For the last two decades, companies have reduced costs, improved business efficiency, and increased their ROI by outsourcing their business processes to the Philippines. Essentially, this process entails contracting with a third-party vendor that provides professional services. However, not all outsourcing solutions are created equal, and in fact, there exists much confusion about the terms offshore “outsourcing” and “staffing.” According to Ralf Ellspermann, CEO of PITON-Global, an award-winning BPO in the Philippines, “The terms are often used interchangeably, but there’s a fundamental difference between the two. For any organization that is considering offshoring some of its business processes, it’s important to know and understand the difference.”
Most organizations planning to migrate some part of their processes to a BPO provider in the Philippines are looking for a seamless outsourcing solution, in essence, a fully managed service. This type of outsourcing solution usually requires a larger number of agents. This could range from half a dozen up to a thousand. “The large majority of outsourcing vendors in the Philippines, especially premium providers, are almost always full-turnkey solution providers,” says Mr. Ellspermann.
One significant difference between these two solutions is that premium full-service outsourcing providers in almost all cases invest significantly more money back into their organizations than offshore staffing providers do. They allocate capital to acquire the most talented and skilled workers in the BPO industry, as well as spend heavily on ongoing training and processes. Another area of investment for full-service outsourcing provider in the Philippines is technology and infrastructure. Some of the largest, most successful organizations in the world, such as Amazon and Google, partner with these organizations and rely on their world-class technology platforms and facilities for their outsourcing solutions.
“Another key difference between the two is a full turn-key outsourcing provider typically will have much deeper domain expertise than an offshore staffing provider, often specializing in certain industries and services. With this deep industry-specific knowledge, turn-key BPO providers can adeptly manage and operate a client’s entire business process across a broad range of industries, whether it be data science, healthcare, or education,” explains Mr. Ellspermann.
As a direct result of their subject-matter expertise, a full-turnkey BPO provider will typically have full accountability for a program’s performance, while an offshore staffing solution provider does not. One of the primary motives for most companies in outsourcing — besides cost containment — is because they want to be able to leverage the domain expertise of the BPO provider. In doing so, they’re also able to take advantage of the premium technology platforms that these vendors utilize. What this essentially amounts to is having a more capable third party manage an organization’s business processes (either because they don’t have the time, money, resources, or manpower themselves), to achieve a higher quality of service, better efficiency, and enhanced program performance. “A fully outsourced BPO solution does not mean that the client is not involved in the day-to-day operation, just to a much lesser degree than with an offshore staffing solution,” says Mr. Ellspermann.
In contrast, an offshore staffing vendor provides a more hands-on, co-managed solution. This type of engagement is often more suitable for clients with smaller headcount requirements, perhaps up to a ten people. BPOs in the Philippines that specialize in offshore staffing solutions are typically low-cost providers that cater to micro- and small-scale clients with limited budgets.
Offshore staffing companies provide clients with HR, IT, and admin services and the necessary office space. They typically don’t specialize in any industry or service, nor do they have anywhere near the domain and management expertise of premium, full-service BPOs in the Philippines. “An offshore staffing provider is more like a BPO enabler (office & infrastructure provider) than anything else. When researching options for outsourcing key business processes, service buyers should not be confused with an offshore outsourcing provider and an offshore staffing provider. They cater to two different market segments,” says Mr. Ellspermann.
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