, game room, and even karaoke room!
BPO industry is a good source of career advancement
Contrary to the stereotypical belief that BPO is for wanderers, it is an excellent place to start a career ladder. BPO industries are very flexible when it comes to job positions, and there are many internal openings that a person can go for.
BPO companies offer good work-life balance
Some BPO companies give two off days to their employees. While employees enjoy the perks of working in the industry, they also get to enjoy quality time with their loved ones.
Just like any other things, there are also reasons why outsourcing is bad (exposure of data, hidden costs, etc.), which are avoidable with due diligence and research. The beneficial things about outsourcing outweigh those.
16 Outsourcing success examples
The fact that the BPO industry is continuing to rise cannot be any more reiterated. Countless individuals and families have benefited from all the things it has to offer.
Outsourcing does not only generate positive things confined inside the workplace. Even entrepreneurs can do it. The idea may seem daunting at first, especially for individuals and small and startup companies, but many have done it and have become successful.
For individual entrepreneurs, the idea of having to do everything by himself may be overwhelming. That is why it is a good idea to do outsourcing. Not only that, but it lets him/her have different perspectives about specific areas that he/she is not familiar with. Simply said, outsourcing promotes learning and thinking outside the box.
Below are famous individuals and their start-ups, established companies, and BPO employees who attest to outsourcing as the road to success.
The entrepreneurs: how outsourcing built up their businesses
If you are an entrepreneur, you might ask, “Why should I outsource?” or if you can even do it. The answer to that is yes. Even small businesses do it, and they benefit from it. Some of the famous entrepreneurs did this, and they are all known for their success. You might even deem outsourcing is right from their experiences.
1. Jack Ma of Alibaba: The secret to his success
First off, Jack is a nickname given to him by a foreign friend when he was still young. Jack Ma did not start having a notable career. In fact, he first started as a tour guide. Back then, he had the entrepreneur mindset that propelled his career to being the founder of the top online market (even surpassing ebay.com) in China: Alibaba.
He wanted English lessons, so he traded tour guides for them. As he did this, he made sure that he was making connections. He was still young back then, but it is evident in his technique that he has what it takes to be a successful entrepreneur.
His family isn’t well-off, so he thought of education as an excellent way to compensate for it. Despite his determination, he failed his college admission test twice. That same determination made him try the third time, and he passed in Hangzhou Teacher’s Institute.
After graduating, he started applying to many job postings. Unfortunately, he got rejected 12 times. Still, because of his grit, he landed a job as an English teacher that pays $12 a month.
Even if it was a low-paying job, Jack still persevered and performed his best. He was even considered a natural in this field, and he loved his students.
There was one time when Jack traveled, and that started his empire.
Major companies that outsource
During that trip, the internet is a hit, and Jack was captivated by it. His first search was the word “beer.” Upon using it, he did not see any search results from China, and so he decided that a Chinese internet company was indeed necessary.
These were his first steps toward creating Alibaba. He gathered his friends in his place and started marketing himself. When he told them about his idea, they supported him to kick start it. As he made connections with many people, he was able to befriend Jerry Yan, Yahoo’s co-founder. Jack Ma was then introduced to the world of world wide web which served as an integral part of Alibaba.
Jack Ma was confident but was humble enough to admit that he does not know everything to make his idea successful. It was what he acknowledged as he thought of why outsource it. He knew that someone would do a better job in the field of web development.
His “outsourcing why” gave him a solid answer of his net worth of $25 billion and were named as the wealthiest man in China.
2. Noah Kagan: How outsourcing helped his business
Noah Kagan is known as Facebook’s 30th employee and Mint.com’s early employee. What he is famous for is not something that speaks positively about him.
Did you know that he was actually fired from Facebook? He was believed to be arrogant and was irresponsible for leaking information about Facebook’s plans. His performance also slipped, and because of the rapid growth of the company, he was not able to keep up.
He could have made himself millions of dollars from his employment if only it lasted long enough. Sadly, it did not, so he did not gain anything.
But after that incident, he was able to learn from his mistakes. He turned things around, which is proven by his current success. Noah also remembered what Mark Zuckerberg, founder of Facebook, shows as his work ethic: creating something and not just thinking about profit.
He was able to make a comeback, though. Noah applied what he learned and founded AppSumo/SumoMe, a site that offers daily deals. It continues to gain popularity and is also being patronized by entrepreneurs.
One of the good things about outsourcing is that it helps you to take a look at other perspectives. Noah Kagan’s road to success started with $50. With no generated money from his previous employment, he took a risk and outsourced the web development needs of the company to a skilled web developer for the said amount. The result? The website looked professional and promising. He then continued to outsource some more by selling Imgur Pro some subscriptions. From $50 to $2 million – that’s the journey of Noah Kagan.
3. Mark McRae: Multi-millionaire entrepreneur with 30 businesses
Mark McRae is a husband and a father to three children while owning 30 companies. He is one of the reasons outsourcing is being practiced in various parts of the world.
For this man, the following are the reasons as to why outsourcing is important:
- Better access to skilled professionals
- Reducing overheads
- Flexibility with staff
- Increase in efficiency
- Reducing turnaround time
- Generating more profit
Mark McRae also believes that if a computer is part of a job, then you can outsource that.
Furthermore, Mark believes that outsourcing is done because it provides a wide variety of global talents in order to finish a task professionally.
This man is indeed an expert in this field and continues to give outsourcing a good image as his company outsource its services.
4. Vivek Wadhwa: the passionate educator on crowdsourcing
Vivek Wadwha is a believer of outsourcing. Even if it was a fearsome scenario during the 90s especially for the US, Vivek Wadwha envisioned the future for outsourcing. Some businesses indeed went offshore, so why do US companies outsource jobs in spite of this? Reasons may vary, but it definitely paved the way for the widening of the world economic pie.
In his research and literary works, Wadwha made full use of both outsourcing and crowdsourcing. After finishing a research work on the competitive strength of Silicon Valley, Vivek found something interesting: no woman was employed in tech companies. For him, there was a strong bias.
Because of this, Vivek initiated a project in Stanford Law School. He wanted to do some surveys on women to conclude. Vivek outsourced some project tasks to one woman based in Washington DC.
Data gathering through outsourcing
His team outsourced some tasks to students to do interviews. What’s interesting about this is that the data gathering process was done over the phone or via the internet. The research happened anywhere.
He was then inspired to write a book, sort of like a record of the findings, which aimed to address the gender gap, but he needed more insights. However, he was faced with a challenge: writing a book is a full-time job that takes years. He decided that he did not have the years.
As a solution to his problem, he contacted his private mailing list and outsourced the task of crowdsourcing to them. The job was to reach out to their social connections. He was amazed that 500 women signed up for it within 2 weeks.
Vivek and his team created a website where women shared their thoughts and insights. They even learned from one another.
What could be years to do was achieved within 6 weeks. His team gained enough responses to materialize the book.
His team was then able to finish the book all because of outsourcing and crowdsourcing. He valued the help of others on his project. He saw this as a reason to outsource it. Not only did outsourcing and crowdsourcing helped Vivek and his team, but also the participants of the study.
5. Brenda Orth: The CIO’s IT outsourcing success
The question “Why do companies outsource?” is often asked, but not only private companies do it. In Pennsylvania, outsourcing has been beneficial in providing the citizens with quality service. Along with this, a more specific question emerges: “Why IT outsourcing?”
Pennsylvania’s Data PowerHouse (DPH) was created by Brenda Orth along with her team back in 1997. It was the result of a government study that aimed to know how to better handle Pennsylvania and its citizens in terms of providing quality service. They viewed that the information technology (IT) was crucial in this business. But, it also means that this department has to function 24/7 to satisfy its critical operation along with other things.
And so, the DPH decided to outsource their delicate operations. Now, Pennsylvania is known as one of the first states to be successful in outsourcing and an excellent example of why outsource IT services.
Some of the notable results of outsourcing are:
- Eliminating redundancies in the Operations
- Redeployment of resources to certain initiatives of specified areas not included in the IT operations
These are just some of the reasons to outsource IT services. In a nutshell, outsourcing is a useful tool for government activities, not only for private companies.
6. Myrna Padilla of Mynd Consulting: Through the eyes of an OFW
Myrna Padilla is no ordinary woman. Before being successful with Mynd Consulting, she had undergone some unfortunate events in her life. It was hard.
Myrna grew up in a low-income family from a province in the Philippines. At an early age, she learned how to help satisfy her family’s needs. In the face of poverty, her only weapon was hope. She dreamed of a better life for her family.
She knew she wouldn’t be able to make a living for her daughters from just working in the country. Because of that, Myrna decided to work as an overseas contract worker, or OFW. According to her, no amount of physical pain ever equates to that of being separated from her daughters. But, she dreamed for them, so she had to sacrifice.
Her persistence and determination led her to a loving family in Hong Kong whom she worked for as a domestic helper. The family treated her kindly and loved her as their own. She took care of the couple’s eight-year-old son, who introduced her to the computer. Her life changed since then.
Myrna was an eager learner. She even founded an online group named Mindanao Hong Kong Worker’s Federation. In this group, members shared their experiences as OFWs. They also held meetings every Sunday, which is their only day off.
Myrna dreamed for her fellow OFWs who had to be away from their families just to make a living for them. She thought of a job that would not require family members to leave anymore. She thought about BPO even though she did not know what it was back then. Myrna then decided to harness the power of the internet.
By the time she got back to the Philippines, she was resolute to bring her dream into life. Mynd Consulting is a business outsourcing company that started with two employees and an old computer. Because of her passion and determination, Mynd Consulting now caters to US and European clients.
Again, there are many reasons why companies outsource, but for Myrna, it helps the Filipino people to make a living without having to be away from their families. She is also serving as an active advocate against human trafficking by funding OFW Watch project, a mobile application which aims to empower women against slavery and trafficking.
These are some of the entrepreneurs who have proven that outsourcing is good. Next are the companies who have been established and thriving with the help of outsourcing.
Major companies that outsource: How outsourcing helped them survive and flourish
Why do companies outsource jobs? These companies have their share of stories to the wonders of outsourcing:
7. Procter and Gamble: Outsourcing increased their innovation
Procter and Gamble (P&G) is well-known for its products. Many people around the world trust their products. However, with rapid success comes fast growing demands, and P&G knew that they had to exert more effort to keep up with the pace.
P&G had always been innovation-centered. Research studies are part of the core concepts of the company. However, there are many facets in running a huge business that also needed to be attended to.
Management – one of the reasons why companies outsource. P&G decided to outsource IT apps development, IT support, and data center operations to HP; payroll, expatriate, and travel services to IBM; and floor and building management to JLL.
Outsourcing its facilities management to JLL was a ground-breaking exchange. It was a first for both companies, thus challenging both of them. P&G did not only want JLL to take care of the company’s establishment but also to be in charge of it.
P&G gave a twist to the traditional outsourcing process; instead of outsourcing daily work, the company devised a model that aimed for results and transformation. Thus, almost 600 P&G employees were then labeled as JLL employees, mainly for being a part of the process of outsourcing.
Outsourcing made it possible for the two companies to work on a win-win situation by creating and sharing value utilizing performance-based goals, which are also innovative.
Even though P&G was the one that outsourced, it still gave credit to JLL. They shared the glory, which is what they call “vested” agreement.
Contract governance leader-in-charge Larry Bridge said that the effort of going in the same direction was why everything worked out instead of being on two ends of the table, negotiating.
Because of this, innovation productivity was increased by 60 percent and 400 new products raised a revenue of above $10 billion. Not only that, but JLL also became the “supplier of the year” within 5 years after being a new supplier to P&G. This is among 80,000 suppliers.
You can see here that outsourcing does not only generate profit but can also build connections and strengthen relationships. For P&G, it was outsourcing plus good intentions and right handling of relationships was the combo that led to success.
8. Skype: From outsourced developers to business partners
Skype is one of the most used online communication platforms whether for personal or professional purposes. With the continuous growth of the application, it implies a growth in the company, too.
Why do companies outsource jobs? Even when it was just starting, Skype recognized the need for the “experts’ touch” to certain aspects of the business.
Before its popularity and full-functionality, it encountered some technical issues, which was not suitable for any customer reviews. The team decided to outsource the app’s development to three developers from Estonia namely Priit Kasesalu, Ahti Heinla, and Jann Tallinn. At first, they were just outsourced but eventually became business partners. This led Microsoft to buy Skype for $8.5 billion.
This shows that outsourcing is a good way of showing humility to ask for help in order to land at a better place.
9. Unilever: Saving operational and labor costs through outsourcing
Unilever is a trusted company, but that did not guarantee a smooth operation every time. With so many things going on within the company and its branches, Unilever has so much on its plate.
Different branches across the globe use different ERP systems. Unilever decided that it’s best to have one ERP system for the whole Unilever body in Europe. However, Unilever was not savvy when it comes to IT stuff. This is why company outsourced its ERP system development to a third party. The result? A massive €700 million yearly savings in terms of operational activities.
By outsourcing the services that the company did not have much expertise with, it was able to focus on what it is best at. By doing so, not only did they remove some burden from its employees’ backs, but it also enabled them to save a lot, which it could use for other business operations.
These three vary in terms of the reasons companies outsource, but all of them have shown a great deal of benefit that they got from doing so.
As mentioned, BPO does benefit not only entrepreneurs or employers but also their employees.
Nestlé is the world’s largest food and beverage company headquartered in Vevey, Switzerland. The food and drink processing conglomerate established its first office in the Philippines in 1911. Their first sales office is in Binondo, Manila.
Fast forward to today, Nestlé Philippines has an administrative office in Makati, and four factories in Laguna, Quezon Province, Batangas, and Cagayan de Oro. Three of these factories have been designated as the Nestlé Group’s ASEAN Supply Centers.
Nestlé employs over 5,000 workers in the Philippines.
11. The Coca-Cola Company
The Coca-Cola Company is a multinational beverage company corporation headquartered in Georgia, United States. The company had presence in the Philippines since 1927, but only acquired full ownership of The Coca-Cola Company in February 2007.
In December 2018, Bottling Investments Group (BIG) acquired the company. They renamed it Coca-Cola Beverages Philippines, Inc. as a reflection of its ambition to build a total beverages company.
Coca-Cola Philippines operates nationwide, with 19 manufacturing plants and around 50 sales offices and distribution centers. The firm also employs more than 9,700 regular employees.
12. Johnson & Johnson
Johnson & Johnson is a multinational medical devices, pharmaceutical, and consumer goods provider headquartered in New Jersey, United States. J&J is considered as one of the world’s most valuable companies.
J&J Philippines’ outsourcing success started in a two-room office on the second floor of the Co-Unjieng Building on the corner of Dasmarinas and Rosario Streets in the Santa Cruz districts in Manila in 1956. In 1999, the Johnson & Johnson ASEAN Consumer Group of Companies was formed consisting of consumer companies in the Philippines, Singapore, Malaysia, Indonesia and Indochina. It was led by a Filipino, Diosdado C. Salvador, Jr.
Fast forward to today, J&J Philippines has branches in Paranaque, Metro Manila, and Davao City. The company is also targeting to reach over 1,200 employees this 2020.
Toyota is a large multinational automobile headquartered in Toyota City, Aichi, Japan. As of December 2019, Toyota was the tenth largest company in the world by revenue.
Toyota Motor Philippines Corporation (TMPC) was founded on August 3, 1988. TMPC’s head office and manufacturing plant are located inside the 82-hectare Toyota Special Economic Zone (TSEZ) in Santa Rosa City, Laguna. Its marketing office is located in Makati City.
The company has 89 dealer offices, 1,925 team members, and over 55,000 employees as of the end of 2018.
14. JPMorgan Chase Bank N.A.
JPMorgan Chase & Co. is a multinational investment bank and financial holding company incorporated in Delaware and headquartered in New York, United States.
The next are the employees who shared their success stories because of outsourcing.
The Employees: How outsourcing plays a big role in their lives
Why do US companies outsource? Why do firms outsource project work? What do they get from doing so? While there are so many answers to these questions (most likely answered from the previous points), the fact that outsourcing provides great help holds true for these two individuals.
Here are their outsourcing success stories:
15. Lori Llanes Flores: A mother of two beautiful kids
Lori was a hopeful wife and worked hard for her family. However, she found out about her husband’s involvement in an extramarital affair. She separated from him, bringing her two daughters with her.
She decided to be an overseas Filipino worker (OFW) to support her two daughters. However, a deplorable incident happened – her daughter was stabbed and pronounced dead. It was extremely hard for Lori as she was overseas and her boss didn’t let her come home to even bury her daughter.
She tried her luck to build her business overseas. Unfortunately, it did not go with much success. She then decided to go home and tried the BPO industry.
Lori was a diligent employee, not wanting to be tardy or absent. She even borrowed from her neighbor for her fare going to work every time her budget falls short.
Her hard work paid off as she was awarded as the “Iron Lady,” which is for her complete attendance that also came with a cash prize.
She was able to get her daughter to finish college. After that, she pursued her passion and is now a Zumba instructor.
16. Ms. Rodriguez: A single mom of a five-year-old boy
C.A. Rodriguez was a girl who loved to party before she got pregnant. She then got pregnant and had to raise her son, Xander, alone because of the toxicity of the relationship with her former husband.
The BPO wasn’t her first choice, but she made her decision as she thought that it was the right job for her and her son.
At first, she often felt guilty for leaving her son alone at night, but Xander was very cooperative and soon learned to sleep without his mom during nighttime. They got used to this set up as time went by.
C.A. was happy with her work and even got promoted as a team leader after 1 year. Aside from the benefits and compensation, flexibility is one of the good things about outsourcing for her.
So, in a nutshell, outsourcing is a tool that drives success to both employees, company owners, and entrepreneurs. There are living proofs that it does so. If you are a small business owner, or just starting up, you might want to consider outsourcing certain tasks to give better services to your clients.