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Bring Down the Cost of Outsourcing: Outsourcing to the Philippines

Jan 18, 2008
Although India is one of the biggest players in the outsourcing industry due to the cheap cost of labor that it offers, the wage rates in the said country has been on the rise. As such, companies that are outsourcing their business processes are now looking at other options so that they can still maintain their leverage and the benefits that attracted them to outsource in the first place. By looking beyond India, other countries in Southeast Asia such as the Philippines may become viable options in outsourcing business processes.

Because of the increasing costs of doing business in India, particularly in Bangalore, companies that do business there are now looking at other countries and locations so that their costs would be kept low. Actually, even Indian corporations are now setting their eyes to other countries so that the level of their profits will remain and their customers would choose to stay with them. By employing this strategy, the companies are able to diversify themselves and reinvent their manner of doing business, thereby winning the loyalty of some of their clients.

Some analysts have come to understand that Indian companies tend to show off only in the beginning. As soon as they have garnered the experience in the industry, they tend to pack up and look for alternative locations in other cheap labor countries in Asia and even in Russia.

The strategy of global giants, however, has been similar. Accenture, Genpact, IBM Global Services and other similar corporations have been gathering their talents from all over the world so that they can harness what a particular location can offer to the rest of the world. EDS has been cited by BusinessWeek that it is working with the Continental airlines in several programming and software development projects. Low cost regions in Asia such as the Philippines are being cited as the most dominant areas in which these big corporations are utilizing in their efforts to promote the outsourcing industry.

Increasingly, however, companies are realizing that cost considerations are not everything. What they truly need are companies that take into account and invest significantly in the eliminating or at least minimizing the cultural difference and language barriers between the contracting parties. As a result of this, there are regions in Europe that are now gaining prominence. Among them is Bucharest, Romania. With Europe taking center stage in the outsourcing industry, there will be a number of changes that will take place. Because of these reasons, outsourcing companies in the Philippines are now investing significantly in addressing these cultural and language issues.

Intellectual property rights are also slowly being addressed by companies that are engaged in outsourcing. In fact, some companies have removed the USB drive feature so that employees could not easily get files and send them to unauthorized locations. There are a number of concerns with the outsourcing industry, however. Workers and employees in the United States as well as in other areas in North America are finding it more difficult to compare with their overseas counterparts that are being paid less than half of their wages. On the whole, however, considering the Philippines as an outsourcing destination may be a big step in making the industry more diversified and more efficient.
About the Author
James Stinson is Owner and Founder of Global Sky Inc. He employs a team of 50 in a high quality call center facility based in the Philippines. For more info on outsourcing your project visit: http://www.global-sky.com
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