What are the advantages of outsourcing?

The global business process outsourcing (BPO) industry is expected to hit $435.89 billion by 2028 with a compound annual growth rate (CAGR) of 8.5% from 2021 to 2028. This significant growth can be attributed to a multitude of economic factors such as global labour shortages, the increased interest in the benefits of offshore teams and the re-evaluation of internal resources.

This blog will provide an in-depth guide on what outsourcing actually is and the advantages hiring an offshore team can have for your business.

Probe Blog | Outsourcing

What is outsourcing?

Outsourcing is a business strategy that involves hiring team member(s) outside of your organisation to complete tasks that support your local teams in whatever capacity is required. Outsourcing and offshoring can be used interchangeably. Where outsourcing means hiring teams outside of your organisation anywhere in the world, this could be down the street or in another country, offshoring means hiring teams outside of your country specifically.

There are many different kinds of outsourcing models and what may work for your business may not necessarily be the right model for another. That is why it is imperative that you carefully choose the right outsourcing provider who meets your business needs. Diving into all aspects of their operations will help understand whether investing in a particular outsourcing partner is the right move… or not.

To help you understand the key differences, the most common types of outsourcing models are:

  • Traditional outsourcing: your provider takes full accountability for completing all functions outsourced.

  • Staff leasing: you retain responsibility for who gets hired and how each outsourced staff is managed. Your outsourcing provider has your outsourced teams on their payroll and provides you with the necessary infrastructure or technology your outsourced employees need to work efficiently. 

  • Captive setup assistance: you engage a consulting service to set up their own outsourced division for your business - known as ‘shared services’.

  • Staff augmentation: you hire staff on a ‘per hire’ basis to assist your business only when required; i.e, not full-time employees and not fully dedicated to your business as they can work for multiple businesses in the course of their working week. 

  • Project-based outsourcing: you outsource tasks to help on a specific project for a certain amount of time.

  • Build-Operate-Transfer (BOT): you get an outsourcing provider to set up an outsourced team for you, ensure they operate effectively and then transfer the entire outsourcing operations to your business to manage.

What is the difference between onshore outsourcing and offshore outsourcing?

Outsourcing has the ability to transform businesses but not everyone wants to deal with time zone differences, language barriers, global travel expenses and cultural expectations. Onshore outsourcing solutions are great for businesses who want to access the many benefits of outsourcing but do so by establishing teams or staff in Australia.

From humble beginnings, offshore outsourcing solutions have established themselves as one of the business world’s most exciting opportunities thanks to their ability to reduce costs and improve efficiencies. Offshore outsourcing providers can operate large networks of outsourced teams in countries such as the Philippines, which is rightly acclaimed as one of the world’s top outsourcing destinations due to low labour costs, high literacy rates and first-class infrastructure.

What are the advantages of outsourcing?

Whether it be rising labour costs, talent shortages, or soaring rents, outsourcing allows businesses to stay competitive by connecting them with professional and highly qualified staff from all over the world who can support their local teams in whatever capacity they require.

The main advantages of outsourcing include:

  • Cost savings: a harsh reality for many organisations is that to achieve business growth, you may need to grow your teams to facilitate higher workloads. However, labour costs can be high, and there are also hidden costs. Whether you operate an in-house work model, or a facilitating remote or hybrid work, you may need to purchase larger office spaces, more tech equipment and cover additional overheads in order to support a larger workforce. These additional staffing costs can be crippling and quickly outweigh the increased sales or revenue that having additional employees may generate. Outsourcing can reduce the costs associated with taking on more work, especially when you outsource to a low-cost economy like the Philippines where employment cost savings are up to 70%. 

  • Business growth opportunities: peak and off-peak periods can cause headaches for businesses trying to optimise their employees' efficiencies. Outsourcing can offer the necessary support during peak times. An example could be hiring an outsourced contact centre team to take care of customer expectations and requests during high traffic periods. Once the peak period has passed, your business can quickly reduce your outsourced staffing needs, meaning even lower employment costs during off-peak periods. 

  • 24/7 availability and flexibility: outsourcing solutions can mean tapping into different time zones to open up business hours that would previously have been too costly to operate onshore. There is this concept called ‘following the sun’ which means having 24/7 operations that present exciting opportunities for vastly improving customer service. Offshoring allows employees to be rostered across different time zones. Hiring an offshore back-office team to take care of administrative tasks that would otherwise take up a significant amount of your local team's time is a great way to benefit from round-the-clock operations. Need certain figures for a meeting in the morning at it’s already 5pm? Get your offshore team to work on this while you sleep and have it ready to go for your 9am meeting the next day.

  • Increased staff satisfaction: outsourcing providers can make sure the tasks you outsource are those that will ultimately improve your local team’s morale and help them focus on what they do best in their roles. This will ultimately lead to increased productivity levels amongst your team as they work on tasks that motivate them and have a higher-level impact on their business. A great function to offshore is your credit and collections tasks which are known for having quite stressful and time-consuming tasks. Want to increase job satisfaction, become an employer of choice and decrease staff attrition rates? Outsourced teams could be the way to go.

Outsourcing is a global approach to recruitment that opens up a talent pool for your business that can be much larger than what is available locally. You may not even realise the skillsets you are missing out on by limiting your options to the candidates in your local vicinity. It allows businesses to hire people with diverse backgrounds, experience and education. This larger pool gives organisations the best opportunity to find the right people to help take a business to the next level.

Why outsource to the Philippines?

Keeping an organisation running smoothly is a full-time job. Especially when it comes down to the ultimate balance of controlling costs without jeopardising quality. Leaders are constantly on the lookout for ways to achieve this perfect medium.

For some, the solution comes in the form of outsourcing and when you outsource to a low-cost economy like the Philippines, cost efficiencies are a major benefit. With the Philippines securing its place as one of the fastest-growing economies in Southeast Asia, it’s no wonder organisations globally are turning to outsourcing solutions. In the Philippines alone, the outsourcing industry is worth AU $38.7 billion and is anticipated to grow 6% in 2022 alone.

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