Despite being one of the fastest growing industries worldwide, the BPO industry has never run out of outsourcing issues in the last few years. From protesting against the outsourcing system to reforming subcontracting laws, the industry has remained controversial even up to date.
If you’re planning to outsource in the future, it pays to understand some of the issues surrounding the BPO industry. Read on to learn more about the challenges the industry is facing and how you can start a safe, globally compliant outsourcing.
Why is outsourcing so controversial?
Although it has long been perceived as a cost-effective business strategy, the Business Process Outsourcing (BPO) industry has never been at rest from critics. Since it gained popularity in the 1980s, it has received backlash especially from labor unions and employees.
Critics of outsourcing argue that it can lead to the loss of jobs for domestic workers, as companies can hire cheaper labor from other countries. Also, it can lead to a decrease in local wages since companies may choose to hire workers from other countries at lower rates.
Various protests have been done in different parts of the United States to oppose the practice of outsourcing. In 2018, more than 10,000 workers rallied in Indianapolis to protest AT&T job cuts. The Communications Workers of America (CWA) estimated that AT&T has laid off 7,000 workers since January and outsourced their jobs to contractors overseas that offer lower wages.
Tim Strong, the president of a local chapter of the CWA, said that an AT&T call center in Indianapolis used to have about 1,200 workers, but now only has around 200 due to outsourcing.
What are some of the outsourcing issues within the BPO industry?
Outsourcing has been a standard procedure for companies seeking to increase resource flexibility at a low cost. However, just like other business strategies, it has drawbacks and trade-offs. When done without solid preparation, it may backfire and wreak havoc on your financial resources.
Experts explain the major outsourcing issues companies are likely to face in transferring their business functions to a third-party service provider, and what they can do avoid its impact on their overall business performance:
Lack of outsourcing knowledge
Most outsourcing initiatives often fail because business owners lack knowledge and experience in outsourcing. After contract signing, clients are clueless and would leave everything to their service provider. It results in not meeting some business objectives and throwing a lot of money down the drain.
Choose a service provider that has an extensive client onboarding process. A reliable service provider will walk you through the best practices, common concepts, and effective workflows in outsourcing.
Cultural and communication barriers
One of the problems with outsourcing is the cultural and communication barriers that come with it. For instance, your company is based in the US and you choose to offshore to low-cost countries in Asia. But you’re not sure which Asian countries can adapt to your work culture. Besides, hiring the wrong culture fit can have a negative impact on your productivity.
You may consider hiring employees with a strong affinity with Western culture. The Philippines, for example, has the closest cultural ties with the West in Asia. The country’s highly-educated workforce is also fluent in the English language and can work across different time zones.
Data security issues
When businesses outsource their non-core functions, they are essentially giving their service provider access to their sensitive information. This can include customer data, financial information, and other confidential business information. As a result, businesses are concerned with data security as they may fall victim to data theft and breaches.
It's best to outsource to a service provider with robust data management systems. ManilaPros, for example, has security and business continuity plans to prevent any kinds of information and security breaches. We have physical, electronic, and managerial procedures in place to prevent unauthorized access and maintain your data security.
Loss of business control
Losing control over business processes is another concern for companies. When you hand over direct control to your service provider, you may not see how activities are being carried out. More often than not, it results in project outputs that are not aligned with your company values.
Establish a Service Level Agreement (SLA) between you and your outsourcing service provider. This document explains how to measure the quality of service and what happens if the service does not meet certain standards.
Instead of saving more, companies sometimes end up paying more than what they have thought because of unforeseen hidden costs. Outsourcing can have many costs that are not listed in the contract, such as SLAs, software upgrades, after-hours support, and troubleshooting. These costs can make the project more expensive than originally planned.
To get more value from your money, you should partner with a service provider that has flexible subscription service plans. ManilaPros offers flat rate monthly fees for its Ecommerce outsourcing services with no hidden charges. Also, every associate you hire comes with backup support, equipment, and dedicated account manager for effective oversight management.
Can outsourcing be illegal?
Outsourcing is not necessarily illegal, but there may be certain legal restrictions on outsourcing depending on the specific circumstances and country in which it is being carried out.
The Philippines is among top outsourcing destinations that impose minimum legal restrictions on outsourcing. In fact, the country has passed the following favorable policies to support its growing BPO sector and attract companies looking for secured outsourcing:
- Republic Act of 10173: The Data Privacy Act of 2012
- Republic Act No. 7916: Special Economic Zone Act
- Republic Act No. 11165: Telecommuting Act
- Republic Act 10844: The Department of Information and Communications Technology Act of 2015
- Department Circular No. 1, Series of 2008: Policy and Guidelines Governing the Safety and Health of Workers in the Call Center Industry
Safe and Globally Compliant Outsourcing in the Philippines
The Philippines has a strong legal system to protect your company’s interest from a wide range of outsourcing issues. If you want to start a safe and legal outsourcing today, then outsource to a Philippine-based outsourcing company.
ManilaPros, a leading Ecommerce outsourcing company in the Philippines, helps businesses build the best offshore team with a risk-free, step-by-step process. From sourcing and vetting talents, QA processes to KPI reporting, you have a partner committed to your success.
By working with us, you are not locked into any contract. You can enjoy the value of our services at a fixed monthly fee and can cancel your subscription anytime without charges.
Reach out to Manilapros today and learn how to start a safe and secured outsourcing in the Philippines!