What is What is business process outsourcing??
Business Process Outsourcing (BPO) is the delegation of business processes to an external service provider to a nearby or farther location. BPO uses various technology-enabled services to optimize the delivery of services.
Some of the usual outsourced business functions are the following:
Payroll
Accounting
Human resources
Customer service
Sales
MarketingIn the case of content providers, these could mean hiring writers, remote editors, or virtual assistants.
BPO speeds up processes and enhances efficiency. Companies that outsource some of their business processes use their time on core services and competencies.
With this shift in focus, companies improve their current processes, which may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies.
Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so. Outsourcing services can also help them save costs and resources in hiring suitable employees.
The definition of business process outsourcing (BPO)In business process outsourcing, a company delegates its services to a service provider. It can be a local firm, nearshore, or offshore company.
Upon reaching an agreement, the service provider will then set up a team for their client. They will shoulder the costs and resources needed, including:
Office space
Workplaces
Connection
Cloud storage
IT infrastructureThe providers are responsible for tracking the staff's performance and progress. Meanwhile, the clients are responsible for providing the tasks, processes, and KPIs needed for their operation.
In some instances, they are also allowed to incorporate their culture and values into their team and absorb them as a part of their company.
What are the benefits of business process outsourcing (BPO)?There are many benefits to outsourcing, as well as some downsides and risks.
Outsourcing powerhouses like the Philippines and India produce high-quality talent at a lower rate due to their low operational costs and full government support.
Since outsourcing companies hire and produce experts in the field, clients can ensure better results in their operations – whether in customer service, accounting, or marketing. Their staff are trained to ensure that their clients achieve the outcome they expect.
Companies are able to scale their staff depending on the demand and availability of their tasks. This also helps them improve their operations by letting their service providers contribute to streamlining their processes.
Outsourcing poses more growth opportunities for businesses of all shapes and sizes. While there are still drawbacks to this practice, it is safe to say that its advantages outweigh its risks.
To explain it further, below we have outlined the top benefits of outsourcing business processes:
Cost savingsCompanies can enjoy savings of up to 70% by leveraging the salaries and costs in offshore countries.
In the Philippines, for instance, companies can hire offshore staff with a US$500/month salary for starting positions. A team of 10 employees would only cost them as much as a single worker in the US with an equal position.
Global marketSmall and medium-sized businesses find it most difficult to hire local employees that suit their roles.
The widened skill gap in developed countries, paired with economic crises, affects their capacity to expand their teams as needed.
Businesses get to access a bigger pool of talent that can fit their requirements. They can have better options in hiring employees since they are not limited to what is available in their home countries.
Global presenceAt the same time, outsourcing opens clients to global trade opportunities. They can establish their global presence and expand more easily to other locations since they already have operations in the area.
Flexible workforceOutsourcing is a great way to establish a remote workforce, especially for companies looking to implement this setup for the first time.
BPO reduces internal local compliance obligations, including providing additional office spaces to employees. Instead, organizations can hold their business operations on a remote setup, most usually having their teams in an office provided by the BPO firm.
Leverage skillCompanies cannot always do everything on their own. Burnout within entrepreneurs and teams is more common than everyone thinks, especially with everyone filling up the tasks beyond their skill sets.
A BPO company enables them to leverage the skills of other specialist companies on more complex tasks such as accounting and IT.
FocusLastly, BPO enables organizations to focus on their core business functions. This is because most of their non-core business operations are done with the help of a reliable service provider.
Business process outsourcing examplesThe BPO industry is vast, generating over $200bn annually and employing millions of people worldwide.
As stated in the Market Analysis Report, the global business process outsourcing market reached over USD 245.9 billion in 2021. Thus, it is foreseen that we will acquire a compound annual growth rate (CAGR) of 9.1% this year from 2022 to 2030.
The proliferation of the global BPO sector is utterly driven by several key factors that organizations take full advantage of:
Improved efficiency and agility
Focus on core competencies
Decreased operational costs
Adapt to the ever-changing business dynamicsIn general, when we speak of outsourcing, it always entails contracting out parts of business processes to an external provider, either domestically or offshore.
BPO can be seen in different forms and contexts, from hiring single staff to getting an offshore team.
Here we have listed some of the examples of business process outsourcing:
Big enterpriseCorporate outsourcing has been around since the industry started. The new breed of large companies are still taking advantage of its benefits and using it to expand their offerings further.
Some of the known enterprises that outsource their services today include the following:
Google. Google has been ramping up its outsourcing efforts since 2016 by delegating development and customer support. Facebook. Meta, particularly Facebook, outsources content moderation to the Philippines as a way to filter toxic content and keep the platform safe for its users. Wells Fargo. Wells Fargo has been outsourcing their operations to the Philippines since 2011. It has recently pulled out its functions in the country, though the company retained its BPO center in Manila. Medium-size businessesA medium business with 50-500 staff might outsource the labor-intensive accounting and finance functions to a team in the Philippines.
Small business and entrepreneurThe recent Clutch survey stated that around 90% of small businesses plan to outsource their services in 2022 due to the efficiency and flexibility that companies get.
It is common for small business owners to have a Virtual Assistant (VA) working for them full-time and remotely from the Philippines.
Aside from this, organizations can delegate other services such as development, IT, and digital marketing.
What are the different types of BPO?Outsourcing can be executed in different forms, depending on the outsourcer's needs. The truth is that not everyone is fully aware and has an in-depth grasp of the BPO sector.
For most people, BPO can simply mean farming out business processes to third parties located in another country, but this is just one type of BPO.
As for businesses, it is always vital to be familiar with the various classifications and functions of BPOs. This way, they are able to opt for a business process outsourcing provider that is best suited for their type of requirements and industry.
More importantly, outsourcing is not a one size fits all strategic approach, this is why it is not enough just know what outsourcing is and how it works.
There are several types of BPOs that businesses can choose from. The type of business process outsourcing can be characterized by its specialization, location, and size.
Generalist or specialist BPOsBusiness process outsourcing is in the human resources and professional services sector.
However, their services extend across all industries. The majority of BPOs are generalists in that they offer a full range of professional services.
Meanwhile, some specialize in certain verticals, such as the following:
Legal process outsourcingLegal process outsourcing deals more with delegating legal processes and compliances to legal firms in another area.
Knowledge process outsourcing
Meanwhile, knowledge process outsourcing enables companies to outsource knowledge-related work, including research and development, innovation, and creativity.
LocationBusiness process outsourcing typically operates from developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost of living and bigger populations. Different locations offer different advantages.
Size of BPOThe bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people.
OffshoreOffshore outsourcing refers to the process of delegating a part of operations or a department to an offshore country.
To maximize profitability and efficiency, companies choose to outsource to a different region or timezone. India, the Philippines, and South Africa are some of the popular countries known for offshore outsourcing services.
OnshoreOnshore outsourcing or onshoring, meanwhile, is preferred by firms looking to delegate their services within their country.
Onshoring does not offer as much savings as offshoring or nearshoring. However, clients prefer this as a way to maintain their branding and satisfy their local markets.
NearshoreLastly, nearshore outsourcing is preferred by companies that do not want the hassles of time zones and cultural differences in offshoring but still want to get the best out of their delegated services.
Through nearshoring, businesses can collaborate with their teams located in nearby countries. This gives them the opportunity to maintain their local compliance and save on costs since most nearshore locations are cheaper than their onshore counterparts.
Functions of business process outsourcingCollectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include:
Finance and accountingOutsourced finance and accounting services help businesses manage their books, monitor cash flow, and keep up with corporate income tax compliances without fuss.
HealthcareHealthcare outsourcing, meanwhile, organizes various back- and front-end functions for the healthcare and insurance industries.
Creative and contentCreative services outsourcing covers everything from post-production of Hollywood movies to newspaper and website content.
Tech, IT and developmentIT outsourcing involves delegating network management, web and app development, and cybersecurity protection to IT firms in different countries.
Sales & customer supportSome BPO providers specialize in sales and customer support for pre- and post-sales transactions. This helps companies meet the expectations and demands of their customers, keeping them satisfied even after their purchase.
MarketingBPOs and marketing firms can help in ongoing marketing, communication and branding activities for their clients. This helps them attract more suitable leads in a cost-efficient way.
Talent and HRBusinesses can delegate HR, recruitment, and compliance to professional employer organizations to maximize recruitment and workforce management.
AdministrationGeneralist BPOs help organizations accomplish general business administration and operational activities. This includes data entry, appointment setting, and other related functions.
Supply chain managementLastly, e-commerce stores benefit from outsourcing supply chain management to manage warehouse and delivery processes.
The future of BPO outsourcingWe have gathered five expert opinions from renowned global business leaders. They shared how they perceive the future of outsourcing will be, including the trends that will prevail in the coming years.
Meg Marrs, Safer Senior CareMeg Marrs of Safer Senior Care strongly believes that entrepreneurs and business leaders should outsource their essential tasks.
“Outsourcing certain roles has freed up my time to focus more on big picture strategy, rather than being completely meshed in the day-to-day tasks.”
One thing is certain, outsourcing to support businesses growth is something that will never go out of trend.
Sean Nguyen, Internet AdvisorAs for Sean Nguyen, Director of the Internet Advisor, outsourcing to streamline processes is another essential trend that businesses will continue to apply.
He quotes, “Outsourcing can be really helpful, even at the most incipient levels, because it allows you to streamline operations. If it's not essential to have it taken care of in-house, there is no reason to do so.”
Elandas Miller, Kicking It SportsElandas Miller of Kicking It Sports, has been outsourcing back office and creatives since 2017. “I like to think of outsourcing as a tool to help me get to my goals faster and more efficient without burning myself out.”
Outsourcing to support both organizations' short and long-term goals is another trend that companies will practice in the foreseeable future.
Tom Baker, Tom's ProjectsThe founder of Tom's Projects, Tom Baker, offshores his entire product and development. “Outsourcing means that we can scale the team up and down when need be.” Scaling the workforce through outsourcing is, yet again, among the trends that will remain prevalent.
Bobby Reid, Capitol Tech SolutionsFor Bobby Reid, founder of Capitol Tech Solutions “Outsourcing has helped our business by being able to provide expertise for a service quickly. While these contracts are outsourced, they are incorporated into our company culture when possible, since they are working full time with our firm.”
Lastly, outsourcing to fill in talent gaps and expertise is one of the key trends that more and more organizations will utilize in the coming years.
The future of work is digital, says Outsource Accelerator Founder and CEO Derek Gallimore.
The world has moved on from manufacturing and creating products to providing services. And as we enter the post-pandemic world, he says we are “moving towards a single global economy.”
The concept of work dramatically changed with COVID-19, and things have changed for good. These changes made us realize that technology is available for remote and digital work interfaces.
Once showed an unsteady growth, the global outsourcing market spiked to US$245.9 billion in 2021. The sudden surge of demand brought by the pandemic, along with the worsened talent shortage, has led companies to increase their outsourcing efforts.
In a podcast episode, Derek explained, “There are eight billion people on the planet, and they are now all increasingly connected digitally.
There are [also] four billion people who are highly qualified professionals sitting around the world, and they're not just virtual assistants and basic roles. You can find [people with] PhDs, architects, accountants, or whatever you need for your business.”
To conclude, Derek believes that the global economy and a globally-sourced workforce are the future, and it is not going away.
Leaders all over the world also know that outsourcing is here to stay. Former US President Barack Obama says that jobs that have been outsourced cannot be brought back to the country.
As a result, it is better to retrain and re-skill the workers who have lost their jobs on account of outsourcing.
Obama further suggests that community colleges could provide the necessary skills for a person to be gainfully re-employed in the workforce. He adds that this is a necessity that Americans look forward to in the future.
Looking back doesn't always make people feel good, so it is essential that they retrain for the ‘jobs of the future.'
How to choose a BPO providerOver the years, outsourcing has been the go-to strategic practice for businesses looking to scale their operations effectively.
But just like any other venture, companies should be wary of the possible drawbacks of outsourcing before selecting bpo providers.
Risks of BPO outsourcing Despite its advantages, business process outsourcing done incorrectly leads to outsourcing risks that affect a company in one way or another.
Hidden chargesSome BPO vendors do not totally disclose the total fees they charge and their terms. Clients could experience “bill shock” upon seeing the hidden charges they get.
Compliance issuesCompliance is crucial, especially in handling financial information and dealing with intellectual property. BPOs that violate compliances could risk their clients' reputations and branding.
Problems with securityLastly, BPO vendors with loose security compliance could risk getting their client's data exposed and used for malicious purposes.
Choosing the right business process outsourcing vendorThe key to successful outsourcing lies in choosing a suitable bpo company and working with them along the way. Here are some of the considerations to look for in a BPO vendor:
ExpertiseA BPO vendor's expertise can be shown primarily through their approach to their clients. Even without getting too technical, they can comfortably discuss the initial solutions to provide according to their client's requirements.
CompliancesEspecially when delegating functions involving sensitive information, a bpo company should be up-to-date and compliant with regulations relevant to their services.
Check for ISO, HIPAA, and PCI certifications as much as possible.
Employee satisfactionA good BPO company also places employee satisfaction as its priority. Check on employee reviews online to see how the staff feels about their company.
TechnologyThe tools and equipment a BPO vendor uses largely affect their performance in general. Check to see if they use updated technology at work and how they train their employees to use them.
Top BPO companies in the world's top outsourcing hubsA wide range of business process outsourcing companies in different parts of the world provide the utmost services to their Western and local clients.
Many of them even earned recognition by award-giving bodies due to their performance in both their roles and their level of care for the employees.
Check out the top BPO companies in several outsourcing destinations below.
Top BPO companies in the Philippines Top Indian BPO companies Top South African BPO companies Business Process Outsourcing (BPO) servicesWith the rise of new offshore outsourcing locations, companies can have better options in terms of location and services they can delegate.
However, finding a suitable BPO company can be a daunting task to be done on their own.
It's a good thing advisory services such as Outsource Accelerator are there to help them.
Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 5,000 articles, 400+ podcast episodes, and a comprehensive directory with 3,000+ BPOs from different locations.
Outsource Accelerator's offerings make it easier for clients to learn about and engage with business process outsourcing companies worldwide.
Want to learn more about outsourcing? Check out the Inside Outsourcing book as well as the Inside Outsourcing book review today!
Offshore outsourcing definition
What is offshore outsourcing?Offshore outsourcing refers to the practice of transferring some functions of your business to a company in a different geographic location, particularly offshore destinations like the Philippines, India, and Malaysia.
Organizations usually use this strategy to access a wider talent pool at a low overhead cost without sacrificing the quality of work done.
Offshore outsourcing helps strengthen a business's performance and compete with other organizations in the industry.
To do this, companies partner with established and trusted outsourcing service providers to ensure high work quality and accountability.
Partnering with a trusted BPO provider assures organizations the following:
Employees who underwent a thorough interview process to ensure suitability for the needed role
Workers going through proper onboarding, training, and upskilling sessions
Satisfied employees, since they will be provided with high-quality equipment and a Class A physical office
Accountable and manageable upper management
Clear targets and KPIs for the offshore team
Efficient processes and standard operating procedures
Legalities and other documentation to be well taken care of, among othersFurther, offshore employees can help manage essential business operation tasks, which means you and your in-house employees have more time to focus on your own responsibilities.
This boosts focus, productivity, and employee fulfillment — all while the company saves up to 70% on labor costs!
This article aims to provide a comprehensive understanding of what offshore outsourcing means and provide examples of its many benefits.
We will also discuss the history of offshore outsourcing, learn why businesses resort to offshore staffing, discover its pros and cons, as well as learn the types of offshore staffing.
Offshore outsourcing definitionOffshore outsourcing, also referred to as business process outsourcing (BPO), is the process of having work done for your business using qualified staffing solutions from countries with lower labor costs.
Commonly, IT, sales, and administrative roles are carried out for businesses across the world from countries such as the Philippines and India.
Companies can benefit from accessing other countries that have more resources for people with specialized skills. At the same time, they get quality work at a fraction of the costs.
Like nearshore outsourcing, companies prefer having minor tasks outsourced to a service provider so that the in-house team can focus on the core business functions.
One perk of offshore outsourcing for businesses is that they do not need to think about the overhead expenses when they hire domestically.
Overall, the company could benefit from lower human resources costs, equal or higher-quality outputs, and higher profits.
About offshore outsourcing Offshoring history Benefits of offshore staffing Why do businesses resort to offshore outsourcing? Offshore outsourcing examples What services you can outsource Pros and cons of offshoring Pros of offshore outsourcing Cons of offshore outsourcing Offshore outsourcing in the Philippines Types of offshore outsourcing Offshoring historyDeploying manufacturing jobs out of the country has been a common business method since the 1960s.
This well-known business strategy started with outsourcing. Outsourcing is when an organization farms out parts of its business processes to an external company.
While it may seem like a current phenomenon to many, the truth is it has been going on since the 1950s.
However, it wasn't until the 1980s that corporations perceived it as an effective business strategy. It was also in that year when companies mainly outsourced to allow them to have a greater focus on their core competencies.
Then in the 1990s up to the early 2000s, organizations started to concentrate more on the cost-saving measures of outsourcing.
Now, this is the time when strategic outsourcing has emerged, and the goal is to gain a competitive advantage in the industry.
Fast forward through time, given today's technological advancements, it is easier for companies to delegate both their core and non-core functions to the external workforce in different countries.
Offshoring revolutionizes organizations and how they perform their daily operations. It transforms business landscapes into agile structures that boost its overall profitability.
Benefits of offshore outsourcingThe world is becoming increasingly globalized. Technology, software, and communications improvements now enable easy access to a globalized workforce.
This has many advantages, but the primary benefits of offshore staffing are:
Cost savingsOne of the leading reasons for offshore outsourcing is the potential to reduce labor costs. Companies can take advantage of lower wage rates in other countries, which can significantly impact the overall cost of production or service delivery.
Also, some countries may have lower infrastructure and operational costs, contributing to overall cost savings (typically 60%-80%).
Access to global talentOffshore outsourcing allows businesses to tap into a global talent pool.
Companies can access specialized skills and expertise that may not be readily available in their home country, leading to improved product or service quality.
Focus on core competenciesOutsourcing non-core functions enables companies to concentrate on their core competencies. This strategic focus can enhance efficiency and productivity, as resources are directed toward areas that contribute most to the organization's success.
Time zone advantageOffshore outsourcing can provide a time-zone advantage. Companies can create a 24/7 working environment by leveraging the time differences between their home country and the offshore location.
This can result in faster project turnaround times and increased productivity.
Flexibility and scalabilityOutsourcing allows businesses to be more flexible and scalable. They can easily scale up or down their operations based on business demands without the challenges of hiring or laying off in-house staff.
Risk mitigationOffshore outsourcing can help spread business risks. Diversifying operations across different geographical locations can reduce the impact of local economic or political fluctuations on the overall business.
Innovation and technologyAccess to global talent often brings in diverse perspectives and innovative ideas.
Outsourcing to locations with advanced technological capabilities can also result in the adoption of the latest technologies and methodologies.
Faster time-to-marketOffshore outsourcing can accelerate time-to-market for products and services. With a global team working on different aspects of a project simultaneously, companies can bring their offerings to market more quickly.
The benefits of offshore staffing impact small, medium, and large enterprises across the globe. Businesses can access more affordable resources to help streamline and grow their business. This is a win-win for all parties involved.
Despite these benefits, it's crucial for businesses to carefully evaluate the risks and challenges associated with offshore outsourcing, such as cultural differences, communication barriers, and potential quality issues.
A well-planned outsourcing strategy that aligns with the business goals and values is essential for success.
Why do businesses resort to offshore outsourcing?Companies do not just switch to offshore outsourcing due to its cost-effectiveness.
Rather, more and more companies these days are acknowledging the other relevant advantages of offshore outsourcing to the market:
To save up to 70% on labor costsBusinesses always have to look for ways they can obtain a stable stream of revenue while sustaining their daily operations.
However, because of the economic fluctuations and its unpredictability, other companies couldn't afford the costs of local operations. This is where offshore outsourcing can come in handy.
To stand out in a sea of tight competitorsAnother reason for offshoring is to stay competitive, especially with the global economy.
Like for example, with customer service, businesses are able to boost their efficiency and daily operational procedures with this strategic practice.
To keep up with the latest business trendsEntrepreneurs in this day and age know well enough that innovation is one key factor in their overall success. Thus, it is more achievable with offshoring.
To leverage professional and highly competent offshore staffOther companies also resort to offshoring as a result of the lack of qualified local workers to do specific tasks. Countries like Australia experience skill shortages in the automotive industry.
It was the same as with the United States when Apple had to transfer its manufacturing to China due to the lack of a local labor force.
Offshore outsourcing examplesBusinesses of all sizes rely on offshore outsourcing to delegate tasks to lower-cost countries but of equal expertise.
Just like nearshore outsourcing, companies prefer offshoring several roles so that the in-house team can focus on the vital functions of the business.
Here are some of the most popular offshore outsourcing examples:
Customer service departments through offshored call centersOne popular example of offshore outsourcing is customer service through call center companies. Every company needs a customer service department to cater to customers' needs, but these operations can get very pricey.
As a business grows, more people are needed to handle queries and maintain customer satisfaction. Having an in-house customer service team may not be the best decision.
From coming up with standard operation procedures to staff and management training, running a customer service department alone can take so much time and effort, not to mention resources.
This is why offshore outsourcing of customer service roles and departments has become the norm
Virtual assistantsAlmost anything can be done online:
Need to book personal appointments or work meetings? It can be done online.
Need to delegate social media posting and graphic design activities? Do it virtually.
Need to develop codes for your website and/or mobile app? Outsource it online.Almost everything can be done online, so business owners and companies offshore outsource tasks to general Virtual Assistants (VAs).
Offshore outsourcing tasks to general VAs has been a major game-changer, especially for small businesses. This is because outsourced staff ensure quality work while saving a lot of resources.
What services can you offshore?Aside from manufacturing, organizations these days are able to farm out both their core and non-core functions to offshore providers.
One example of this is foreign companies that have been offshoring their call center in the Philippines. We all know that the country is known as the Business Process Outsourcing (BPO) capital of the globe and is well known for call center services.
However, aside from customer service and support, Information technology (IT), related job functions are also some of the leading offshored services.
In fact, according to statistics, the global IT outsourcing market is expected to be worth $98 billion from 2020 to 2024.
A lot of foreign companies have also tapped into offshoring their human resources tasks such as sourcing, hiring process, and more. More so, finance and accounting-related tasks like bookkeeping, tax filing, procurement processes, etc.
In terms of sales and marketing, offshore outsourcing companies like Six Eleven BPO offer global strategic solutions for different types of industry sectors.
Some of their services may include lead generation campaigns, industry and market research, and search engine optimization, among others.
Basically, companies can offshore nearly every part of their daily business functions to offshoring providers from around the world. This has been made even possible with the help of our modern-day technology and the availability of the internet.
Pros and cons of offshoringNaturally, offshoring will always have its mix of advantages and disadvantages. Having said that, let's see whether the benefits of offshoring outweigh its downsides:
Offshoring pros Reduced labor costsOne good example of this is US companies that offshore to developing countries like the Philippines.
This allows them to reduce their overhead costs as Filipino workers have low compensation as compared to those hiring local in-house employees.
Availability of a skilled workforceAs we have mentioned earlier, one of the reasons why organizations offshore is the lack of skilled labor. Offshoring to countries like the Philippines and India grants international companies access to a skilled talent pool.
Both these countries have seasoned global talents who are English proficient and college degree holders.
24/7 operationsForeign companies that offshore to another country with major time differences allow them to have their daily operations overextended hours.
Like in most cases customer services, these foreign companies are able to extend their contact center services even up to twenty-four hours.
Increased focus on the business coreAs businesses free up more on their job loads, this gives more time for leaders and in-house staff to focus on improving their core functions.
You can rely on a trusted outsourcing partner like HireSmart Staff to build a highly-skilled team to perform other tasks needed in your company.
It is also important to note that organizations that offshore are not just on the receiving end of this practice's perks. In the Philippines, the BPO industry plays a huge role in terms of its economic growth.
The country's BPO industry employs a lot of the working population in the Philippines.
Offshoring cons Language barriersThis is perhaps one of the major drawbacks of offshoring. Usually, in countries like India and China, the English language isn't the locals' first language.
Another factor is when the offshoring provider comes from a region with a strong local accent.
Cultural differencesWhen offshoring to different countries, cultural and social differences are unavoidable.
For example, US business leaders may talk in a straightforward and candid manner, while a Filipino remote staff may be more reserved.
Quality controlAnother concern for foreign companies is that offshoring also means that they will be giving up control over their offshored tasks.
Even if these clients provide quality guidelines, there will still be differences in terms of the working culture and environment.
Despite these cons, businesses still consider offshoring as a good business model for organizations of all shapes and sizes. Going back to offshoring to the Philippines, the country has ranked second among Asian countries with the highest English-speaking population.
More so, the country is also heavily influenced by Western culture as it has been colonized by the US and Spain for years.
Offshore outsourcing in the PhilippinesThe Philippines is the leading offshore outsourcing destination in the world.
With 1.3 million BPO workers and counting, large corporations and even small to medium-sized enterprises all over the world trust that their Filipino workers and remote teams can provide excellent outputs, customer service, or IT assistance at a cost-effective price.
Outsource Accelerator provides you with the best customer service outsourcing companies in the Philippines, where you can save up to 70% on staffing costs.
We have over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2500+ BPOs, all designed to make it easier for clients to learn about and engage with outsourcing.
Types of offshore outsourcingHere are some types of offshore outsourcing, as listed by Rezaid:
There are many popular approaches and solutions that are used by businesses today – each with its own benefits and drawbacks. The right offshore outsourcing type will depend on your specific requirements as well as the nature of your project.
Here are four different types of offshore outsourcing:
Production offshoringThe actual movement of the physical manufacturing process overseas, generally at a significantly cheaper cost in terms of personnel and materials, is known as production offshoring.
Front-office and back-office processes and functions are the two primary types of offshored processes and functions. Customer service, inbound and outbound telemarketing, virtual assistants, and technical assistance are all examples of offshore.
HR and recruiting, accounting and bookkeeping, mobile and web development, and design and graphics are other examples of production offshoring.
System services offshoringInformation technology (IT) will be a key subject to get right given the multiplicity of procedures and minute-by-minute activities of any corporate operation.
In the 1990s, a huge amount of communication infrastructure allowed nations like India, which has a big pool of English speakers and a technically skilled workforce, to lead the sector by luring companies like HP, IBM, Microsoft, Oracle Corporation, Intel, and Cisco.
Innovation and software offshoringAsian countries lead the world in computer science and software development services. High-tech product companies, including those in Silicon Valley, have begun to offshore innovation work to Colombia, Belarus, South Africa, Mexico, and Ukraine.
Using these countries' highly trained labor pools results in considerable cost savings and faster production cycles.
ReshoringReshoring, also known as back shoring or inshoring, is the opposite of offshoring. Companies like Google, Facebook, and Amazon have been criticized in Europe for allegedly concealing income and avoiding taxes.
They reportedly did this by booking non-US earnings from major advertisers through its Dublin branch in low-tax havens like the Republic of Ireland.
As a result, in January 2018, it started to book those earnings and pay taxes on those profits in the countries where they were generated.
Want to learn more about outsourcing? Check out the Inside Outsourcing book as well as the Inside Outsourcing book review today!
What is Back Office?
What is a back office?Back office is a term used to classify business activities that are not directly attributable to frontline customer support, sales, and services.
Its functions relate to administrative functions that do not directly generate income or are accessed by customers but are necessary to streamline the other processes involved in a business.
The back office can be thought of as the non-customer-facing element of a business.
Back office tasks include but are not limited to the following: data entry, account processing, website content management, data verification, mediation, graphic design, writing and editing services, accounting and financial services, and quality assurance.
These functions are necessary to a business yet incur additional costs. Some companies find back office jobs costly because they require a substantial amount of capital for recruitment, salaries, and employee benefits.
The back office function is often described as ‘non-core,' which means that it does not directly support or contribute to the achievement of the business's financial or strategic objectives.
Although back office functions are often considered to be less strategic than front office roles, they are nevertheless essential for every business, large or small. The majority of back office tasks are performed by administrative staff and are therefore considered routine work.
Still, without the efforts of the back office, the organization would cease to operate properly, thus affecting the front office and overall customer satisfaction.
Back office employees typically do not interact directly with customers or clients. Instead, they handle internal operations that are often more complex than those handled by front-office personnel who deal directly with customers.
They are also responsible for ensuring that all company business functions run smoothly and efficiently.
Back office operations are typically highly repetitive, making them an ideal target for cost savings opportunities. However, the nature of this type of work makes it difficult to automate and streamline.
Automating these processes can be especially challenging because of their highly fragmented nature and the large number of different users involved. The result is that many back office processes are still performed manually.
To ensure that your manual back office processes are done efficiently, you can consider outsourcing.
Back-office functionsThe back office is the cornerstone of any company's financial and operational success. As a result, it often generates less revenue than the front office.
The traditional back office tasks are divided into two categories. These are the administrative operations that keep the firm functioning and the customer support functions that directly fulfill customer services and demands.
Modern back office functions are the behind-the-scenes tasks that support a company's front-line operations.
These include operations such as supply chain management, procurement and logistics that are necessary to ensure an organization can meet customer demand in a cost-effective way.
Further, a modern back office model is one where all departments work together towards a common goal – delivering value to customers at the lowest possible cost.
In this model, no department is seen as more important than another, and none has more power than another either
The traditional approach to managing an organization involves separate departments focusing on their own specific goals with little consideration for what other departments may need from them or how their actions might impact others' performance
These functions frequently carry out significant, multi-step processes in which more than one individual or functional group contributes to the fulfillment of the business process.
Administrative functionsAdministrative back office functions are essential to the smooth running of any business. These roles include:
Human resources
Project management
Accounting
Legal
Data entry
Virtual reception
Market research
Inventory control
Website management
Basic admin duties Customer support functionsCustomer support is one of the most important back office functions in any business. It is a process that helps customers get answers to their inquiries, solve problems, and resolve issues with a company's product or service.
These tasks include:
Handling complaints and irate customers
Providing information and answering questions about products or services
Answering questions about payment plans and refunds
Technical support
Ensuring customer satisfaction
Customer relationship management What are back-office jobs?A company's back office operations are formed of several functions, and below are some examples of back office jobs and their key responsibilities:
Financial assistantA financial assistant is in charge of assisting a company's finance department. They are responsible for various tasks in the office, such as data entry, balance sheet generation, accounting, and keeping financial records up to date.
Because they mostly work on the company's accounts, financial assistants must be detail-oriented, well-organized, and analytical.
The following is the updated 2023 salary comparison of paying for an in-house and outsourced financial assistant.
Financial assistant
Monthly rate of Filipino staff
Monthly rate of in-house staff Entry-level
$470
$2,883 Average
$630
$4,069 Experienced
$1000
$5,700(Sources: Talent.com, Indeed.com)
HR assistantHuman resource assistants are in charge of organizing appointments, keeping records, and onboarding new employees.
Among several other tasks, they handle payroll keep attendance records, and usually help the human resources manager. Employees in this field must be trustworthy, organized, and have effective communication skills.
Here is a quick comparison to see the difference between paying for an in-house and outsourced HR assistant.
HR assistant
Monthly rate of Filipino staff
Monthly rate of in-house staff Entry-level
$450
$2,214 Average
$640
$2,992 Experienced
$900
$4044(Sources: Talent.com, Indeed.com)
Data analystData analysts are in charge of interpreting data, analyzing data, and putting data-gathering systems in place. They also create reports and provide assistance for the data warehouse.
Data analysts must be competent mathematicians with good problem-solving abilities and the capacity to manage information efficiently.
Here is a quick comparison to see the difference between paying for an in-house and outsourced data analyst.
Data analyst
Monthly rate of Filipino staff
Monthly rate of in-house staff Entry-level
$522
$3,323 Average
$641
$5,091 Experienced
$1,099
$7,766(Sources: Talent.com, Indeed.com)
Financial analystFinancial analysts are in charge of various financial activities on behalf of external or internal clients. Their responsibilities include estimating operating expenses, producing reports, and maintaining a database.
In order to stay excellent in this job, applicants must be skilled mathematicians with great analytical abilities. It is also important to be kept updated on the latest developments in the field to determine how they could affect the firm's financial records.
Here is a quick comparison to see the difference between paying for an in-house and outsourced financial analyst.
Financial analyst
Monthly rate of Filipino staff
Monthly rate of in-house staff Entry-level
$593
$3,617 Average
$733
$5,148 Experienced
$1,134
$7,328(Sources: Talent.com, Indeed.com)
Risk analystRisk analysts are back office employees who supervise investments and identify potential risks in a company's investment portfolio.
Based on their review of these investments, they support the company by providing suggestions to corporations to assist in reducing future risks. Risk analysts must be skilled in analytical, strategic, and interpersonal abilities.
Here is a quick comparison to see the difference between paying for an in-house and outsourced risk analyst.
Risk analyst
Monthly rate of Filipino staff
Monthly rate of in-house staff Entry-level
$479
$3,510 Average
$631
$5,510 Experienced
$1,180
$8,650(Sources: Talent.com, Indeed.com)
Why is the back office important?Back office services are simply the unseen but critical processes that make a business run.
The importance of back office services to any business cannot be overstated. Without these services in place, an organization will face financial consequences — whether it's the inability to pay bills on time or having to pay employees late because payroll hasn't been processed.
The back office is often overlooked when businesses focus on marketing and sales. However, the success of your organization depends on how well the back office runs.
Here are some reasons why it's important:
Revenue. The more efficiently you can run your business, the more money you'll make. If operations are slow, it will take longer to receive payments from customers and vendors — which could impact cash flow. Staff productivity. Employees who don't have to perform tedious tasks like data entry can spend more time on other projects that are important for growing your business or completing daily tasks. Efficiency. By having a back office support team, your core team doesn't have to waste time manually inputting data into multiple programs or making phone calls just so that you can get things done quickly and accurately. Instead, all these kinds of tasks are done, handled, and maintained by a dedicated team! Customer service. A well-run back office means employees can focus on providing quality customer service, which will help maintain strong relationships with clients and create referrals for future business opportunities.Back office support can be provided by third-party companies or outsourced entirely to save time and money by eliminating internal redundancies.
For instance, many online businesses hire virtual assistants (VA) to provide administrative and customer service assistance without having them physically present in the office.
This allows businesses to maintain contact with their customers without paying for an expensive location in an expensive city with expensive overhead costs like rent and utilities.
Back office support definitionBack office support is responsible for organizing and improving the customer experience in the company. Accurate data, clear and interesting content, and well-designed websites all contribute to a better customer experience.
Back office support is the term used to refer to the services provided by an organization to its customers, suppliers, and other business partners. It encompasses all the activities that take place in a company's offices that are not directly related to its main products or services.
Back office support is the work that enables other people to do their jobs. It's important because without it, no one will be able to do their jobs very well.
The back office is also called “administrative support” or “administrative services,” and it includes jobs like human resources, payroll, data entry, and accounting, among others.
Back office support jobs are frequently concealed behind the scenes. However, they should never be underestimated.
These roles help expand company demands and minimize friction from the customer experience for roles dealing with data input, content moderation, office services, and financial services.
A good back office support program can help you prevent unfavorable encounters at every point of interaction. Employees in back office roles are equally as important to excellent CX as those in front office positions, from multichannel services to order fulfillment.
Further, back office support can be broken down into two categories: Support for sales staff and support for other departments.
Support for sales staffThis includes administrative tasks such as keeping accurate records of sales and customer information, ordering supplies and equipment, managing budgets, and paying bills.
It also includes providing technical support for sales staff, such as answering queries about products or services and helping them resolve any problems that may arise during a sale.
Support for other departmentsThe back office provides all the non-customer-facing capacities that keep the business running smoothly. This includes financial operations, accounting, human resources, IT, and inventory management.
Basically, the back office is where the work is done. It's where the staff are and where the support is provided.
In most businesses, the back office is where you'll find most of the employees. It's where your business happens.
Key benefits of outsourcing back office With the advent of the internet age, companies can now take advantage of what we call Business Process Outsourcing (BPO). This business approach can lessen the operational costs of running back offices while maximizing its full benefits.
This also translates to more time for you and your core office team to focus on income-generating functions.
Outsourcing back office roles guarantees that you are working with skilled professionals minus the hassle and cost of recruitment, as well as other operational and employee benefit expenses.
There are several advantages to why businesses should outsource their back office functions:
Cost savingsOutsourcing your back office operations will help you reduce operational costs without impacting the quality of your services. You can also cut down on employee expenses such as office space and the cost of equipment.
Back office outsourcing can help you save money by reducing the need for expensive in-house personnel to perform these tasks. In addition, it gives you access to employees who specialize in these areas and have the expertise needed to handle them properly.
Time savingsReducing costs means saving time too! You'll spend less time on administrative tasks like data entry, filing taxes, and finding new vendors to do business with because all this will be handled by your outsourced provider.
Improved productivityBack office outsourcing will allow you to focus on core business activities while leaving other roles to experts who have years of experience in handling such tasks.
This will help increase productivity levels at your company since they can now focus on their core responsibilities.
Focus on revenue-generating tasksBack office outsourcing frees up entrepreneurs to spend more time working on revenue-generating activities such as sales and marketing, which will help them grow their businesses faster than ever before!
Higher quality servicesOutsourcing companies have a lot of experience in providing back office services. They also have a large network of resources to draw from.
Your BPO provider can provide you with high-quality services at a lower cost than what it would be if you were to set up your own back office operations from scratch.
Where to find a back office outsourcing partner?Thanks to the growing BPO industry, finding a back office outsourcing partner is easier these days. There are thousands of companies that have entered the business process outsourcing industry to accommodate clients who need specific skill sets in their business.
The good thing is they can be found in any country across the world — whether nearshore or offshore.
The Philippines is among the fastest-emerging outsourcing destinations in the world ever since its emergence in the 1980s. Their expertise in back office services, as well as numerous other roles, attracts global firms to their shores.
The country's wide pool of BPO firms makes sure that their representatives are competent enough to handle the client's needs.
Outsource Accelerator lists over 3,800+ business process outsourcing companies in the Philippines specializing in back office administration.
What is Human Resources?
What is human resources?People are considered a crucial asset to any company. The human resources team is responsible for transitioning companies and organizations into a more people-involved and developmental association.
The HR trains and develop employees according to company values and goals. Employees make the company grow. The company, in return, develop these employees better individuals in their chosen fields.
It is vital for employees to be motivated and be placed in a healthy environment. However, the human resources department is also involved in dealing with an employee's disciplinary action as needed.
Every company or organization has its own house rules and policies that employees are supposed to abide and follow.
Outsourcing human resourcesThe HR workforce’s goal is to recruit people who have the right qualifications that are specific to the job description. They should not compromise the company's standards and must evaluate them thoroughly.
HR is an essential part of a business, and it is their responsibility to equip the business with an efficient and productive workforce.
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