August 25, 2022

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Outsourcing Philippines: A game changer for startups and SMEs

For entrepreneurs, launching a startup or running a small or medium-size enterprise (SME) can be the attainment of a dream. But once the many challenges associated with operating and growing that business set in, the dream might morph into a nightmare.

“The harsh reality is that no matter how much experience and business acumen a person brings to the table, the time-consuming problems and persistent issues can seem insurmountable,” says Ralf Ellspermann, CEO of PITON-Global, a leading mid-sized outsourcing provider in the Philippines.

To complicate matters, owners of SMEs are facing the challenge of maximizing operating efficiencies, hiring and retaining staff during the Great Resignation, and the pressures of reducing costs and turning a profit, especially when investors and shareholders demand a solid return on their investment.

But of all the challenges facing a young business, poor cash flow, insufficient capital, and high operating cost are the three that can easily take a company down. In fact, more than a third of SMEs that don’t survive cite insufficient cash flow as the main reason.

To avoid falling into a money pit, many companies cut costs by outsourcing their contact center requirements overseas. And to best do this, American companies of all sizes turn to the call center outsourcing capital of the world, the Philippines.

Companies must provide round-the-clock, omnichannel customer service and technical support to compete in today’s digitally driven, customer-centric business environment. An excellent customer experience is often the only distinction between brands in a fiercely competitive business landscape.

Outsourcing to the Philippines assures customers that assistance is available whenever they need it. Setting up an in-house contact center can be an expensive venture. Agent salaries and benefits alone add up quickly. Factor in leased office space, software and hardware, employee training, and resources like phone systems and office supplies, and setting up an in-house operation is just not economically feasible for most startups and SMEs.

Since the costs of call centers in the Philippines can be 40-50% lower than those in the US, outsourcing customer support to the Philippines is a logical cost-cutting solution for American companies.

In just 20 years, the Philippines has eclipsed India to become the go-to country for call center outsourcing. It is now the world’s largest contact center outsourcing destination, with over 800 call centers employing up to 1.3 million Filipinos. The outsourcing industry generates more than US$28 billion in annual revenues, which accounts for 8% of the country’s GDP.

The call center outsourcing industry in the Philippines offers startups and SMEs many advantages over operating an in-house facility or outsourcing to onshore providers. A young, skilled, and highly educated workforce, access to cutting-edge technology and world-class infrastructure, and a substantial English-speaking population are highly valued attributes prized by American companies.

Most importantly, by outsourcing to the Philippines, US companies can cut their labor costs by a whopping 60%. Whereas an American call center agent can earn up to US$30,000 a year, the same worker in the Philippines earns an annual salary of US$12,000.

Additionally, the cost of front- and back-office support in the Philippines can be 40-50% lower than in the US. Outsourcing operations to the Philippines can significantly reduce operating costs for start-ups and SMEs, savings that can be funneled into other business growth strategies such as product diversification and expansion, market penetration, and extending an online footprint.

Outsourcing to the Philippines provides startups and SMEs a quick, affordable, and proven way to scale up successfully, grow service capacities, and set themselves up for long-term success. “While outsourcing to the Philippines can’t solve all the pain points facing new businesses, the savings from reduced labor costs alone make it a game changer and, in many ways, a lifesaver for small companies struggling to survive,” says Ellspermann.

 

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