After the great recession in 2008, it was expected that 80% of outsourcing jobs that originated in the United States will vanish but only 9% of businesses stopped outsourcing after the stock market debacle.
A decade later, the outsourcing industry is thriving and it has completely evolved from what it was. Today, BPOs are not only about offering customer support but more about offering incomparable advantages of outsourcing, which we will discuss here in detail.
Is Outsourcing Good or Bad?
In 2018, the global outsourcing market was worth $85.6 billion, and ever since it has grown with a CAGR of 8%. Let alone the BPO industry, the defense, and IT sector are banking upon the advantages of outsourcing for developing the next-generation capabilities. The growth, popularity, and capital investment by varied central governments testify to the effectiveness of outsourcing.
While the biggest global economies garner benefits of outsourcing such as reduced labor cost, the developing countries are equipping themselves with the requisite skills and technology to render quality services. Job creation is yet another outsourcing advantage that developing countries have pinned their hopes on.
By listing outsourcing advantages that varied industries and economies are accumulating, we are making it easier for you to decide whether outsourcing is good or bad.
What are the Effects of Outsourcing?
78% of businesses from around the globe feel positive about outsourcing and have immense trust in their outsourcing partners. From literature and diplomatic perspective, outsourcing bridges the gap between two diverse cultures but economically it builds a reliable relationship between supplier and procurer.
Outsourcing from countries like Australia, Europe, and the UK has increased by 33% over the last 5 years. African countries are lining up to garner the advantages of outsourcing for building a tech-driven economy. On the other side, India, the Philippines, and Bangladesh are benefiting from outsourcing.
India offers quality English-speaking employees equally well-equipped with in-demand skills like coding, visualization, inbound customer service, and data processing at an economically effective price. The demand and supply game keep the global economy climbing new heights.
Together biggest economies and growing economies are building products and services for common users. E-commerce, BFSI, Cab aggregators, OTAs, and OTT platforms, are dependent heavily upon outsourcing for building quality businesses and rendering uninterrupted services.
Governments are now taking initiative in turning their countries into outsourcing hubs, the central government of India and Singapore are now promising tax holidays and rebates for organizations that establish a base in tier-2 and tier-3 cities. With outsourcing reaching tier-2&3 cities, the development follows as a trickle-down effect.
Top 10 Advantages of Outsourcing
Global giants like Amazon, Uber, and Airbnb have garnered benefits of outsourcing for kick-starting their global expansion plan. Through outsourcing, they have scaled effectively within no time from one country to over 15.
1. Industry-Specific Skills at Economical Price
An organization in the US with an expansion plan will need to have a huge customer service team that could cater to a global English-speaking audience round the clock. To hire, train, and maintain employees in the US is not only a lot tough but very expensive. Organizations are required to ensure minimum wage, which is very high when compared to other countries with relevant skillsets.
By taking the customer service process out of the United States, organizations are momentarily saving heavily by offering lesser salary and secondly, countries they outsource to provides them with tax holidays and tax subsidiary options, which makes those industry-specific skills even more affordable.
For example, an OTT platform with plans to expanding globally will need to have a proficient inbound customer service team to cater to customer queries from around the world. In a country like India, which is an outsourcing hub, governments are establishing special economic zones, where organizations are allowed to run offices 24X7, they are provided with additional security, uninterrupted power supply, and also business-friendly laws. The OTT platform can bank upon these advantages of outsourcing and cater quality inbound customer service to its global audience without spending a fortune.
2. The Overall Risk Involved Reduces Immensely
Building and offering services that monetary transactions and involvement of crucial documents like social securi