Cost-Effective Outsourcing in the Philippines

Outsourcing is the subcontracting of an overseas company to perform services such as customer service, back-office tasks like accounting, technical support, programming, virtual assistance and more.

In the recent times, outsourcing has been most commonly defined in instances where an IT company gives the technical and customer service support to a third-party company to do the job. But the main goal why for example, a US company prefer outsourcing their customer service support department to offshore countries like India and Philippines is because of the AFFORDABILITY of services. The comparative quality than of what the local employees can offer, is of course a Big Plus!

These days, the rate per hour for a highly-qualified US employee is $10. So for an 8-hour, 5-days a week work, you'd have to pay $400 a week just to get the weekly job done. Not to say, that this is just the minimal fee.

However, outsourcing allows you to extend your money and save more. Instead of paying $10 minimum per hour, you can already get an employee offshore with an equal amount of work quality at a $5-6 per hour!

This is clearly the major reason why many foreigners invest outsourcing in other countries, preferrably Asian.

When it comes to customer satisfaction or top-class work, not a problem! Many countries may belong in the 3rd world countries but they have a very good English language background, as well as in technical and back-office tasks. They have a quite impressive passion and determination for learning and for working. So rest assured that you're business is in good hands.

Organizations that outsource are seeking to realize benefits or address the following issues:

Cost savings - The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.

Focus on Core Business - Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specialised IT services companies.

Cost restructuring - Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.

Improve quality - Achieve a step change in quality through contracting out the service with a new service level agreement.

Knowledge - Access to intellectual property and wider experience and knowledge.

Contract - Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.

Operational expertise - Access to operational best practice that would be too difficult or time consuming to develop in-house.

Access to talent - Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering.

Capacity management - An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.

Catalyst for change - An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.

Enhance capacity for innovation - Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation.

Reduce time to market - The acceleration of the development or production of a product through the additional capability brought by the supplier.

Commodification - The trend of standardizing business processes, IT Services, and application services which enable to buy at the right price, allows businesses access to services which were only available to large corporations.

Risk management - An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.

Venture Capital - Some countries match government funds venture capital with private venture capital for startups that start businesses in their country.

Tax Benefit - Countries offer tax incentives to move manufacturing operations to counter high corporate taxes within another country.

Philippines in the past few years, have made a name for itself in providing offshore call center and BPO related services and is becoming India's toughest rival in the said field.

Lately, many foreigners favor Philippines over India because of the Filipinos' neutral accents, large volume of English-speaking workforce, high literacy rates(95.9% compared to India's 52%), good work ethic, and low labor cost, not to mention the similarity of culture of the Americans with the Filipinos, which is a good common ground for North Americans and Filipinos, crashing out the communication gap tendencies.

India is one of the first countries to open BPO for American companies and is the top outsourcing destination for IT services and BPO, but not any longer. In the recent years, study shows that companies operating BPO in India are closing down and migrating to the Philippines, simply because of the advantages that sets apart Philippines from India. Dell and Sprint are just one of the many who transferred.

Moreover, India's new tax ruling brought a negative effect to the country's outsourcing industry, giving way for the Philippines to be on the spotlight.

Outsourcing in the Philippines not only paves American companies to be able to globalize their business, they were also able to maximize their resources and increase quality customer ratings and most importantly opening the doors for further investments for the business growth.

With Philippines' fast-emerging potential in BPO, it is more likely that 10-20 years from now, it will reign as the global BPO hub. India appears to acknowledge this outrule over Philippines, in fact, some Indian BPO companies have done great extent for survival such as opening call centers in major cities in the Philippines while others buy Philippine BPOs.

BPO race just like the human race, is also about survival of the fittest where obviously Philippines outwins India.

Hundreds of companies from all over the world, come to the Philippines to invest on business process outsourcing, in the hope of providing quality customer and technical service representatives to their clients abroad without spending a huge amount of money.

In the midst of global crisis, many companies have had to cut back human resources and worst, close down, while some
companies particularly from top nations, resort to alternative solutions in spite of the cons as long as the company survives.

These days, outsourcing has become the best altervative for these affected businesses to survive, especially those who require massive number of human resources like IT products and mobile phone companies which are in dire need of hundreds of individual to fill in both their customer service and technical department.

To know why many resort to Outsourcing and to find out the reasons behind this growing trend, please refer to posts above, "Why Outsource?" and "Reasons for Outsourcing".

Just before you decide to go outsourcing, keep in mind that outsourcing is not equivalent to compromising. It's simply a matter of balancing the pros and cons and doing a lot of research, giving off time and effort and the success that you envision will be returned.

Information Technology Outsourcing, particularly, just like other outsourcing services Philippines can offer, have made its spot alongside India and competitor countries. Over the past 5 years, IT solution providers have been growing like mushrooms in a garden.

With the amount of IT graduates Philippines produce each year, no wonder many outsourcing companies pops up. This fact alone makes enough evidence why companies abroad outsource to the Philippines to take care of their website and software development, web design, animation and multimedia creation, data entry, search engine optimization and more. And like a wildfire, once a foreign client is satisfied and gets excellent results, they recommend Filipino IT specialists to their friends and relatives and there has been more and more of them that are wanting to get their hands to the trend.

Outsourcing industry has opened many doors to the Philippines, has helped in reviving the economy and offered tons of job opportunities, that's why the Philippine government promises its full-support for the growth of the industry. IT outsourcing companies expands their branches to other major cities like Cebu and Davao, where they could benefit even more as the cost of living decreases, thus paving way to the increase of profits for investors' advantage.

IT solution providers in the Philippines are dynamic as they are up to date with the latest technologies and international standards in maintenance. Their capability to learn fast and passion and determination for their work tops them off the others.

Make the same strategic move now, outsource your IT jobs to the Philippines and every penny you invest will pay off long-term.

Medical Transcription Outsourcing is becoming one of the booming and successful outsourcing industry in the past few years. As the global recession hits the USA, vast amounts of MT outsourcing jobs have been showering to different parts of the world. The developing countries namely, India, Thailand and Philippines are just some of Asian countries that have gained benefit from this.

The Philippines is the most aggressive and leading in the MT field. It has been a top destination for MT Outsourcing jobs from all over the world because of the advantages it has over its rivals. Where unlike its competitor countries, majority of its local workforce have a good background in English language. Thanks to the fact that English is the second language in schools, offices and the government. PLUS, as an American colonialized-country, Filipinos have adopted Westernized living and has been exposed over the years to western culture via magazines, TV shows, movies, books and more. Thus, they understand American idioms, colloquialism and slang - making them stand-out among its counterparts.

For the Philippines to be able to accommodate the huge amount of MT outsourcing jobs, Health Insurance Portability and Accountability Act (HIPAA) -accredited establishments are being built (and more to come), providing standardized and up-to-date training for those who want to proceed a career in the MT field. While there are also on-the-site centers that processes MT jobs by hiring certified medical transcriptionists.

In relation to the continuous growth for the demand of medical transcriptionist, Filipino MT centers and organizations keep on training and hiring top-notch MTs and updating to the latest procedures and technologies to stay globally-competitive without compromising the cost-effectiveness.

Well, the best solution for you is to outsource these tasks to someone homeshore or offshore, but I strongly recommend offshore. Not only because its the "in" thing right now, rather because it's affordable and you'd still be able to get the same amount or higher quality of results. Thousands of companies from all over the world provide services like Agents of Value Philippines Outsourcing,that complies to exactly what you need, such as; SEO, Email Marketing, Blog Programming and Marketing, Writing (eBooks, articles and contents), Google Adwords Campaign Management, Social Networking, Website Designing, and more. Most importantly, just make sure to do a research and get the right information on which outsourcing sites best suits you and your needs.

Another "must do" before you find the outsourcing company to provide you with services, you must write the tasks that you need to outsource and how exactly you want the tasks done. Set rules and guidelines, if you're an expert, train them that you would contribute to getting better results in accordance to how you want it to be.

Although Philippines may have never been one of the first countries to ever be introduced in SEO, their capacity and willingness to learn made them stand out among other countries who have long ago started SEO and marketing campaigns. Nowadays, many companies have been established that provides outsourcing services, where most of them are globally-competitive.

Philippines is a country that should never ever be underestimated. What the 1st world countries do and offer, Philippines can do and offer them too.

Agents of Value is a company based in the Philippines that specializes in providing both foreign and local Internet businessmen with dedicated agents to perform day-to-day task and help in achieving their goals, be it in success in SEO, completion of back-office and IT jobs and more. Name it, AOV agents will make it possible.

AOV Philippines Outsourcing branches out to three major cities in the Philippines, with a vast top notch agents to choose from at a very affordable price. For as low as $625 a month, that's barely $4 per hour, you can hire a full-time staff. Compared to its competitors, with $4 per hour, rest assured that your business is in good hands.

Unlike other outsourcing companies in the Philippines, AOV has the toughest entry level. Applicants are filtered by a series of skill-related tests particularly SEO and undergoes a training and must pass all these before declared as hired. Thus, with the entry alone, AOV gets the best of the best in order to provide a globally-competitive staff to their clients.

In return, clients are happy and completely satisfied with the outcome of projects, tasks and the huge success brought to their business - a goal that any competitor can only wish!

All of us are very familiar with the term BPO which is Business Process Outsourcing. Today, they say that BPO's are loosing its glory as setting up a call centre is expensive; the competition is intense and margins drastically reducing. Here then KPO emerges. What is KPO anyway?

Knowledge Processing Outsourcing (popularly known as a KPO), calls for the application of specialized domain pertinent knowledge of a high level. The KPO typically involves a component of Business Processing Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). KPO business entities provide typical domain-based processes, advanced analytical skills and business expertise, rather than just process expertise. KPO Industry is handling more amount of high skilled work other than the BPO Industry. While KPO derives its strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more about size, volume and efficiency.

Emerging KPO opportunities in following sectors:

* e-Marketing
* Retail Industry
* Research & Development
* Business and Technical Analysis
* Learning Solutions
* Animation & Design
* Business & Market Research
* Pharmaceuticals and Biotechnology
* Medical Services
* Writing & Content Development
* Legal Services
* Intellectual Property (IP) Research
* Data Analytics
* Network Management
* Training & Consultancy

KPO vs. BPO

KPO is fundamentally different from BPO; in BPO mostly noncore business processes are outsourced to offshore locations. But in KPO core businesses processes are outsourced to offshore locations where highly educated professionals perform the KPO tasks. The fundamental reason for BPO is to save money. But in KPO it is not about saving money. Knowledge workers scarcity is the main reason for the companies offshoring KPO work. Typical KPO projects are performed by professionals found in different parts of the world where the work and responsibility is shared among all the workers. But in BPO within a business value chain one ore more steps are striped, sent to offshore locations, performed and integrated back into the business value chain. Understandably, the average KPO employee is expected to have better qualifications, skills and knowledge as compared to his/her BPO counterpart.

Doing whatever they can just to save costs and gaining higher profitability in business is in the core nature of most companies. Companies can cut labor costs by outsourcing their back office business processes to less expensive nations like China, India, Philippines, Malaysia, and can concentrate on their core businesses and strengths, and ensure better customer satisfaction. According to a recent report, US firms have saved nearly US$8 billion through outsourcing to developing nations like the Philippines.

Some of the countries that can be considered as offshore outsourcing destinations are as follows:

Philippines

Its people are the Philippines' key competitive advantage. Philippines has a well-educated English speaking work force and stands out as the world's third largest English speaking nation. Filipinos' attitude, commitment, community, and education constitute the key competitive advantage especially in the front office operations such as customer service and sales.

Government support and the IT infrastructure is a given. Major companies that already operate in the Philippines include AIG, AOL, Barnes & Noble, Chevron, Citigroup, Dell, HP, HSBC, IBM, Intel, JPMorgan Chase, Motorola, Procter & Gamble, Siemens AG and Trend Micro.

China

China is emerging rapidly as one of the world's leading suppliers of offshore software outsourcing services due to its incredible development rate. Although India is at the moments the world leader in software outsourcing industry, China aims to outpace India and become the next dominant competitor in software outsourcing.

The recent flurry of activity that helped put China on the outsourcing map came about partly as a result of government support and promotion, partly because of Japan's push to move much of its software development work to China, and partly because a number of large foreign companies -- GE, Microsoft, Dell, SAP and HP, for example -- started up R&D centers in China.

India

One of the major players in the offshore outsourcing industry, India has a well educated, talented, low cost and English speaking workforce, excellent IT and networking infrastructure, a fairly stable political scenario, friendly laws and well laid taxes and quality certified software firms. The offshore outsourcing market in India is ever growing and has produced many success stories making India a popular offshore outsourcing destination for IT related and other BPO services.

Malaysia

Malaysia's well-developed infrastructure, attractive business environment and strong government support makes it a rising alternative to India and China. The government's positioning of Malaysia as a hub for services and technology innovation has resulted in a number of multinationals locating some of its global or regional operations in Malaysia. Malaysia has a relatively more stable political climate backed by consistent economic growth which makes it attractive for sensitive, high end applications in banking and finance.

All in all, these are the simple outsourcing current ideas you need to know when choosing the best BPO firms in the world. Grab the benefits of outsourcing now and it all start in your tough decision.

To determine whether it makes sense to outsource, you must understand what makes for a successful outsourcing partnership.

Check them out: an outsourcing vendor is no less critical to your operations than a regular employee, so why should you one with less caution? It is worthwhile to shortlist two or three service providers, on whom you can do a complete background and credentials check before zeroing in on "the one".

Lay down the ground rules: Because of a lack of clear delineation of responsibilities a lot of outsourcing relationships have fail. Keep in mind that you have relatively less control over an outside service provider, as compared to your own employee. It is important to keep everything in writing!

Go slow : it may not be very fair to expect top notch performance right away, the temptation to offload everything the minute you sign up could be your undoing. Start by outsourcing some part of a project, preferably that which has a lower impact on your business. See how it goes before you take it further.

Keep talking with each other: establish a review and feedback mechanism that can help everyone understand which way things are headed. Of course, this means that everyone must know what is expected of them. An outsourcing relationship can succeed only when all parties play their respective parts well. And that includes you too.

Understanding the cultural differences: This is one area where countries like India need to concentrate. As both parties to the outsourcing relationship will have their own culture, these differences have to be recognized and bridged. Organizing social events, education on company background, participation in other's quality programs, etc., is some of the ways to improve the cultural understandings and bridging this gap.

Steve Fisher from KPIT Cummins gave a quick guide to the top six outsourcing mistakes made by organizations when they enter into an outsourcing relationship.

The top six mistakes in outsourcing:

1. Underestimating the cost and complexity of managing the relationship with a vendor.
2. Overestimating the cost savings (linked to point 1 especially in the short term.)
3. Selecting a country for offshoring plans before defining your objectives.
4. Failing to tell your employees what you are planning and what you are doing when a plan is put into action.
5. Selecting a single-source provider to do everything.
6. Failure to put retention plans in place for talented people.

A short list but direct to the point.

A place where a company can shift its processes overseas is called an off-shore outsourcing destination. Responding to it's allied benefits, Philippines is seen as a good destination for outsourcing business process services.

Let me run through some benefits and drawbacks associated with business process outsourcing Philippines;.

Benefits:

* Philippines is the third largest English speaking country
* Labor is relatively cheaper compared to other nations
* Availability of well educated computer savvy workforce
* Different government incentives to attract investments
* Strategic location that allows 24 hours work compliment with US and UK
* Quality software firms are available

Drawbacks:

* Less developed IT and networking infrastructure
* Political instability

Various many functions or processes could be outsource to off-shore destinations. These services to outsource can be divided into technology services outsourcing and business process outsourcing. Some of the most important functions to outsource are as follows.

Technology Services outsourcing

*web security and solutions
*Web hosting
*e-commerce: B2B, B2C and C2B Infrastructure
*Website designing/development/maintenance
*Telecommunications

Business Process Outsourcing

* Back office operations
* Call Centers and telemarketing
* eleservicing and product support
* Payroll maintenance
* Finance / Accounting/billing
* Human Resources
* Medical transcription
* Supply Chain Management
* Customer Relationship Management
* Logistics Management

Apart from this above mentioned function to outsource there are other high end processes like knowledge services that are being outsourced by many companies.

Outsourcing is still more of an art than a science. But it's now part of the corporate toolkit, and it's important to use this tool right.

* Go Offshore for the Right Reasons
Don't outsource a mess! Don't decide to send work offshore simply because your competitors are doing it. When outsourcing you have to consider these question. Can you boost efficiency and competitiveness by shaking up operations or improving technology at home? What's the risk of a damaging backlash from your customers or community? "Offshoring is a powerful lever, but just one [of many]" for companies aiming to stay competitive, says Ramesh Venkataraman, McKinsey & Co.'s tech partner for Asia.

*Choose Your Model Carefully
Weigh whether you should set up your own subsidiary offshore--known as a "captive" operation--or contract with outside specialists as you develop your strategy. The appeal of opening your own outfit is that you keep firm control of proprietary technology and processes.

* Get Your People On Board
Keep in mind that employees and middle managers can make your bold move happen--or stop you in your tracks.

*Be Prepared to Invest Time and Effort
Quality control is also important once the offshore project is up and running, particularly for more complicated tasks. As Gartner points out, 80% of companies cite cost-cutting as the main reason for outsourcing. But you won't save as much after the initial year unless you're prepared to invest serious management time and effort.

*Treat Your Partners As Equals
While working with offshore partners can be scary at first, outsourcing veterans agree that the gains are greater if you regard them as equals. "If you try to treat these suppliers as a body shop--telling them exactly what to do and how to do it--it does not go well," says Christopher Cartwright, CEO of the corporate and financial services division of Dutch-American publisher Wolters Kluwer.

Are you constantly running out of time and energy? Restructure your life with the services of a business or personal virtual assistant. Virtual assistant is also part of an outsourcing industry that performs any task that is given by the client. They are the one responsible for the entire task that is required by the client. Meeting client's satisfaction and great output is one of the virtual assistant's goals. Are you constantly running out of time and energy?

Restructure your life with the services of a business or personal virtual assistant. A business virtual assistant is like having an extra employee on the job to minimize stress and maximize productivity in the workplace. They can answer and place phone calls like a receptionist, manage calendars and schedules, and even perform accounting services. With the growing use of the internet and technology, a business personal assistant can even help with website design, blog writing and web content writing.

It's amazing what a personal or business virtual assistant can accomplish. Whether your virtual assistant is located in California or Davao City in the Philippines, their services are available 24 hours a day and 7 days a week. Keep in mind that offshoring tends to minimize the expense associated with a personal or business personal assistant. Finally, business and personal assistants are unique in that they can be ready on demand. This means you don't have to schedule them for 40 hours a week if you only need services for 2 hours. Full-time, part-time, weekends or holidays, virtual assistants are ready to work when you need them.

In deciding to outsource several critical business processes, your company has made the right decision. But should you choose an offshore or onshore solution? There is a growing number of business process outsourcing (BPO) companies available today, with some located onshore in the United States and others in offshore locations like the India and Philippines. Offshore and onshore outsourcing companies both have pros and cons.

Onshore Partners: Cultural Convenience at a Cost

The obvious strength of onshore outsourcing is that you will be readily able to meet face-to-face with your outsourcing partner if it is necessary.Unfortunately, onshore outsourcing, with its significant cultural advantages, features a high price tag that can be a strain on the average outsourcing budget. A domestic outsourcing partner will come at a much higher cost than one located offshore.

Offshore Partners: Expertise with a Budget-Friendly Price Tag

Some of the popular sites for offshoring include the Philippines and India, two countries with strong economies. They feature energetic and enthusiastic workforces that are ready to meet your business process outsourcing needs. Offshoring is much more affordable than onshore outsourcing. Offshore outsourcing firms also have state-of-the-art call centers in place to handle and issues and solve complex problems that may arise.

In your search for an outsourcing partner, you will discover that companies all over the globe have impressive track records, strong leadership and management teams, and employees with the right combination of skills to serve you.

India has long been considered the outsourcing capital of the world. India raked in over US$7 billion of the offshore BPO industry, more than 60% of the offshore component worldwide. Outsourcing in the Philippines is taking flight primarily through call centers that have sprung up across the country. Primarily centered around Manila, Cebu, and Davao City, the abundance of talent at a lower cost has made the Philippines a much more viable option in recent years, especially where medium-sized businesses are considered.

Below are some examples where the Philippines maintains an edge over India:

1. Skilled Workers - The lack of skilled workers in India has caused prices to increase in recent years, while the talent pool in the Philippines remains largely untouched. The current lack of options in the Philippines allows for higher employee retention and continued growth with their offshore counterparts.

2. Cost - Simply put, the Philippines remain a less expensive option. In some specific industries, employee costs in India have risen to approximately 60% of comparable costs in the US, with the Philippines only achieving roughly 30% for those same positions.

3. Cultural Adaption - When it comes to call centers and customer facing positions, having employees that understand well the intricacies of American culture provides huge qualitative benefits. Less cultural training also leads to less employee acquisition costs, which can become quite extensive compared to India.

Finding a good outsource partner is like looking for a boyfriend or girlfriend; it takes time, energy, and a significant personal investment to build a strong and healthy relationship. Most people get to know each other by asking and responding accordingly to a series of questions. The outsourcing process should be no different. Consider these five questions to help you get to know your potential outsourcing partners before you commit to a long-term relationship.

* Does the match meet your goals and objectives for using business process outsourcing?
* Is the potential match financially stable?
* Can the potential match provide references?
* Is the size of the outsourcing team manageable?
* How educated and trained are the staff members?

Most Information Technology companies have the capability of doing their IT/BPO services in-house.
With the rising fees for outsourcing consultancy, like do-it-yourself (DIY) outsourcing can pay off in a more flexible contract or a stronger relationship with the service provider.

Here are 10 cost-saving secrets that one can do during the services procurement process:

1.Say No to Fear, Uncertainty and Doubt
2.Consult counsel judiciously
3.Use consultants selectively
4.Take advantage of new tools
5.Embrace hard times
6.Locate and leverage in-house experts
7.Focus on the business case
8.Exploit your vendor
9."Google" it
10. Be selective

Outcome-based outsourcing is the holy grail of IT services. Both customers and providers agree that if they can figure out a way to tie sourcing strategy to business results everyone will be happier in the end. "Paying for outcomes is the idea of paying for success toward a desired result instead of paying for individual items like servers or programming hours," says Adam Strichman, an independent outsourcing consultant based in Mechanicsville, Va. Managing outcome-based deals is far from simple and requires a labyrinthine system of metrics. "One of the challenges in software development is there is no real set of measures that are simple and make sense," says Dave West, a senior analyst at Cambridge (Mass.)-based Forrester Research.

Besides the different classifications of outsourcing, there are also a lot of different ways that an outsourcing solution can be structured. Let us look at some of the project variables and each outsourcing model that clients and providers can agree upon:

* Project Duration
Are you outsourcing a project with a fixed time table and duration or are you planning to outsource a certain business process for an indefinite period of time?

* Manpower Requirements
How many people do you need? Will these employees have full-time, part-time or freelance contracts? What skills and experience do you need them to have?

* Infrastructure & Tools
What infrastructure will your project require? What will your people need in terms of hardware, software, and connectivity?

* Management
How will the various management tasks be divided between you and your outsourcing provider? Who will handle HR, technical support, operational management, quality assurance, production planning, etc?

*Compensation Scheme
How will your outsourcing provider be compensated? Will it be based on head count, man-hours or deliverables? Will there be any performance incentive schemes?

These project variables and the details involved will form the building blocks of the final outsourcing model applied between you and your provider.