Outsourcing in the Philippines

Outsourcing is either a dirty word or the holy grail, depending on which side of the debate you’re on.

It’s one of the hottest of the hot button economic issues this political season in the United States, with John Kerry declaring companies who outsource as “modern day Benedict Arnolds”. There is legislation pending in several US States prohibiting outsourcing of state government contracts.

Economists on the other side say it is an inevitable result of globalization: business will go where wages are cheapest and quality is comparable. In the long run, the US will benefit, since more spending power by Indian and Philippine middle-class workers will unavoidably result in more business for American companies. Studies from the World Bank also indicate the potential upside by way of reduced costs is huge: an estimated US $ 138 million for the US banking sector alone. A recent report by the McKinsey Global Institute backs the outsourcing strategy. For every dollar of work moved offshore, the US economy gets back $1.12 to $1.14 in income, says the institute.

What really is Outsourcing?

Outsourcing right now has no standard legal definition. It can be defined as the transfer of a commercial function to an outside service provider, subject to the customer’s retained authority and responsibility to third parties and shareholders for continued success of the customer organization. This normally involves long-term contracts. Virtually any long-term service contract is outsourcing, to some degree. This is distinguished from projects, or “contracting out.”

Outsourcing has been here for quite some time. In the 1960’s, the outsourcing model was successfully used by American car manufacturers to be more competitive with Japan. Instead of manufacturing all of a car’s parts, Ford or GM would source non-vital parts, say carburetors, from specialty sub-contractors. They were then free to concentrate on marketing and distribution. Back then, it was accepted as just another business tactic.

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An Introduction to AOV Outsourcing Service

AoV Outsourcing Service is a webmaster staffing company, and we specialize in finding full-time programmers, graphic designers, journalists, researchers, and link builders to help your business grow. With webmaster staffing, you directly choose and manage the staff who will work on your project’s success.

Our staff offices are located in the Philippines. This means you get an educated staff at a very cost effective price. A full time agent starts at just $625 per month. Take the time to review the benefits of working with us, or contact us right away to get started.

As a webmaster staffing company, we are focused on premium, inexpensive, concurrent, programming and design help. We will be helping your business by providing professional employee services designed to reduce your labor expenses. We will be allowing you more time to focus on the growth and strategy of your business.

Outsourcing Destinations

Over the years offshore outsourcing has increased at a rapid pace due to the advancement in modern satellite and Internet technologies, better connectivity and a constant search for less expensive labor to cut costs and achieve competitive advantage. By outsourcing their back office business processes to less expensive nations like China, India, Philippines, Malaysia etc companies can cut costs, to concentrate on their core businesses and strengths, and ensure better customer satisfaction. A recent report suggests that US firms have saved nearly US$8 billion through outsourcing to developing nations like the Philippines.

There are many developing nations that act as offshore outsourcing destinations to developed nations. Some of the countries that can be considered as offshore outsourcing destinations are as follows:

Philippines

The Philippines’ key competitive advantage is the people. Philippines has a well-educated English speaking work force and stands out as the world’s third largest English speaking nation. The attitude, commitment, community, and education constitute the key competitive advantage especially in the front office operations such as customer service and sales. Government support and the IT infrastructure is a given.

The Philippines boasts of a huge pool of productive, trainable and multi-skilled labor force. Filipino Outsourcing companies such as AOV Outsourcing service only hire workers that are highly qualified for various outsourcing tasks. Major companies can benefit from the high quality of managers and IT staff that the Philippines can offer. The country is the 3rd largest English-speaking country in the world so Filipino workers have a high level of proficiency in English.

China

In recent years, China is rapidly emerging as one of the world’s leading suppliers of offshore software outsourcing services due to its incredible development rate. Although India is at the moments the world leader in software outsourcing industry, China aims to outpace India and become the next dominant competitor in software outsourcing. It is predicted that China will emerge as one of the top three countries for overseas software outsourcing between 2007 and 2010. Companies are already beginning to plan their offshore outsourcing strategies to take advantage of China’s emerging strength as an outsourcing center. This includes looking for ways to take advantage of the country’s current software strengths. Some estimates state that China outsourcing could rival India as the leading offshore IT services market as early as 2007.

India

One of the major players in the offshore outsourcing industry, India has a well educated, talented, low cost and English speaking workforce, excellent IT and networking infrastructure, a fairly stable political scenario, friendly laws and well laid taxes and quality certified software firms. The offshore outsourcing market in India is ever growing and has produced many success stories making India a popular offshore outsourcing destination for IT related and other BPO services.

Malaysia

Malaysia’s well-developed infrastructure, attractive business environment and strong government support makes it a rising alternative to India and China. The government’s positioning of Malaysia as a hub for services and technology innovation has resulted in a number of multinationals locating some of its global or regional operations in Malaysia. Malaysia has a relatively more stable political climate backed by consistent economic growth which makes it attractive for sensitive, high end applications in banking and finance.

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Philippine Outsourcing comes Third in Asian Outsourcing Revenue

After decades of lagging behind in terms of economic development among Asian countries, outsourcing to the Philippines is starting to gain some traction on the outsourcing front. An article from Business Week – The Philippine Awesome Outsourcing Opportunity mentioning the potential of the Philippines that have breed in outsourcing services generating revenues of $2.1 billion last year, phasing in third behind India and China and slightly ahead of Malaysia. That’s up 62% over the $1.3 billion it gained in 2004, and a huge increase from the start of the decade when the outsourcing industry in Manila employed just 2,400 people and the industry had revenues of merely $24 million.

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Learn more about outsourcing to the Philippines in AoV Philippines Outsourcing