Recession And Business Process Outsourcing
BPO destination countries are hoping that President Obama’s concern over saving American jobs, while fair, will not discourage and pressure US businesses from offshoring.
Watchdogs of the economy advise companies to think long and hard before sending more processes abroad. The reality at the moment is that when the US unemployment rate rose and the wages in BPO destination countries increased, the labor-cost advantage shrank. There are transition costs and tariffs to be considered as well. Transportation costs (in the case of manufacturing outsourcing) have not significantly gone down despite the oil price decrease. In the face of shrinking cost savings, what then can save outsourcing?
Up the ante!
The issues are very real and shouldn’t be swept under the rug of complacency. Warner Bros. is axing 800 jobs and planning to outsource 300 of those but only locally. BPO companies now more than ever must emphasize mercilessly that outsourcing offshore has other values besides cost reduction: a) access to capabilities, and b) the strategic benefit. This is based on the general principle that upwardly mobile businesses have other drivers than simply saving money. BPO clients want to free their resources yet still improve performance and transform the way they do business. They want to expand in scale and efficiencies while keeping cost at a minimum. BPO companies should respond accordingly, and promote high performance and flexibility, the best of human talent and technological infrastructure– everything that leads to operations and process excellence. In other words, to secure a need for offshore service providers with an eye for the longer-term by outperforming the competition, locally and abroad.
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If the BPO juggernauts such as the Philippines and India wish to remain competitive even in such trying times, they should not neglect what is key in maintaining their (especially the Philippines’) edge — a highly educated and easily-trained pool of talents. BPO companies’ human resources departments should focus on the quality rather than the quantity of the people they hire for such a demanding and exacting job that scream METRICS every single day. Cost reduction appeals to the Western clients, but if they are getting substandard agents in return, they will certainly look elsewhere!
You’re spot on, Lalaine! Exactly.. many times over. This is the time for BPO companies to hold on to and invest in their best people even if they cost more in wages, the time to define the “other” competitive edge (or two), and enhance enhance enhance!
Our country was also hit hard by the Economic Recession. At least we are seeing some signs of economic recovery now. I hope that we could recover soon from this recession.