The modern concept of outsourcing largely dates to the 80s, when the practice started in India. Although businesses practices like subcontracting were common in many industries, few had practised outsourcing on a major scale. And even if there were no hesitance in entrusting potentially critical business functions to third parties, the ingredients were not in place to create a viable outsourcing industry.
However, during the latter part of the twentieth century, a combination of factors made outsourcing a much more attractive option. Improvements in telecommunications were key. As the quality and reliability of networks, and the services they carried, around the world improved, offshore outsourcing became possible. And, with it, the potential for big savings by using outsourcing companies in nations with lower labour costs.
And the attractiveness of the savings was compounded by the increasing demand for high-quality service from customers. Even those that bought a product increasingly expected a wider package of support or aftercare from manufacturers. And outsourcing services seemed to be an ideal way to meet that demand.
Unfortunately, the early experiences of outsourcing were not universally successful. One of the major difficulties was in communication, a problem that still exists with lower-cost outsourcing providers today. Western businesses paid too much attention to cost, meaning offshore outsourcing companies could not pay high enough salaries to attract fluent call agents. These problems were made worse by the usual teething troubles one would expect with a nascent industry, with problems like poorly defined projects leading to some high-profile failures.
Despite this, the potential savings created an incentive for many to persevere with outsourcing. The consequence has been the creation of a growing global industry known for its innovation. However, the stereotype of the heavily accented Indian call centre lingers in the minds of many consumers. Few realise that call centres are now highly professional setups, often with some of the best employment opportunities in their home nation and typically employing the latest technologies.
The modern era of outsourcing is increasingly global and diverse. Although India remains a dominant outsourcing destination, other centres have also emerged. And as the domains covered by outsourcing have extended, it’s increasingly common to see specialisms. India, for example, because of a strong technical education system, frequently attracts those looking to outsource technical functions, such as coding and IT support. Meanwhile, businesses looking for more traditional customer service functions are increasingly outsourcing to the Philippines, where the strong English skills have meant it has eclipsed even India as a destination for call centres.
The net result for businesses is that there has never been a better time to outsource. The annual market for outsourcing is approaching $100 billion and continues to grow as demand increases, and new areas of outsourcing are created. With a competitive, innovative and now highly experienced outsourcing sector, the potential for big savings with little risk is one that few businesses can afford to ignore.