The rise of globalization has influenced how the business world revolves today. To cut expenses, boost productivity, and provide 24/7 business support for improved operations, more and more businesses have resorted to offshoring some of their responsibilities to other countries.
Without a doubt, international companies always consider outsourcing and offshoring in the Philippines for the very reason that the country has been known as a go-to outsourcing hub. Nevertheless, this claim barely scratches the surface. Did you know that offshoring in the Philippines is one of the wisest decisions a company could make? This article will tell you why. Read on.
What is Offshoring?
Sharing a few characteristics with outsourcing, offshoring nonetheless focuses on one distinct trait. In this business arrangement, a company turns over their various operational and service-related responsibilities to other countries. Companies decide to offshore for various reasons. These include maximizing productivity, improving organizational efficiency, or cutting costs.
When offshoring, a company may choose to directly control its operations, while the resources it exhausts — manpower, location, facilities — are from the country overseas.
Outsourcing vs Offshoring
Offshoring is when work is completed in a different country, typically to take advantage of cost savings. This runs contrary to outsourcing, which is when a company contracts out work to a third party.
Moreover, in terms of overall control, offshoring may offer a company more control since it had a say in selecting the employees who would work on their tasks. Plus, offshoring companies might install managers overseas to monitor the progress of each task that the company assigned. In outsourcing, on the other hand, the same company may have limited control. This is due to the fact that a third-party organization is completing the work without the company’s oversight.
The Pros and Cons of Offshoring in the Philippines
Companies gain a variety of perks when they outsource their business operations abroad. Here are the key benefits as well as the drawbacks of offshoring:
Here are the benefits of offshoring in the Philippines:
- Cheaper Labor: Offshoring will be a wise financial decision for business owners if foreign workers can perform the same type of work as their local counterparts for much lower labor expenses. This is especially important for labor-intensive businesses since it can reduce operating costs, increase sales, and maximize profits by cutting labor expenditures.
- Considerable Cost Savings: Employers can save money on expenses like Medicare taxes, Social Security benefits, health insurance, and workers’ compensation in offshore nations since they offer lower pay and benefits. Developing nations with cheaper utilities, infrastructure, and materials include the Philippines and India.
- 24/7 Operations: Businesses can expand their operations to untapped time zones by hiring overseas subsidiaries or contracting with 24/7 offshore service providers. This allows local teams to transfer unfinished tasks to offshore teams, ensuring continuous project completion.
- Access to Competent Workers: Businesses can choose from a substantial pool of trained personnel available in outsourcing nations like the Philippines to staff their offshore operations. The Philippines has a plethora of talent in terms of college graduates, people who are fluent in English, and workers with the necessary abilities.
Outsourcing business activities to other countries offers numerous benefits, but it also has significant drawbacks, including:
- Cultural Concerns: Offshore nations have unique cultural and social conventions, which results in communication gaps, for instance, between senior American businesses and Filipino staff. Both parties may find it difficult to articulate their objectives effectively, which may alter the way they communicate.
- Language Barriers: Although English is the official language in offshore countries, there are communication gaps between offshore employees and foreign colleagues. Foreigners with distinctive accents may find it difficult to interact with offshore employees from local accented regions, which could lead to problems.
- Poor Quality Control: Due to the manufacturing setup in the offshore location, the parent company’s manufacturing outsourcing requirements may not be strictly followed, which could have an impact on the quality of the finished product due to issues like the working environment, language, logistics, and supply chains.
- Different Time Zones: Business processes might be hampered by time zone differences between home and offshore locations in manufacturing and service offshoring. This may have an effect on tasks that are urgent, time-sensitive, or have deadlines, demanding contact between the two nations.
Most Commonly Offshored Business Functions
Many services can now be offshored as a result of the emphasis on remote work. These services are listed below:
Database and server administration services are provided by offshore IT service providers from distant locations, saving their clients’ money on overhead and offering 24/7, high-quality support without the need for on-site IT personnel.
Offshoring is frequently linked to customer service, as businesses hire staff from abroad to save costs and guarantee high-quality service. These executives are given all the tools they need to manage consumer complaints or inquiries, assuring a quick resolution.
For cost savings and round-the-clock help without the need for on-site personal assistants, C-suite executives are increasingly using virtual assistants to manage their correspondence, calendars, and project creation.
Bookkeeping and Accounting
The financial management of international companies is handled by offshore bookkeepers, who carry out duties like auditing, account maintenance, financial planning, budgeting, and cash flow analysis. As opposed to paying higher prices to hire onsite staff, this saves businesses time, money, and effort.
When compared to onsite services, offshore digital marketing specialists offer enhanced reach, visibility, and cost savings through the use of websites, email, and social media for lead generation, branding initiatives, and SEO optimization.
Operators who input and manage data on client invoices, purchase orders, eCommerce product details, healthcare, medical information, and documentation are known as early offshores. This outsourced duty frees up in-house workers to work on more challenging, profit-boosting projects.
Human Resource Functions
Smaller businesses or those focused on technical tasks might cut expenses by outsourcing HR tasks including hiring, payroll, compensation, and performance reviews. Offshore service providers take care of crucial procedures and complaints, ensuring more efficient operations.
Why is the Philippines the Top Choice for Offshoring?
Offshoring in the Philippines is a wise business move, and for good reason. Here are the main benefits of hiring offshoring companies in the Philippines:
In comparison to opening an onshore office, the Philippines offers a cost advantage because of its cheaper exchange rate against the US dollar, which results in significant staff and technological support savings.
A Pool of High-Potential Employees
Millions of highly educated workers in the Philippines, including managers, supervisors, and up-and-coming CEOs, have high IQs, allowing them to function effectively under pressure and with difficult workloads. These people can be hired and trained.
Exceptional Communication Skills
The labor force in the Philippines, a largely English-speaking nation, is qualified, effective, and multiskilled. English is the principal educational medium, with over 14 million speakers. The economy is driven by this trained labor force, which has also helped the entire country succeed in the global voice service sector.
Due to its multilingual workforce, the Philippines has an advantage over other countries when it comes to offshore because it can serve clients from China, Japan, Korea, the US, and even Europe.
Guarded Government Support
The Special Economic Zone Act (RA 7916) and the Data Security Act (RA 10173) are just two examples of the laws and incentives the Philippine government offers the BPO industry. These regulations guarantee the protection of customer information while providing tax exemptions, permits, and permanent residence for international investors.
Helpful Tips for Seamless Offshoring in the Philippines
Here are a few tips on how you can have a smooth offshoring experience in the Philippines:
1. Acknowledge your company’s issues and needs.
It’s extremely important to consider your company’s issues and needs before considering offshoring in the Philippines. Analyze your current operations to find obstacles that prevent expansion and success. Typical issues include:
- Limited manpower: Extra staff is needed to serve your expanding consumer base.
- Ineffective technology: You demand the newest technologies to increase the effectiveness of your services.
- Longer processing: Processing orders and shipping products take longer than expected.
- Dissatisfied clients: The majority of your clients are unsatisfied with the services you provide.
- Poor sales: Trouble increasing your monthly sales revenue
2. Analyze the Philippine outsourcing industry.
Making informed decisions and evaluating the skills of possible service providers require a thorough grasp of the risks, rewards, and returns associated with working with the service provider. This can only be achieved by researching the Philippine outsourcing market.
3. Assess and choose the most suitable offshoring company.
A thorough assessment of the key factors — services, experience, expertise, workforce, technology, infrastructure, cost, and reputation — is necessary before choosing the best outsourcing company. Your demands and preferences for your business must come first. To satisfy your outsourcing requirements, you must select a BPO partner that offers tailored solutions.
Choose a Top-Notch Offshoring Provider Today
Overall, certain roles can be offshored to significantly cut costs for your business and increase production. But it is also your prime responsibility to carefully examine which jobs are best for outsourcing to other countries.
As a reliable and engaged partner for go-to outsourcing and offshoring services, Outsource-Philippines provides business support to ensure smooth operations. Get in touch today and learn more about how we can support you.