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Why Outsource?
Why Outsource to
the Philippines?
PNI-KMPG:
A History
ARTICLES

Why Outsource?

The trend for outsourcing services has flourished in the past few years. To understand why many companies are moving towards outsourcing, here is a list of outsourcing's major advantages:

1. Reduced infrastructure and manpower costs.
Perhaps the most compelling and obvious advantage of outsourcing services is cost-cutting. Because of the costly labor in the United States and Europe, many businesses are now taking the more practical approach of getting their services in countries that provide inexpensive labor, such as the Philippines.

An added benefit is that outsourced services avoid expenses related to the employees: social security contributions, taxation, payroll, equipment overhead, vacation time, sick days, training expenses, etc.

2. Fixed costs are converted to variable costs resulting in stronger cash flows.
Again, financial considerations play a large role in a business' decision to outsource to countries such as the Philippines.

3. Significant improvement in productivity resulting from close monitoring of Key Performance Indicators (KPI's).
Because the strategic goal of an outsourcing company is to provide a source of manpower for its clients, one of its foremost concerns is in making sure that the manpower does their jobs effectively and efficiently. This is achieved by providing ample training for scenarios and parameters specific to the particular industry of a client as well as close monitoring of agent performance.

4. Increase in service speed, benefiting from timezone differences.
Work can be provided and completed overnight. Outsourcing agents work while the client sleeps.

5. Reduction in management time spent on non-core functions allows more focus on key strategies.
Clients' businesses are able to spend more time managing the critical functions that actually generate the revenue, while less-crucial but still important tasks are handled by someone in the know. The burden and hassle of recruiting, monitoring, and training are taken off the client company's shoulders.
According to CA Magazine:

"In a recent Accenture survey of more than 800 health, manufacturing, retail and travel executives in the US and Europe, 86% said outsourcing gives them more control over business results in a variety of critical areas, the most important being the ability to plan...."

"Furthermore, 55% of respondents said outsourcing allows their companies to implement strategies and change at a faster and more controlled rate. And more than half (57%) the executives surveyed said they experience control gains within the first eight months of an outsourcing agreement."

- http://www.camagazine.com/1/9/2/1/3/index1.shtml







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