Next Wave of Outsourcing – ANC News Interview with Derek Gallimore

ANC News spoke with Derek Gallimore, founder of Outsource Accelerator to get his opinion on the BPO industry’s prognosis amidst the Coronavirus pandemic.

Throughout this pandemic, Derek sees an opportunity for Business Process Outsourcing (BPO) in the Philippines, especially in customer service and technical support. He sees the potential for the industry to generate millions of jobs and eventually become a 600 billion-dollar industry in the future.

COVID-19 Business Recovery Plan

With the ongoing lockdown and looming worldwide recession, Derek said that businesses worldwide will be forced to cut costs, and seek more cost-efficient and flexible means of managing their workforce. He said that as business respond to and emerge from the Coronavirus, they will need to: (i) slash costs, (ii) adapt, and (iii) rebuild.   Outsourcing is a powerful tool in this situation as it allows them to (i) save 70% on stating costs, (ii) access work-from-home (WFH) enabled teams, and (iii) flexible, scalable teams.

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The Philippine outsourcing sector ticks all these boxes.  It allows businesses to both slash costs whilst at the same time maintain the resources they need to adapt and rebuild their business.

Amid the Luzon lockdown, BPO companies have turned into flexible working arrangements, mostly work-from-home. While more first-time companies undergo adjustments, some of them have been adapting to remote work set-up before.

Outsourcing also gives an advantage to low labour costs needed to run an operation. “The average salary here in the Philippines is about US$6,000 per annum versus the US, which is about US$60,000. That’s incredible savings to have and that is very attractive in terms of recession.”

It is for these reasons that outsourcing sector is countercyclical – meaning that it is positioned dot do well in times of recession, such as now.

Outsourcing for small- and medium-sized businesses

Michelle Ong the host of ANC News, mentioned that businesses have been outsourcing to India and the Philippines for over 25 years. Large enterprises, especially telecom companies, have been hiring call centres for customer service and technical support. She asks Derek if outsourcing was now equally available to small and medium enterprises? Derek agreed with this:

“[Outsourcing] started about 25 years ago with only telephones available. The cost of this technology was huge but has become cheap since then… Now, Philippine outsourcing for the last five or 10 years is accessible to the small and medium-sized businesses of the world.”

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He also mentioned that there are over 40 million SMEs across the high-cost English-speaking world – most of which haven’t outsourced yet. This is because they either don’t know about the concept yet or they don’t know where to start. With this, Derek believes that the second wave of outsourcing has now started and is coming from the uptake of SMEs outsourcing. This next wave of outsourcing could produce a further 30 million outsourcing jobs for the Philippines, generating $600bn annually.

The threat of automation and AI

Michelle also raised the concern that outsourcing will be harmed by AI, automation and machine learning, which Derek opposed. Low-value, high-repetition tasks are certainly at risk – and this is the case across the world.  However, the future of outsourcing – and especially SME outsourcing – is in higher value, lower volume activities and professional roles, such as coding, CAD, marketing and design services. 

Outsourcing’s biggest competitor

When asked what is the biggest competitor of Philippine outsourcing, Derek said that the biggest competitor to the concept of outsourcing is actually, traditional employment.  He said that for people to be aware of, and embrace outsourcing, the sector needed to promote the benefits to the world, and encourage businesses to try it.  In terms of other outsourcing countries, he said that there certainly is competition and the Philippines had to ensure that it remained competitive:

“When (businesses) are looking to offshore staffing there is India, Vietnam, which is the new kid on the block, and Eastern Europe for instance. The Philippines just has to be careful to not only stay relevant and highly qualified but also promote and brand themselves as the best in the world.”

More from Outsource Accelerator

Outsource Accelerator is the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between Philippines outsourcing suppliers and businesses across the globe.  Outsource Accelerator has published over 4,000 articles, 280+ podcast episodes, and a comprehensive directory with 700+ BPOs.

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