In a world of ever-expanding globalization, businesses of every size and type have increasingly employed Business Process Outsourcing (BPO) to control costs, increase efficiency, and remain competitive. According to Statista, the worldwide demand for outsourced services from the United States alone is predicted to reach $140.3 billion by 2022—a 58% increase from 2017. One country that is meeting this demand is the Philippines. Low labor costs, a skilled workforce, and language diversity have contributed to two decades of growth for the BPO industry in the Philippines. In turn, the nation’s burgeoning BPO industry has both attracted and been driven by some of the largest multinational corporations in the world.
As this global demand has increased, so too has the number of BPO vendors in the Philippines. Like any service, however, there are varying degrees of quality, and when considering offshore outsourcing, it is vital to align with a premium provider that can deliver world-class service.
Ralf Ellspermann, CEO of PITON-Global, a leading mid-sized BPO in the Philippines, says, “Cost, of course, is a primary incentive for outsourcing. A company could look virtually anywhere outside of the United States and immediately realize a 30-50% savings. Although this is an important factor, cost containment should never be the only criterion when comparing outsourcing providers.”
Offshore outsourcing takes time to implement and requires capital investment. With such a commitment of time and money, it is paramount to get the partnership right. Choosing a partner strictly on cost can often lead to significant future expenditures to compensate for inferior services. As such, working with a premium BPO provider is not so much a cost but rather an investment in a partnership that delivers quality, efficiency, and savings.
Consider the following: The average hourly cost of a US-based vendor is roughly $28 per hour. A low-cost offshore vendor is approximately $8 per hour, whereas a premium offshore provider averages about $14 per hour. The low-cost vendor can compete in only one way—price. The premium BPO company, however, provides multiple benefits: at least a 50% cost savings over standard US vendor rates but also superior quality in terms of people, processes, technologies, and facilities because of reinvestment of capital. A low-cost BPO provider, competing on price alone, simply cannot afford to make those investments.
“The top 50 BPO companies in the Philippines, which include globally operating third-party outsourcing providers such as Accenture and captive operators such as J.P. Morgan Chase & Co., account for 70% of all BPO-related employment in the country. These industry giants employ between 10,000 and 90,000 Filipinos each. They also provide the highest compensation packages, job security, favorable work environments, and best opportunities for career advancement. As a result, they consistently attract and retain the top talent in the Philippines,” says Ellspermann.
Another important consideration is the potential for downtime. Remaining competitive in a global economy requires dependability from outsourcing partners. Downtime is costly and can occur as a result of using inferior technology, leading to critical gaps in service. It can also be attributed to a workforce that lacks experience, is poorly trained, or is simply unreliable. Over time, these costs negate any potential savings with a low-cost BPO.
“Partnering with BPOs in the Philippines can reduce costs, increase efficiency, and provide a competitive advantage, but there should be careful consideration given to the totality of the service provided—not exclusively cost. Low-cost BPO providers that compete solely on price often come with a hidden price tag, which amounts to significant compromises at all levels of service. Premium BPO companies may come at a slightly higher cost, but these providers reinvest this capital into a highly trained workforce, superior infrastructure, current technologies, and state-of-the-art facilities. All of this contributes to a superior overall experience for companies that partner with premium BPOs in the Philippines—and their customers,” explains Ellspermann.