Outsourcing has become essential in the business toolkit. Enabling an enterprise to operate functions at a lower cost than an in-house equivalent and often improving quality, it’s easy to assume that their success was guaranteed. The early days of outsourcing, though, were a different story. Associated with consumer frustration, often linked to heavily accented call agents in Indian outsourcing providers, and with some high-profile project failures, plenty assumed outsourcing would be a fad.
In fact, the lessons learned from those early examples created the foundation of a global industry that is worth over $100 billion every year. And an industry that is not only seeing more businesses adopt the practice but also a significant widening of the areas that are outsourced. And with ever-increasing customer service demands, it’s hard to see the growth slowing in the near future. But what have been the core ingredients of the outsourcing industry’s success?
Pricing has, unarguably, been a key driver. Getting the price right is still, sometimes, an issue. Offshore outsourcing realises the biggest savings by taking advantage of lower labour costs elsewhere. However, there is a limit to how low they can be. Too low, and the provider cannot afford fluent call agents. However, even when paying for high-quality staff, the costs can be as much as 50% lower than in-house provision.
Quality staff has been another driver behind the success. The outsourcing industry has become a major employer and an attractive career option for educated staff in major destinations like India. Because the largest providers employ thousands of staff, they also invest in their training and development, creating highly skilled staff. Businesses outsourcing their call centres to the Philippines, for example, can access an employment pool of over 1 million fluent staff, who have helped make the nation the leader in customer service and contact centre outsourcing.
And finally, the sector has developed deep expertise. The best outsourcing providers are specialists, an increasing trend. Providers will specialise in specific sectors and adapt their services accordingly. Those in the finance and health sectors will place a high value on the security of their facilities, for example, and may well undertake specialist recruitment. They may also take advantage of local characteristics: just as the Philippines leads on customer service, India is seen as a leading destination for IT because of the nation’s strong technical education.
Naturally, price will be the key motivator for outsourcing for many businesses. Facing constant pressure to keep prices low but profits high, outsourcing to somewhere like India to take advantage of the lower staff costs makes a lot of sense. However, the high quality of staff that outsourcing services can source, combined with the expertise and specialisms they can offer, means that cost is no longer the only motivator. Businesses that are looking to make sure their customers are happy and their processes run smoothly will find that outsourcing has a lot more than just savings to offer.