Lessons to Derive from the Outsourcing Rationales of Australian companies

Cost reduction is often reported as the main driver in the rise of outsourcing in Australia. Yet the reality gives a more revealing answer why Australian organizations send some of their business functions offshore.

An Australian BPO Report 2012 by Outsource UK has cited numerous reasons why major Australian organizations outsource.

There is now a shift from pure cost-cutting to improved efficiency and to strategic transformation  cited as reasons companies decide to outsource. An IBM Growth Markets director said that outsourcing is beginning to take an important part of business strategy.”

The rapid pace of change and maturity in the way companies do business today contribute to the decision-making process of organizations who outsource. Hence, Australia’s senior business community are looking to get higher-order benefits out of outsourcing.

According to the report, among the benefits that sending business functions offshore include: improved financial flexibility, strengthened customer satisfaction, increased market penetration, expansion into emerging markets, seize the opportunities offered by a freer global economy.

We highlight some revealing points of the report. Here are a few:

• Contact centre and customer service functions, both belonging to the customer service functions, are not among the top three of the most outsourced services. The top three are: Printing/Document Management (18%), Human Resources (15%), and Finance & Accounting (13%).
• HR outsourcing is expected to grow to 23% in the next 12 to 24 months (report was published in January 2012).
• There is an expected upturn in outsourcing marketing processes including CRM (or Customer Relationship Management). CRM will jump by 21% among companies who are already outsourcing element of this business function.
• Outsourcing online marketing services will see massive growth from 6 to 17%, showing that this marketing processes is getting hotter and an opportunity waiting to be seized by organizations offering these kinds of services.
• Cloud services will continue to emerge as a hot button trend in the coming years. The report shows that 35% (or quite a large number) of organizations are now considering cloud computing when making the decision to outsource.
• There are around 15% of organizations who have adopted cloud computing at an enterprise level in light of their outsourcing strategy.

So what do we gain out of this report? Now that many Philippine outsourcing firms are servicing many Australian organizations in the last two years or so, the challenges remain astounding and plenty.

Yes, the Philippines has been declared unanimously as the world’s call centre capital. And for the record, most cities in the country are making waves in most surveys about the Philippines’ attractiveness as an outsourcing destination for various industries, such as IT, game application development, back-office and administrative functions, and more.

For its part, outsourcing companies just have set its sight in capturing some of the more sophisticated, high-level business functions. To really offer these higher-value services, outsourcing companies would need to make some important decisions and investments on the levers of business transformation that we know – people, technology and process.

The increasing demand to offer services up in the value chain of business need to be filled. That’s one spot that the Philippines can take advantage of. The country has a rich pool of university-educated, highly-skilled workers who can do much more than their Asian peers. Companies who realized the growth spots have also invested in process and technology, which along with people are know as levers of business transformation.

Sources:

Martin Conboy. Cost not the driver of Australian outsource rise. May 11, 2012.