Outsourcing Firms in Cebu Expand

Owed largely to the skilled labor pool in Cebu and the growing flexibility of the global outsourcing industry, outsourcing firms in the city are now looking to expand or are already expanding  their services beyond their usual brand of clients.

Outsourcing vendors in Cebu that usually just provide BPO solutions and are blessed with employees who possess specialized skills can now extend the services they offer to knowledge process outsourcing (KPO) seekers.  (Read about the differences of BPO and KPO here.) In a nutshell, KPO involves outsourcing processes that are connected to, or are themselves, core commodities of the parent company. Examples of KPO services include teaching, legal work, healthcare, research, and design and animation.

A collective goal of outsourcing firms in Cebu is not just to add KPO services to their roster of offerings but also to increase their knowledge-based personnel to meet the growing demand for customized services. These services require not just good English skills but more importantly technical and analytical prowess in diverse fields other than communication and information technology (e.g., healthcare, finance, legal work).  What local outsourcing providers now have to address is a more tailored brand of customer service and a more stable, secure, and efficient market. These qualities will attract clients who are eyeing global expansion. 

Cebu's IT-BPO industry has near-perfected the ropes of the field that they are now ripe to take more specialized, knowledge-based tasks. Local outsourcing vendors have made themselves a name in the American market and are now looking to penetrate other markets in other countries such as Australia, the United Kingdom, and China. The way things are going now, we can pretty much say that Cebu continues to be a wise investment.

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Outsourcing for SMEs

Outsourcing endeavors isn't only for huge multinational companies. In fact, small and medium enterprises (SMEs) outsource some of their business processes for exactly the same reason: rationalize costs and focus on core and strategic areas in their businesses. Through outsourcing ventures, SMEs can expect a smoother operation flow, an increase in production gains, a substantial return of investment.

Firms have been seeking the services of third-party providers  for security and maintenance for quite some time now, but today outsourced processes have grown to include operations, IT support, accounting and human resource functions. Outsourcing allows companies to delegate some of their non-core processes to other parties who can do these functions for them at a lower price, and who can deliver faster services and help keep track of their developments. 

Hiring employees always entails the company to dazzle applicants with incentives and benefits. In the outsourcing process, however, the company's main consideration should be the vendor's ability to satisfactorily perform the services tasked to them . SMEs must therefore be meticulous in their selection of the outsourcing vendor (How to Choose the Right Outsourcing Vendor). 

The outsourcing process is more or less the same for large companies and SMEs---the only difference is the size and extend of the outsourcing project. SMEs should take it one step at a time and see how far outsourcing can take them, which by the looks of SMEs already outsourcing their services, is a pretty encouraging distance.

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Ethical Concerns of Outsourcing

Outsourcing helps companies rationalize their costs and focus on the core processes of their business. However, before finalizing negotiations, acquaint yourself first with the possible risks (Risks of Outsourcing and How to Manage Them) and ethical issues and plan ahead for steps to take when they happen. Here are some ethical concerns in outsourcing processes.

• Security: The main security issue of outsourcing practices is confidentiality of information. Both client and vendor companies need to be meticulous about the set up of security systems and about the safety of storing electronic data. Ask your outsourcing provider about the measures they practice for information security, and if they give you a clear, comprehensive answer, take them as far as they can go with the decision-making process.

• Quality: This is where background research on your potential client vendor becomes important. There will always be that question of quality for services performed halfway across the globe; but if your partner knows what to do and has been doing this for quite a while, you might be less worried about how your expected tasks will turn out.  

• Environment: Thinking about how your business affects the environment is an integral part of your corporate social responsibility. Outsourcing your business processes then means also checking on your potential vendor if they practice sustainable operation methods and conducting periodic audits to make sure that they are complying consistently.

• Poor Work Environment at Vendor Location: Having a back office thousands of miles away can be daunting as you have minimal supervision on exactly what is going on. Choose an outsourcing vendor that imposes strict and reasonable policies on working conditions and who updates you on how your offshore employees are doing---are they comfortable? Are they motivated? 

Managing risks and smoothing out ethical kinks in outsourcing endeavors is an interactive process between client and vendor. Risks will materialize at some point, and ethical questions will rise; what is needed for a smooth-sailing partnership is a business model fostered on mutual trust and common goals.

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Outsourcing (and) Social Media

You might be wondering why and is enclosed in parentheses. This is because this post is about  1) outsourcing and social media as two distinct business tools independent of each other and 2) outsourcing social media. I know you're confused, but we'll work through the morphological niceties together.

If you run a small to a mid-size company and you want more exposure for your products and services, research in marketing strategies and other businesses will point to social media platforms as one of the most effective marketing tools out there. But what exactly is social media?

"A group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content."— Andreas Kaplan and Michael Haenlein 

Above is a rather technical definition, but let's focus on the "allow creation and exchange of user-generated content" part. In other words, while traditional marketing strategies set you apart from potential customers, social media allows you to actually get to know them and therefore tailor the presentation of your product/service according to what will most likely make them want it. Another keyword is exchange. Social media gives the market an avenue for discussion---where clients can ask questions, make clarifications, express grievances and companies can answer, analyze, and address. It is then very important for businesses to maintain activity on their social media pages or profiles.

Examples of the most popular social media sites out there are Facebook, Twitter, Tumblr, LinkedIn, YouTube, Google+, and Pinterest.

We have defined outsourcing in a previous post, so we know that it is contracting an inner business process to another company. Examples of services outsourced to outsourcing vendors are customer relations, data entry, human resources, content management, and other services that do not necessarily affect the businesses  core processes. As a business tool for cost-rationalization, outsourcing has proven itself to be so effective that it has evolved from a mere corporate strategy to a global corporate trend.

Outsourcing Social Media

Bringing outsourcing and social media together makes good sense because knowing how to properly utilize these tools together can dramatically do wonders for your business. Social media marketing is a non-critical part of your business processes (unless of course social media is your actual line of work) and can be done by experts who don't have to be at your office. Here are three reasons why you should outsource your social media.

1. It isn't really free.

Yeah, sure, you don't pay anything when you sign up, post pictures, or update your status. But for businesses like yours where time is money, maintaining social media pages can be an expense. An article by Forbes posits that the average midsize company spends at least 32 hours a month to properly maintain a single social media platform. And there is always opportunity cost, which means that the time you spend being on Facebook or Twitter could have been used doing work that is more critical to the company's operation. The ten likes you get on Facebook might cost you productivity gains. So while you might think you would rather not spend extra money to hire someone to be on Facebook or Twitter all the time, realize that you're already spending money by doing it yourself.

2. Focus on what you do best. Let experts do the rest.

Social media sites can be fairly addictive, and what you might intend as a two-hour visit to answer comments and post new updates can turn into half a day and by the end of your shift you'll realize that you haven't spent any time at all doing what you should really be doing. Sure, even nine-year-olds now can do a pretty good job keeping their Facebook pages active, but as a businessman who considers every part of his company important, do you really want to hire just anyone to take care of your social media responsibilities? My guess is not. The good news is there are experts in social media marketing, people who know what things to post, who to reach, and how to keep your social media platforms actively and consistently interesting.

3. Outsourcing = Less time and money

Experts on social media marketing will spend less time and do more than someone who is still trying to learn the ropes. Your chosen outsourcing vendor should know your goals and objectives and be able to incorporate that in their marketing strategies. Devote your social media platforms to someone who understands the nature of social media---fluid, dynamic, and encompassing. Finding the right outsourcing provider can mean less time, less money, and increased productivity gains for your company.

Finally, analyze how your investments can return to you for your social media campaigns before finalizing contracts. Your cost per acquisition for a lead through social media platforms must be complementary with your total expenses for outsourcing. 

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Outsourcing: A Little Timeline

Many a philosopher have said that the key to unlocking the future and understanding the present is to learn from the past. And like other ideas born from different fields, outsourcing has had quite a history that we can pinpoint on the industrial aftermath of the Second World War: expansion of global trade. The government and economy of the United States were set on increasing imports to Asia and Europe to help them recover from their war-devastated economies.

1950s and 1960s.  Diversification was the word on businessmen's lips, which meant they sought to expand their corporate bases by taking advantage of economies of scale. By broadening their corporate reach, companies intended to safeguard their profits, even though that meant organizing multiple layers for management. 

1970s and 1980s. Companies who wanted to join the global competition during these years were crippled by inflated management structures, which proved to be quite inefficient. To address growing concerns on flexibility and creativity, several macro companies focused on their core business, determined critical processes, and ultimately, decided which of them could be outsourced. 

Competing globally in the 1970s and 1980s then meant contracting more Asian manufacturers to supply demands in apparel and garments, which was previously the job of factories in the United States.Overseas manufacturers became more technologically-sophisticated with time, and American companies started to outsource the production of electronics and cars as well. 

1990s. The concept of outsourcing as a convenient measure for cost-rationalization spread, and other companies soon joined the bandwagon to keep up with the competition. These companies outsourced tasks important for operation, but not necessary fundamental to the core business, to emerging service companies to perform services on accounting, human resources, data processing, and security.

Today, business process outsourcing puts more focus on client-vendor relationship to achieve business objectives and goals (How To Choose The Right Outsourcing Vendor). Outsourcing as a corporate endeavor is based more on who can perform assigned tasks more efficiently, than on whether the function is core or commodity.

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Perks of Outsourcing to the Philippines

If you are a business executive who hasn't tried outsourcing yet but you have friends that have tried it, you are bound to hear India and Philippines at some point in your conversation. This is because India and Philippines are the world's top outsourcing destinations (Why the Philippines Makes a Better Back Office than India). Your choice of country should really depend on the service you seek. If your company wants services in the lines of software development, then India is probably your best bet as Indians have proven themselves quite adept at technology. If your company needs labor-intensive services such as human resources, accounting, data entry, content-writing, and customer contact, then the Philippines is your best option.

Here are some perks of outsourcing to the Philippines.

Great price!

This is the reason you want to outsource to begin with: cost rationalization. Whether it's economic constraints or just your own volition, outsourcing can save you a lot of money if you know how to do it properly (How to Choose the Right Outsourcing Vendor.) To give you an idea of how cheap the labor is in the Philippines, we'll need to compare it to the labor rates in other countries. If you're hiring a fresh graduate in the United States for an entry level position, the least you can pay them is $7 an hour. In the Philippines, the starting wage is $1 per hour, and there are even some who are willing to work for less. This, however, does not imply that because labor is cheap, the quality of the service is substandard. In fact, many multinational companies who have invested in Filipino offshore employees find them as capable of doing the work as their inshore workers. What makes the labor rate so cheap here in the Philippines has nothing to do with the capabilities of the Filipino labor force but has more to do with the economic state of the Philippines.

Great place!

If you've ever been to the Philippines, then two things probably caught your attention: the hustle-bustle and the hospitality. Manila is one of the densely populated cities in the world, so you're bound to notice the traffic, the metropolitan rush, and the overall urban-ness that makes Manila the capital of the country. This is also where most of the international companies have set up back office for customer support and other IT-related work. If you want less city hustle-bustle but still a metropolis in its own right, you'll want to check out Cebu, the second center of business in the Philippines. Apart from a more peaceful environment, Cebu also enjoys a lower cost of living than Manila.Other Philippine cities are also conducive for IT offices including Santa Rosa, Iloilo, and Davao (The Best Cities to Outsource in the Philippines).

Great people!

In considering hiring employees from another country, you are sure to feel some trepidation about a lot of things: the cultural gap between you and them, the monitoring process, the communication, etc. Fortunately, there are solutions for those apprehensions. If you're worried about the cultural differences between you and Filipinos, then you'll be pleased to know that they are quite well-versed with Western culture. If you're American, you'll probably be surprised how much they know about your geography, your language, and your favorite TV shows. As for the monitoring and communication concerns, there are companies who take care of that for you. They are called outsourcing service providers. Striking a negotiation with these companies isn't something you can do for one day over cups of coffee and a handshake. Choosing the right outsourcing vendor takes months to a year for you to really evaluate and test that they handle the job.

Aside from being knowledgeable in Western culture, Filipinos are proven to be one of the best English speakers in the world of business. This is back up by several surveys and studies including the one conducted by GlobalEnglish. While English may not be their native tongue, Filipinos are trained from when they were very young to speak English in the most natural way possible. This is evident in some foreigners mistaking Filipino call center agents for Americans. 

Ultimately, outsourcing only requires you to consider three things: the price, the place, and the people. Other details come into place once these three factors have already taken shape. Outsourcing in the Philippines is not without its share of challenges, which thankfully, with the right outsourcing partner, can be overcome once the appropriate steps are taken. Different countries offer different perks and pros, but testimonials and surveys point to the Philippines as the best. So, what are you waiting for?

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Outsourcing in Simple Terms

Out-source-ing.

If you dissect the word like this, there is really no need for corporate jargon to define outsourcing, which I observe many people find difficult to understand. Out and source. In a nutshell, it implies that something is sourced from the outside.  It doesn't really get simpler than that.

So you're starting a company, or operating one. You want to minimize costs and provide your clients with the best product or service they deserve. You're caught in the middle of this corporate paradox, and you don't know how to wriggle yourself out and cut expenses without affecting the quality of your company's product or service. Hire less employees? Yeah, sure, that would lessen costs, but are you sure the rest of the employees will be happy with the added workload? Of course not. Lessen compensation? Be ready for a barrage of resignation letters. Use below-par technological resources? Good luck handling irate, unsatisfied customers.

In literature, when opposite sides (ideas, really) of the spectrum seem irreconcilable, we usually destroy the spectrum and deconstruct the system to reach consensus. Business economics is not a conventional playground for literature, but some theoretical approaches cross borders and make quite a sturdy bridge. Going back to our analogy, if minimizing costs and quality service are at opposite ends, guess what destroys the paradox and builds the bridge? Yes, out-source-ing.

Basically, when a business outsources, they hire people who are not officially affiliated with their company aka freelancers. For example, the graphic designer of a PR firm has gotten into an accident and could not make it to work for at least two months. It would be unethical to fire the designer on grounds of being in an accident, so the company will hire a freelance graphic designer to do the hospitalized designer's job for two months. The question here, however, is how much was saved, if there even were savings at all? Let's face it. Outsourcing people from within your country beats the purpose—you are basically hiring a different person for the same price. This is where offshore outsourcing comes in.

Offshore outsourcing simply means hiring employees from another country without having them immigrate to your country. For example, you are outsourcing customer service contact to the Philippines because labor in the Philippines is substantially cheaper than your inshore workforce. You don't have to bring them to your country to make sure that they are working at par with your company standards. There are companies who do that for you. They are called outsourcing vendors.

Outsourcing vendors or outsourcing service providers are, shall we say, the manager of your offshore employees. They get to know you first—what services you need, how you want it done, how many employees you need and their qualifications, how much you are willing to spend, and other project-related information that you will talk about at some point of the negotiation. Of course, you need to get to know them as well. What can they do? How do they do it? How long have they been around? What do previous and present clients say about them? Answering these questions is only the first step to building a partnership with your outsourcing vendor.

There is a long list of countries where you can outsource, but as this site is about BPO in the Philippines, I will go ahead and say that the Philippines is one of the leading outsourcing destination globally, second only to India. (Read about why the Philippines makes a better back office than India here.) Recently  however,  with India's wage inflation, more companies are turning to the Philippines, whose skilled and abundant labor pool are proving themselves adept at customer contact, customer service, and technical support among others. Philippine cities also provide a strategic setting for BPO offices, with clean and safe working environments (The Best Cities to Outsource in the Philippines).

Ultimately, outsourcing can both be a savior and a risk. It all really depends on the right choice of  outsourcing service provider.  But before you consider it as a business venture, get to know the concept first before actually delving into the real thing. Look at your company and determine which part you can entrust to  an outside source and have a contingency plan in case something goes wrong. Don't be blinded by how much you can save with employee compensation. Never forget that a well-deserved profit calls for innovative business measures that disrupt the paradox of cost-cutting and quality service. 

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