While the United States continues to be one of the biggest customers for outsourcing, other countries are also starting to practise outsourcing as a means of reducing business costs while improving operations and increasing profits. As of 2017, Australia, New Zealand and several countries in Europe have engaged extensively in outsourcing.
In most cases, businesses in developed countries turn to companies that provide BPO services in developing countries. BPOs in developing countries are relatively more affordable compared to those based in first-world countries due to the low cost. It’s why in a list of top countries for BPOs, 70 percent of the countries listed are developing countries with BPO manpower. Of these 7 countries, 4 of them are in Southeast Asia: Malaysia, Thailand, Indonesia, and the Philippines.
Why Outsource to Southeast Asian Countries?
From IT and HR services in Malaysia, to the call centers and SEO service providers in the Philippines, each country specializes in different domains which companies of all sizes in developed countries are looking for. While the point of BPO is to reduce costs, companies are unlikely to hire BPO services if it means a drop in the quality they’re looking for both in internal operations, and the products and services they provide their customers.
If companies had a choice between an in-house department that costs a lot to keep in terms of office equipment, salary, and other government-mandated benefits but got the job done efficiently and effectively, or a BPO model that cost a fraction of those expenses but did the job poorly, companies would rather opt for the former. The reason why BPOs are enticing to businesses looking to cut costs is that they’re getting both low-cost and high-quality talent.
Highly Skilled and Educated Workers
In Southeast Asia (SEA), where education is a priority especially in developing countries, the literacy rates are relatively high compared to other countries in the BPO market. Malaysia, currently the biggest BPO player in Southeast Asia, stood at a 93 percent literacy rate as of 2016. Other SEA countries’ literacy rates are 92.9 in Thailand, 93.6 percent in Indonesia and 96.5 percent in the Philippines.
While India remains the top BPO country for many years running, other players in Southeast Asia, South America, and Europe are gaining traction because of their relatively lower literacy rate of 74 percent. This does not correlate to the type of quality one could expect from hiring BPO services in each country, but the fact that a country has plenty of literate people suggests that a significant percentage are capable of being trained or are educated, and a percentage of those may find work in the BPO industry to contribute their own set of skills to their clients.
Earlier, I mentioned a comparison between hiring BPO services and hiring an in-house team. Hiring BPO companies means that you pay a company to let their own employees manage and complete tasks for your company. You aren’t paying each of the employees involved in completing the task, but the whole company based on the tasks you need done. In comparison, hiring one employee alone may cost about $4,000 and it can take up to 6 weeks to find a suitable hire. The cost of hiring doesn’t include the cost of salaries, paid time off, and other competitive benefits. Also, if the employee turns out to be a bad hire, there is more time and expenses wasted as companies find another replacement.
The reason for the low costs is that salaries and costs in developed countries like the United States are different from other countries. In the US, for example, the median personal annual income in 2016 was $31,000. In Thailand at around the same time, the average salary was approximately $800 a month or $9,600 a year. That’s only a third of the average salary in the US, but because the cost of living differs in the US and Thailand, Thailand BPOs can charge less compared to BPOs based in the US.
Opportunity Cost: Is Distance Going to Be a Problem?
Thanks to the current globalization movement and the rise of freelancing, telecommuting or working virtually is hardly a problem in this day and age. Even in local settings, employees opt to work from home rather than commute to the office, and both employees and companies are taking advantage of virtual meetings rather than having to be in the same office to cut costs.
The same applies to BPOs in Southeast Asia providing services to the US and other countries. Most BPOs have adapted and have teams in both the day-shift and night-shift schedule to ensure that they can be contacted at any time of the day anywhere in the world. In Southeast Asia, for example, since their day time is the US’ night time, in order to get a piece of the US market, they’ll have to have teams ready at night to communicate with their clients.
Thanks to the countless communication tools online (e.g. Skype), video chat and calls aren’t as difficult as they were 20 years ago. There may be cultural barriers and differences between the way the client and the BPO company representatives see their business and relationship, but the most successful BPOs are the ones that know how to adjust to their clients’ expectations.
With low-cost and high quality BPO companies, Southeast Asia region is the choice location companies tend to go for when looking for BPOs to hire. Consider the type of work you require, online reviews of these BPOs, and the unique services that make certain BPOs stand out among others, before you make a decision.