Where Do US Firms Go for Offshoring: Outsourcing Companies in the Philippines and Other Countries
Businesses continue to brace themselves for the impact of inflation, intense market volatility, supply chain disruptions, and, most recently, labor hoarding. One strategy can help firms navigate unpredictable market conditions: Offshoring to outsourcing companies in the Philippines and other top Business Process Outsourcing (BPO) destinations.
State of the U.S. Labor Market
There are currently two openings for every person seeking work in the country – meaning even if each gets a job, half of the vacancies will remain unfilled. There’s no uptick in layoffs, either.
Meanwhile, the World Bank predicts the working-age population (aged 15 to 65 years old) in the U.S. will also decline by over 3% in the next decade, further depleting the talent pool.
Experts predict that the hiring difficulties will persist as deeply-rooted supply issues create gaps between hiring demand and the existing talent pipeline.
An effective strategy to navigate this staffing challenge is tapping into the deep global talent pool through offshoring.
Offshoring is when companies partner with a geographically distant country, typically with a different time zone – take, for instance, U.S. businesses working with outsourcing companies in the Philippines.
It allows businesses to use the “follow the sun” model – an effective workflow strategy that enables 24/7 customer interactions and technical support.
As your in-house team clocks out for the day, your outsourcing team working in a different time zone can take over, ensuring that your business is running round-the-clock.
Top Countries U.S. Businesses Go For Offshoring
The Philippines leads with its stronghold as the Call Center of the World. It bagged the 15th spot in the 2023 Tholons Global Business Innovation Sustainability Index (TBIS), scoring impressively in three major facets — Super Cities, Business and Diversity, Equity and Inclusion (DEI). Tholons aptly categorized the Pearl of the Orient as a “Big Kahuna” nation which is described as a “new leader having built a vibrant foundation.”
The Southeast Asian nation already holds a significant share of the global BPO market, but at its current trajectory, the Philippines is poised to capture an even bigger slice in the years to come.
Since Philippine call centers overtook India as the leading provider of voice BPO services in 2010, the industry has expanded to higher-value services that have attracted significantly more foreign investors.
Now featuring non-voice services available in omnichannel models, the Philippine offshoring industry continues to deliver niche BPO and Knowledge Process Outsourcing (KPO) services to businesses of all sizes across the globe.
There are several reasons why foreign investors and outsourcing clients entrust their business to Philippine outsourcing companies. For one thing, the country boasts a high English Proficiency rate, ranking 22nd globally and 2nd in Asia. It also has a high literacy rate that breached the 99% mark in 2021.
Another competitive edge of the Philippine BPO industry is the country’s deep talent pool fueled by over a million eligible graduates from the country’s top universities.
The country’s distinct Asian background and historical Western roots enable modern Filipinos to work with people from all over the globe.
The government’s strong support is another perk that Philippine offshoring clients enjoy. From stringent data privacy laws to special economic zone laws, the public sector continues to advocate for an investor-friendly business environment by implementing policies that promote the industry’s growth.
Ranking second in Tholons’ Top 50 Digital Nations, India is another heavy hitter in the global BPO market.
The South Asian country was classified as “Avant-Garde,” pioneering and accelerating its leadership.
The country has a bottomless talent pool with a workforce population of over 1.4 billion in 2021 alone. India is also considered the second-largest English nation in the world, making it ideal for outsourcing, especially in the Western market.
According to the BPO Offshore Confidence Index, most stakeholders have extremely high confidence in their ability to recruit front-line agents and managers or executives from the country. Still, they need more confidence in the availability of foreign and contingent workers.
Since the country’s education system focuses heavily on science, technology, engineering, and mathematics (STEM), with over 2.6 million graduates every year, the most outsourced services in the country are IT, software engineering, and web development.
The rising accessibility of smartphones and high-speed internet has cemented India’s place as a digitally advanced country. Home to one of the world’s largest and fastest-growing bases of digital consumers, the Hindustan country is evolving more rapidly than developed nations.
Another Big Kahuna in the Tholons Index, this Eastern European country boasts one of the region’s most prominent software outsourcing markets.
Poland, ranked fifth in the BPO Offshore Index, has a thriving BPO ecosystem. However, while investor confidence is high, there is significant doubt in the public sector’s ability to support the industry.
Country managers, investors, and other stakeholders have the utmost confidence in the country’s talent pool, with 93% expressing confidence in the availability of quality front-line agents, 87% in the availability of supervisors, and 80% for operational leadership. However, many respondents stressed the need for the country to improve its efforts in teaching language and soft skills.
The country’s stakeholders also expressed complete confidence in the quality of the country’s internet connectivity, electric grid, public transportation, and international travel ports, proving that Poland’s infrastructure is solid across the board.
Political and economic stability are also significant contributors to their success. In the face of the pandemic, the Polish economy showed immense resilience, with a minimal contraction of 2.7% in the country’s GDP – the biggest since 1991.
Rounding up our list is the “Coffee Pot of the World,” yet another Tholons Big Kahuna nation.
Brazil may be known for being the leading producer and exporter of coffee. Still, the Latin American country is also a massive BPO exporter famous for nearshoring IT and tech support services to North America.
Tech giants like IBM and HP have been successfully outsourcing services to the country for years, but it wasn’t an overnight success.
Over time, the country has strategically moved to earn a coveted spot in the top global outsourcing destinations list.
In 2018, Brazil finally managed to break through to the top 3 in Tholons Top Digital Nations and has since been a mainstay.
While the country’s performance slipped due to the pandemic, it remains a viable outsourcing destination for software development and BPO services.
Top Advantages of Choosing Outsourcing Companies in the Philippines
- Cost Efficiency
The significant cost saving advantage is the primary driver of outsourcing.
Since the cost of living is lower in countries that provide outsourcing services, Western clients can save on operational and overhead expenses such as rental and utilities.
Businesses can also use competitive labor costs in countries like the Philippines and Colombia for even more cost efficiency. Additionally, BPO companies can spare corporations from hiring expenses by shouldering the cost of recruiting, training, and onboarding employees.
- Access to Cutting-Edge Technology
While all businesses need cutting-edge technology to stay competitive, it may not be cost-effective for small and medium-sized enterprises.
Fortunately, top BPO companies can give them access to robust digital infrastructure that can help them stay ahead of the curve without spending too much.
- Access to Deep Industry Expertise and World-Class Talent
Amid the labor shortage in most Western markets, businesses can tap into world-class talent from globally-ranked universities with knowledge and skills in various specialized fields.
BPO companies also leverage their expertise in human resource management to expedite the hiring process.
- Minimal Capital Investment
Instead of spending massive capital on infrastructure and office equipment, companies can partner with an outsourcing firm and channel their funds to more crucial parts of the business.
- Greater Focus on Core Competencies
Contracting business functions such as information technology, data processing, and social media management to an outsourcing company will give clients more time to focus on their core competencies.
- Increased Operational Efficiency
As experts in streamlining and fine-tuning business processes, your outsourcing partner can identify pain points in your operations, then provide innovative solutions that will help maximize your productivity and efficiency.
- Better Risk Management
Recognizing that running a business will always come with risks, such as legal liabilities and data breaches, leading BPO companies always take accountability and share those risks with their clients.
With their deep understanding of how economic uncertainty affects market volatility, BPO companies offer the best and most straightforward ways to navigate the unpredictable dips and spikes in industry demand.
They enable you to expand your workforce capacity during peak seasons. Once demands drop, outsourcing firms can help you seamlessly downscale your workforce to normal levels, eliminating the need for costly hiring and layoff cycles.
- Competitive Advantage
Businesses that embrace outsourcing their operations will surely gain an edge over competitors with increased productivity, revenues, and data-driven business decisions.
With BPO companies’ extensive experience in customer service, they can also help businesses elevate their customer experience.
- Reduced Workload
Your employee’s performance is bound to suffer if they are overburdened with repetitive and menial tasks that get in the way of their jobs. While they may be compelled to do these, they will surely get frustrated that they cannot spend time on more meaningful tasks.
Keep burnout from increasing staff churn. With an outsourced team supporting them, your staff will feel less stressed and more fulfilled with their jobs.
Bonus Read: Offshoring to Outsourcing Companies in the Philippines + Nearshoring to Colombia
As the word “near” implies, nearshoring means contracting out your operations to a BPO company from a nearby country. A good example would be when US businesses nearshore to a Latin American country like Colombia.
Due to cultural compatibility and time zone alignment, businesses can leverage nearshoring for seamless collaboration. It allows them to closely monitor the progress of their urgent projects through real-time updates. Additionally, the short distance enables clients to visit their partner outsourcing company without hassle or expense.
Read more: The ‘Philippines Offshoring + Colombia Nearshoring’ Strategy: A Formula Amid Global Economic Disruptions
Benefits of Nearshoring to Colombia
Colombia, the burgeoning Silicon Valley of Latin America, is another powerhouse in the BPO industry.
For two consecutive years, the country has bagged the top spot in Ryan Advisory’s BPO Offshore Confidex Index.
With one of the largest workforce populations in Latin America, investors and business leaders have high confidence in the country’s ability to provide top-notch talents ranging from CX managers to front-line agents.
The Colombian government’s strong support for the BPO sector is another reason foreign investors have high confidence in the country. The public sector strives to ensure political and trade sustainability, with BPO leaders discussing the industry’s future with President Gustavo Petro. ProColombia, the country’s investment promotion agency, also received much praise for lobbying for favorable BPO regulations.
Moreover, investors expressed complete confidence in the country’s vast tech infrastructure, which features fast internet connectivity and mobile coverage to support digital services. They also place immense trust in the ability of local law enforcement agencies to foster a safe environment for BPO employees.
Another factor that plays into the success of the Colombian BPO sector is its thriving real estate market which allows for convenient buying, leasing, and retrofitting of commercial property. Overall, investors and other stakeholders have the utmost confidence in the country’s metropolitan cities and the potential of their second and third-tier cities.
Colombia’s ideal location allows it to secure supply chains and tap into emerging markets while remaining strategically close to the U.S., its primary outsourcing market. Additionally, since the country is so close to the U.S. East coast, Colombia has a time zone nearly parallel to U.S. Eastern Standard Time (EST). This paves the way for seamless collaboration between BPO companies and their global clients.
How To Navigate Changing Market Conditions With a BPO Company
With a recession threatening economic growth, business leaders need to think outside of the box for ways to cushion their bottom line from the financial blow of a downturn.
Business process outsourcing is an effective strategy they can adopt to scale their workforce and meet demand seamlessly. It also helps businesses stay competitive by boosting productivity, delivering quality services, and maximizing the reach of their lead generation.
Ultimately, the business process outsourcing industry is designed to create value for companies. While you can take advantage of it anytime, it becomes even more beneficial in recessionary periods.
Additionally, with all indicators pointing to a labor shortage that will persist in the years to come, the key to surviving is a strategy that capitalizes on the massive potential of global talent pools.
SuperStaff, one of the best outsourcing companies in the Philippines, offers comprehensive outsourcing solutions tailored to your needs. It also has headquarters in Colombia for nearshoring options.
With more than a decade of success, we’ve helped companies of all kinds – from start-ups to Forbes-ranked enterprises – achieve their business goals by increasing revenues and reducing costs.
Contact us today to learn how our fully customizable and scalable solutions can help you navigate hiring challenges.