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Outsourcing

Definition

About outsourcing

Outsourcing is the process of leasing skilled resources from third-party providers. It usually involves availing of services or manufacturing of products. In effect, there’s no employer-employee relationship between the availing company and the staff leased.

The employees’ salary and benefits are paid by the outsourcing company and the client gets billed on a monthly basis. The amount charged is usually a computation of seat/management fee plus salary (passed-thru cost). Seat and management fee varies depending on the company and role being outsourced.

Outsourcing business

Outsourced roles are often back-office related jobs. These jobs don’t require specialized knowledge or specific skills, primarily outsourcing refers to service-oriented ones such as customer support or email support. However, some outsourced position may require specialized skills that the service providers have mastered and developed.

Outsourcing brings a lot of advantages to businesses, primarily being the cost involved. When a business needs a new set of skills, hiring a new employee inhouse maybe more expensive than hiring someone from a service provider.

Outsource Accelerator specializes in helping small & medium-sized enterprises (SMEs), with 2-500 employees, typically based in the high-cost English-speaking world. We are the experts in transforming these businesses with outsourcing.

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Outsourcing FAQ

What is an Outsourcing Company?

What is an outsourcing company?

An outsourcing company handles various supporting processes of contracting companies. These supporting processes are activities that are not central to the company's business but cannot be done away with. Examples include payroll, customer service, accounting, IT, etc.

A great outsourcing company is someone that has proven expertise in the process to be outsourced, that has access to resources and technology not otherwise available to the contracting company. For a contracting company to fully leverage the advantage of outsourcing, it is preferable that the outsourcing company will have it's own key performance indicators to help drive innovation and growth for the contracting company.

Outsourcing companies in the Philippines

Outsourcing evolved a lot during the past decade, it is no longer all about customer service outsourcing. Nowadays, it is very common to outsource other functions such as finance & accounting, lead generation, software development or digital marketing. Outsourcing is also applicable to any industry and any business size, as long as the job can be done in front of a computer, then it can be outsourced.

Outsource Accelerator's directory lists over 700+ outsourcing companies in the Philippines. All of these are carefully selected for innovation, expertise, and technology that will benefit our clients. We also provide you with guidance on how to maximize the potential that such expertise gives you in growing your business.

Offshore outsourcing definition

Offshore outsourcing definition

Offshore outsourcing, also referred to as Business Process Outsourcing (BPO),  is the process of having work done for your business using qualified staffing solutions from countries with lower labor costs.

About offshore outsourcing Offshore outsourcing definition About offshore outsourcing Benefits of offshore staffing Offshore outsourcing examples Offshore vs onshore outsourcing Offshore outsourcing pros and cons Pros of offshore outsourcing Cons of offshore outsourcing Offshore outsourcing Philippines Types of offshore outsourcing 

Offshore outsourcing, also referred to as Business Process Outsourcing (BPO),  is the process of having work done for your business using qualified staffing solutions from countries with lower labor costs.

Commonly IT, sales, and administrative roles are carried out for businesses across the world from countries such as the Philippines and India.

Companies can benefit from accessing other countries that have more resources for people with specialized skills. One popular example of offshore outsourcing is customer service through call center companies. These BPO companies offer quality customer service at a much cheaper rate than hiring locally.

Like nearshore outsourcing, companies prefer having minor tasks outsourced so that the in-house team could focus on the vital functions of the business. One perk of offshore outsourcing for businesses is that they do not need to think about the overhead expenses for the benefits of additional in-house employees.

Overall, the company could benefit from lower human resources costs, equal or higher-quality outputs, and higher profits.

Benefits of offshore staffing

The world is becoming increasingly globalized. Technology, software and communications improvements now enable easy access to a globalized workforce. This has many advantages, but the primary benefits of offshore staffing are that:

You can significantly cut costs (typically saving 60%-80%) Access large pools of highly qualified and highly capable staff Source staff from across the globe instead of being limited by the local population

The benefits of offshore staffing impact small, medium and enterprises across the globe.  These businesses can access more affordable resources to help streamline and grow their business.  This is a win-win for all parties involved.

Offshore outsourcing examples

Companies turn to offshore outsourcing for cheaper wages and better quality work. Just like nearshore outsourcing, companies prefer having minor tasks outsourced so that the in-house team could focus on the vital functions of the business. 

One popular example of offshore outsourcing is customer service through call center companies. These BPO companies offer quality customer service at a much cheaper rate than hiring locally.

Offshore vs onshore outsourcing

The opposite of offshore outsourcing is onshore outsourcing, which is the practice of outsourcing your business functions and non-core teams to a BPO firm in the same country where the business operates. It is also commonly referred to as “domestic outsourcing.”

Unlike offshore outsourcing, the business does not save as much on employment costs – which is the main reason why businesses turn to outsourcing in the first place. 

Since the outsourcing provider is in the same country, both companies will have the same cost of living and labor laws applied. However, with onshore outsourcing, you wouldn’t have to deal with cultural and time-zone differences.

Offshore outsourcing pros and cons

Companies can turn to offshore outsourcing for almost every business role – whether they’re in need of customer service teams, virtual assistants, bookkeepers, graphic designers, IT consultants, and more.

Further, before diving into the world of offshore outsourcing, it’s best to be informed of its pros and cons.

Pros of offshore outsourcing Substantial savings Access to a flexible, diverse, versatile, and proficient offshore team Experienced and competent team leaders will guide your remote team Diminished cost and less legal responsibilities (because your outsourcing provider will take care of everything) Cons of offshore outsourcing Occasional delivery delays Time zone and cultural barriers Possible disclosure of confidential information Offshore outsourcing Philippines

The Philippines is the leading offshore outsourcing destination in the world. With 1.3 million BPO workers and counting, large corporations and even small to medium-sized enterprises all over the world trust that their Filipino workers and remote teams can provide excellent outputs, customer service, or IT assistance at a cost-effective price.

Outsource Accelerator provides you with the best customer service outsourcing companies in the Philippines, where you can save up to 70% on staffing costs. We have over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2500+ BPOs… all designed to make it easier for clients to learn about, and engage with, outsourcing.

Types of offshore outsourcing

Here are some types of offshore outsourcing, as listed by Rezaid:

Production offshoring

The actual movement of the physical manufacturing process overseas, generally at a significantly cheaper cost in terms of personnel and materials, is known as production offshoring.

Front-office and back-office processes and functions are the two primary types of offshored processes and functions. Customer service, inbound and outbound telemarketing, virtual assistants, and technical assistance are all examples of offshore.

HR and recruiting, accounting and bookkeeping, mobile and web development, and design and graphics are other examples of production offshoring.

System services offshoring

Information technology (IT) will be a key subject to get right given the multiplicity of procedures and minute-by-minute activities of any corporate operation. 

In the 1990s, a huge amount of communication infrastructure allowed nations like India, which has a big pool of English speakers and a technically skilled workforce, to lead the sector by luring companies like HP, IBM, Microsoft, Oracle Corporation, Intel, and Cisco.

Innovation and software offshoring

In computer science and software development services, Asian countries lead the world. High-tech product companies, including those in Silicon Valley, have begun to offshore innovation work to Colombia, Belarus, South Africa, Mexico, and Ukraine. 

Using these countries' highly trained labor pools results in considerable cost savings and faster production cycles.

Reshoring

Reshoring, also known as back shoring or inshoring, is the opposite of offshoring. Companies like Google, Facebook, and Amazon have been criticized in Europe for allegedly concealing income and avoiding taxes. They reportedly did this by booking non-US earnings from major advertisers through its Dublin branch in low-tax havens like the Republic of Ireland.

As a result, it started in January 2018 that it would book those earnings and pay the taxes on those profits in the countries where they were generated.

What is Back Office?

What is back office?

Back office is a term used to classify business activities that are not directly attributable to frontline customer support, sales, and services. Back office functions relate to administrative functions which do not directly generate income or accessed by customers, but such is necessary to streamline the other processes involved in a business.

Back office functions include, but are not limited to the following: data entry, account processing, website content management, data verification, mediation, graphic design, writing and editing services, and accounting and finance services. These functions are necessary to a business yet attribute additional cost. Some companies find back office jobs costly since you need to allow a substantial amount of capital for recruitment, salaries, and employee benefits.

Outsourcing back office

In the advent of the internet age, companies can now take advantage of outsourcing, which can lessen the cost of running back offices while maximizing its full benefits. This also translates more time for you and your core team to focus on income-generating functions. Outsourcing back office functions guarantees that you are working with skilled professionals minus the hassle and cost of recruitment, as well as other operational and employee benefit expenses. BPO companies make sure that their representatives are competent enough to handle the client's needs. Outsource Accelerator lists over 700 business process outsourcing companies in the Philippines that specializes in back office administration.

 

What is a Customer Service?

What is customer service?

Customer service is a process of delivering a product or service to a customer in an efficient, accessible, cost-effective, and satisfying manner. It is creating a relationship that involves trust and builds loyalty, even after the delivery is made. Customer service is knowing how to deal with customers and understanding their needs and wants. It is finding what customers want during the entire process of delivering the product or service.

Excellent customer service is knowing when to ask the right questions to get the correct answers. It is listening wholeheartedly to your customers as if you’ve known them for a very long time. Excellent customer service is learning to adapt and provide solution to each individual client. It is discovering the right level of judgment then and there. Most importantly, in-depth knowledge of the products or services you offer is the ultimate foundation of a great customer service experience. Communication skills, creating the right environment, and being friendly aren’t enough if you don’t have in-depth knowledge of the product or service that your company offers.

Outsourcing of customer service

Outsource Accelerator provides you the best customer service outsourcing companies in the Philippines, where you can save up-to 70% on staffing cost. We have over 3,000 articles, 200+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with, outsourcing.

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About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO)

The #1 outsourcing authority

Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between Philippines outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 900+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.