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Businesses have always sought new ways to increase their reach and protect their profits. The time between 1950s to 1960s saw businesses adopt diversification strategies as a way to increase their markets and profits by ofering more products and services. This strategy was largely successful, resulting in the speedy expansion of businesses.

This unprecedented growth however also resulted in multiple layers of management and a bloated management network. By the time the 70s and 80s rolled in, these organizations were ill-equipped to take advantage of emerging trends and markets because of a lack of agility given their current management structure.

This was one of the primary conditions that gave birth to outsourcing as a business strategy.

To improve flexibility and ability to respond to new opportunities, many large companies began to identify and focus on their core business and began outsourcing non-critical processes. It was only towards the end of the 1980s that outsourcing was formall identified as a business strategy.

In the beginning, non-critical business processes were outsourced to third party providers who specialised in these services in the same general geographic location as the contracting company. Over time however, especially as global communication and technology advanced, business found that it was actually more cost effective to outsource these non-critical tasks to countries other than their own, particularly those who had a lower cost of living and a large pool of talent.

Aside from a bigger margin, these businesses found that there were other benefits to outsourcing as well which included:

• Improved company focus
• Acquisition of skills and services that were not otherwise available
• Freeing up internal resources which can now be redirected for other purposes such as research and development.
• The ability to quickly upscale and downscale depending on existing market conditions
• Improved risk and cost management by having a global footprint

The IT-BPO industry started from a single contact center founded by Frank Holz in 1992 which marked the beginning of the local BPO industry in the country. Since then outsourcing has had a major impact on the Philippine economy. The BPO industry had substantial contribution to economic growth, accounting 2.4% of the GDP in 2005. The sector reached a staggering one million workers by 2010 and accounted for 27% of all new jobs.

Today the Philippines is an important offshore player globally, ranking consistently among the top five BPO locations, driven by several factors such as:

• Increasing government support on IT investment
• Large pool of gradutes with English communication skills
• Knowledge in ICT

The Philippines is currently the second largest Business Process Outsourcing (BPO) providers in the world and is projected to become even bigger. The Philippine BPO industry is estimated to generate 1.3M jobs in 2016 with a growth rate of 17% annually.

If you want to find out more about outsourcing in the Philippines, get in touch with CLEAR Corporate Solutions for a free consultation at info@clearcorpsolutions.com. If you’re in Australia, you can reach us at 1300 300 269.

We’d love the opportunity to show you what outsourcing can do for your business.