Business Process Outsourcing (BPO) “has become an important new force in the global economy” (Duening & Click, 2005, p.viii). BPO is not just about lowering your costs and increasing the speed of your business processes. More than anything, BPO can forge real mutually beneficial partnerships between business owners and offshore vendors. It also gives the outsourcer competitive advantages over bigger players, and in due course enlarges its pool of customers. According to Forrester Research, the next 15 years see a rise in the number of outsourced jobs. Around a total of 3.3 million service jobs will find their way towards the Philippines, India, Russia and China. The outsourcing sector constitutes around 7.5% of all jobs in the United States. What is more, current BPO trends are gradually moving out of the stereotypical outsourced jobs such as telemarketing and customer service. Yet the question remains: how long will this brouhaha over outsourcing last?
Today’s outsourcing is not just a pure business endeavor – it is becoming more and more knowledge-based. Much of the work involves a certain degree of complexity, extensive preparation and training, and special skills. Knowledge-based jobs in Third World countries are sold at a fraction of the salaries earned by workers in the United States. Take for instance the case of Indian radiologists, who are paid by medical firms abroad to analyze computed tomography (CT) scans and chest X-ray results for American patients. They often do so under the protection of make-shift offices, situated either in Bangalore or Mumbai. Radiologists are among the highest paid medical specialists in the United States, earning more than $300,000 annually just for assessing CT scan or X-ray results. On one hand, outsourced radiologists in Bangalore receive only half of these earnings even if they basically perform the same amount of work as radiologists in America.
Similarly, Ernst and Young (E&Y), a big US professional services and auditing firm, has outsourced hundreds of accountants to Third World countries. In Bangalore alone, there are 200 accountants who process tax returns for E&Y clients. Like the Indian radiologists, these accountants are also paid less than what US accountants earn on their shores, a monthly rate of more or less $50,000.
Other knowledge-based jobs that are popularly in-demand by North American, European and Australian outsourcers mostly come from the following service sectors: computer and information technology, graphic arts and design, media and communications, management, sales, architecture and legal. Many banks and insurance companies have also begun to outsource one or more functions. This not only includes a shift from in-house to outsourced accounting, but also a significant migration of backend office positions. As with the case of outsourced business processes in developing states, workers earn cheaper wages compared to their foreign counterparts. In reality, however, outsourced workers earn industry-level wages, far above the minimum wage rate of the average white-collar worker.
So what happens afterwards – when financial growth is achieved by both the outsourcer and the outsourcing firm? What is to follow when just about any outsourceable job is moved to the Philippine BPO industry or to India or China for that matter? The point is outsourcing jobs will continue to grow over the next few decades, but even such growth has its limits.
The next challenge is therefore to build firm linkages that can benefit both the business owner and the vendor/third-party service provider. They can sit down with each other, be it through a virtual conference or a face-to-face meeting, and discuss methods where they can strengthen each of their respective assets. As partners, they may also find ways to motivate each other by sharing breakthrough ideas and best practices. They can divide important tasks between them – the outsourcer can delegate and provide clear-cut instructions so as not to lose focus on core business functions, while the service provider can concentrate on backend work like manpower pooling and online marketing. In so doing, they each do what they do best. Both outsourcer and the outsourcing firm can definitely work together towards a common goal and buffer the one another in times of misfortune.
The reason why outsourcing has become such a major force in the global economy is its natural ability to accommodate the needs of all involved parties. Through the presence of third-party service providers or BPO firms, developing countries experience an increase in employment opportunities, an upgrade in technological competence and overall financial growth. Educated and skilled laborers who have worked on Western shores at the expense of isolating themselves from their loved ones can now return to their countries and work jobs that can support their family and preserve their dignity at the same time. Meanwhile, businesses from developing states get to focus on their core functions, increase their budget, and reduce major costs on labor and capital. With more earnings at hand, and technically more tax collected by their governments, other industries can be developed where more jobs might be generated in lieu of those that were displaced by outsourcing. Of course, so long as there is mutual understanding and mutual cooperation, outsourcing will work in a symbiotic pattern and there will be a win-win situation on both ends. Outsourced processes, be it knowledge-based or just a matter of speed and efficiency, will only work properly if fueled by mutual trust and driven by mutual benefits.
Indeed, one can say that BPO is not just about business profits and speed in providing services. It is also about linkages, teamwork, camaraderie, and symbiosis. There is nothing better than growing together in a global marketplace full of uncertainties and unexpected adversaries. Whether it is BPO Philippines, India, Russia, or wherever in the world, it is important to remember the words of late 18th century industrialist, Andrew Carnegie, who said that “Teamwork is the ability to work together toward a common vision. The ability to direct individual accomplishments toward organizational objectives. It is the fuel that allows common people to attain uncommon results” (cited in Guffey & Loewy, 2009, p.320). True enough. If you think about it, only then can outsourcing truly last.
Let’s take a quick review on the grassroots of the foundation of Philippine Outsourcing BPO. It is compensating to know the history of such key player in Philippine economic growth – from its infancy to maturity – as it provides us reflection and assessment for other possible options and ideas on how to potentially uplift our nation’s economy.
the English language and affinity to the American culture, strong government support, and low labor cost but with efficiency guaranteed, just to name a few. In the coming years, it is not far from reality that Philippine economy will relatively soar high due to the huge amount of revenues outsourcing BPO brings in.
