Outsourcing As a Business Model
With Globalization underway, opportunities have been created worldwide
. One of these benefits, particularly to developing countries, is outsourcing. Outsourcing is a business and economic model where in large companies from the developing nations outsource some or all of their businesses from countries that can deliver the same expectations but with lesser cost. While it is possible for companies to outsource within their own country, it is more strategic to outsource offshore where they can exploit cheaper labour and lower operational costs to their advantage.
Prior to the introduction of outsourcing, companies have to bear expensive costs of running their operations. Companies need to master each level of their operations as well, which obviously leads to more costs. Globalization has radicalized the way businesses carry out their operations. It has given companies a better business model that will significantly reduce their cost and spare them from unnecessary inconveniences.
Outsourcing part or all aspects of a business allows companies to concentrate on what they do best and give tasks they slack on to specialized companies. Apparently, due to specialization and economies of scale, companies that specialize on certain business services are able to deliver these services at a minimal cost. This has always been the driving force for companies to outsource.
Leading Outsourcing Hubs
China, India and the Philippines are the leading outsourcing countries in the world. Most businesses decide to outsource some or all of their operations on these countries because of the abundance of cheap manpower and skilled labours. The Philippines and India for instance are a favourite hub for call centers because English is their second language. India and China's skilled labours in the field of information technology has attracted hundreds of medium-scale and large companies. These companies enjoy the ability to operate their businesses with the same level or surpassed expectations but at a lower cost.
Almost all sorts of business processes are outsourced in the Philippines. Some of the more popular are customer service, web development, search engine optimization (SEO), technical support and collections.
Outsourcing SEO, one of the more recently outsourced services in the Philippines is growing fast at a point where Professional SEO Specialists have become scarce. Countries like India, Malaysia, Singapore and China are stepping up to the challenge but Philippines remains the top choice because of its language and skill advantages.
Advantages and Disadvantages of Outsourcing
Naturally, like any other business models, outsourcing has its sets of advantages and disadvantages. The most notable advantage is the reduction of operational expenses to companies and the introduction of more employment to the developing countries. On the contrary, while you give employment to the developing countries, you take away jobs from these developing nations. Outsourcing lessens cash flow in a domestic level, which in effect minimizes economic benefits.
Regardless of the advantages and disadvantages, outsourcing as a business model and strategy is the most viable way to beat competition. Especially in the world economy driven by competition, cost advantage gives companies the ability to earn more profit and stay longer in business. While unfavourable effects are inevitable in outsourcing, companies are left with nothing but to make the best out of what they have or embrace outsourcing as their way out.
Outsourcing As a Business Model
By: John Roberts
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