Cost Cutting in the Outsourcing Business

Companies nowadays keep on searching for possible ways to cut costs. Amidst the economic turmoil, outsourcing business became popular and viable to help businesses continue their services while decreasing operational costs. As a result, cost centers, like IT departments, are prime targets for outsourcing and off-shore maintenance. The typical business script is that as the IT organization moves into maintenance mode that cost center with high overhead becomes a prime target for reducing costs. Companies have reduced their spend on IT services and business transformation by almost one fifth by turning to outsourcers, according to a survey.

Michael DeSalles, Frost & Sullivan Research Analyst, said While the U.K. outsourcing market is fully grown and nearly reached dispersion and there are important opportunities in other European countries. Central and Eastern Netherlands proposed new outsourcing contracts that deal with financial services, communications, and information technology. The cost differential in BPO operations is not adequate. The organization must certify the availability of the resources which includes infrastructure and pool of individuals. The service levels can be maintained while deducting the costs. Last year Europe became the world's highest spender on outsourcing, with companies based in Europe spending more on IT outsourcing than those based in any other region of the world. In 2010 UK companies are expected to increase the amount they spend on outsourcing back-office functions, such as HR and finance.

Call centers desire to accomplish their work efficiently in low cost. If a company wants to compete, it must deal with business operations that will be beneficial and less costly. Inbound and outbound services in call centers maintain all types of tensions. Personnel with expertise are hired to have the work done as required by their clients. Customers will be grateful if they are attended with full respect and attention. BPO services are important to make better infrastructure provide good service to the customers. Call Center activities are tedious, cumbersome, time-consuming, extra-strenuous, and demanding. Extra budget is needed in other BPO activities. The workforce handling is another task which involves setting up of individual customer care unit. Outsourcing call center activities will benefit the Company's performance.

Despite The Crisis in Europe Outsourcing Work Expected to Continue

Despite a debt crisis in Europe, are expected to continue and, in some cases, even increase their outsourcing and offshoring work to low-cost countries like India and Philippines. Though Europe is still fragile, we are certainly seeing an uptick in outsourcing, as well as offshoring from European clients. Deals are getting shorter and smaller in duration, but it certainly is increasing. To give you an idea of the 800 inquiries that we received last year from European clients, about 90 per cent asked us about offshoring, explains Gilbert Van Der Heiden, Gartners research director for information technology (IT) sourcing.

Earlier European customers started with staff augmentation but as they see the cost advantage, they are looking beyond that and want to partner at a strategic level. Other than the economic downturn and need to cut cost, European customers use a large number of contractors. Due to the immediate cost savings initiatives, they are looking at replacing expensive contractors with offshoring. IT firms also agree that Europe is much more positive to offshoring than it was before the global meltdown hit.

“The Europe crisis will not have much of an impact on Philippine IT service providers. The impact will be on valuations due to the currency movement, but this will not impact the deal flow. Similarly in the UK, the incumbent government is under huge pressure to reduce cost,” says Peter Bendor Samuel, Chief Executive Officer, Everest Group. Much more, Philippine outsourcers have been urged to turn their attention to European customers to expand their markets. European Chamber of Commerce and Industry in the Philippines executive VP Henry Schumacher said the Philippines is still unable to fully maximise the outsourcing market, which is currently being enjoyed by India. Philippines has a huge potential to even grab a bigger share. Since Europe is also aggressively looking at opportunities from emerging countries in the east, Philippines set to explore Europe since it is also the largest business process outsourcing market.

Vikram Gulati, Director of Quantum Step remarks that Europe has some serious challenges. The population is aging, and they are running out of skills. They will have to look at outsourcing and offshoring. Most of the large players have benefited from this. It is for the others, the medium-sized players, to adopt this.

Philippines Urged to Tap Europe Outsourcing Market

Philippine outsourcing companies have been urged to turn their attention to European customers to expand their markets. Now that the country is fast capitalizing on being among the world’s destinations for global outsourcing and off-shoring business, industry stakeholders here are encouraged to continue to taking advantage of the vast European market.

European Chamber of Commerce and Industry in the Philippines executive VP Henry Schumacher said the Philippines is still unable to fully maximize the outsourcing market, which is currently being enjoyed by India. "India is doing well in marketing itself as a growth location for European investors. But the Philippines has a huge potential to even grab a bigger share," he said. "Since Europe is also aggressively looking at opportunities from emerging countries in the east, now is the time for the entire Philippines to explore Europe since it is also the largest business process outsourcing market," Schumacher said. While several European companies have already come to invest in the Philippines, the lack of knowledge in understanding the European culture requires need for waging a more aggressive campaign when penetrating the foreign market. The European culture is not hard to grasp and the European Chamber of Commerce of the Philippines (ECCP) is willing to assist stakeholders here in that aspect, the association can do initial training for employees to businesses like call center.

Schumacher advised that more visibility in the market should be emphasize, including the need for a European or someone with influence speaking for the Philippines and the business environment in the country. Branding, he stressed, is also necessary when capitalizing on the highly elusive European market. The brand should professionalize Filipinos. We believe that everybody in the world has in one way or another been touched by a Filipino. The Filipinos’ individuality is important to market the Philippines to Europe, we just have to focus on the Filipinos’ capabilities.

The ECCP is currently conducting talks with the Business Process Association of the Philippines (BPAP) to pioneer a committee called “Team Europe” to spearhead an aggressive marketing campaign for the country’s O&O industry. The team will also involve other institutions like the Commission on Information and Communication Technology (CICT), CITEM and a number of individual companies.