SMEs Attracted to Outsourcing in the Philippines & Other BPO Hubs

A growing number of small and medium-sized enterprises (SME) and new businesses are attracted to the outsourcing of certain services to optimize savings and business processes. According to Prople’s business development and project management group head Juan Paolo Araneta, businesses that outsource business processes save from 15 to 20 percent in operational costs while experiencing process improvements. 

Compared to larger companies that require board approval and deliberations, Araneta said that SMEs and new businesses are more open to outsourcing. He added that businesses may do well in their industries, but may lack the right infrastructure and efficient finance and accountingdata management and storage processes.

In these cases, SMEs tend to engage the services of outsourcing companies that have the technical capabilities and infrastructure. Through outsourcing, small businesses also benefit from the third party firm’s technical knowledge, leading to better work efficiency and reduction in the number of full-time employees (FTEs) involved in a project. Besides profit, Araneta explained that businesses value business stability. He said they should focus on what they are good at and outsource other processes to external firms.

The Information Technology and Business Process Association of the Philippines (IBPAP) expects the business process outsourcing (BPO) sector to generate $25 billion in revenues and 1.3 million jobs by the end of 2016. IBPAP said the continued growth of the BPO industry is due to the expansion of services from voice to non-voice.

Knowledge process outsourcing (KPO) and health information management (HIM) are among the segments showing robust growth, along with IT and engineering, animation and game development, marketing, and legal process outsourcing.