A decade ago, United States companies were outsourcing a range of back office functions, often to India or the Philippines, with a focus on reducing salary costs and saving money on wages.
These roles were primarily focused on lower-skill and entry-level desk jobs and white-collar functions, that required a high level of human labour, eg. call centre agents, data entry order processors, bookkeepers and IT level one help desk.
Outsourcing has evolved substantially over the last two decades, with the mix of skills available in lower-wage countries evolving, alongside the parallel growth of technology. This has meant that many of the lower-skill roles are self-serve for the customers via an app or website, or automated.
Many people thought that this would reduce the need for outsourcing companies in the United States, and that technology would replace the lower skill roles, and make the labor cost savings irrelevant.
Industry veteran, Founder and CEO of Flat Planet Chris Moriarty explains “Outsourcing companies in the United States have experienced their own disruption. People who were focused on low value talent have been wiped out, or acquired by the bigger players in the industry.”
The motivations now for businesses in the USA is how to leverage technology in teamwork with high value talent, to get the best out of both worlds.
“15 years ago when I began at Flat Planet, many outsourcing companies in the United States would have 500 junior staff doing data entry over the phone into a CRM system like Salesforce (SFDC), processing 50,000 customer orders per day.”
“Today a business like that might have a team of 8 staff who achieve better results, with more accuracy and efficiency than 500 people did previously.”
“However, the composition of the team is unrecognisable compared to back then. Now there will be a Senior Business Analyst, Two Salesforce Developers, a QA, Two Salesforce Automation Experts, and one Salesforce Administrator.”
“They may even be handling 75,000 or 150,000 orders per day, but by leveraging technology, custom development, automations and data warehouses, they can add value and achieve a better outcome for the end customers, without needing an army of junior staff in the Philippines doing lower value work.”
If you see examples like these play out across thousands of businesses, with teams of 500 becoming teams of 8, or teams of 100 becoming teams of five, you might assume that the number of people working in the Philippines has dropped by 75-95%.
In 2010, there were 500,000 people in the Philippines working in the outsourcing industry, for a number of outsourcing companies in the United States (1).
By 2024, there are 1.3 million Filipinos in the industry (2), with projections for it to reach 2.5 million by 2028 (3).
“To understand the real reasons that outsourcing companies in the United States are growing, you need to triangulate all these factors,” said Moriarty.
“When running a business in Sydney I was constantly frustrated by the tension between my ideas for what I could do versus the reality of what my business then could afford,” said Moriarty. “Having access to Filipino, Vietnamese, and Malaysian talent has meant I can do things that were previously not possible.”
For a kitchen equipment wholesale supplier, they had to turn down their marketing spend and sales activity, because they did not have the order processing staff to be able to input all of the data in a timely and accurate way.
This meant that they needed to dampen their ambitions, their revenue goals and their profits, as they could not solve the bottleneck in their business.
But what if the CEO can see a pathway to a better business by gaining access to such a resource? This is where qualitative drivers come into play. CEOs who recognise the potential for growth, efficiency, and innovation might decide to outsource key roles, like a Salesforce Automation Specialist, to tap into global talent while avoiding the prohibitive costs of local hires for such a technical role.
While previously a business like that might have hired 30 or 50 order processing staff in the Philippines in order to create capacity for a larger volume of orders, now they are re-thinking the skills they need.
They are realising that the real aspect killing their growth is not their budget for a larger volume of junior staff, but the entire technology stack and technical skills within their business.
Outsourcing companies in the United States who have re-tooled their business and workforce to focus on higher value skills, that leverage technology, are able to deliver these wins to their clients, rather than relying on simple cost arbitrages, which is a band-aid fix on a much bigger problem.
“Building better businesses by gaining access to highly skilled, high-value talent ultimately trumps basic cost savings as the driver of outsourcing decisions by businesses,” said Moriarty. “Saving money is important and is also a great thing, but the growth of outsourcing companies in United States is ultimately driven by the aspirations of business leaders to build the best businesses they possibly can.”
(1) https://www.adb.org/publications/analysis-philippine-business-process-outsourcing-industry
(2) https://creathink-solutions.com/articles/bpo-philippines-key-trends/
(3) https://unity-connect.com/our-resources/blog/philippine-outsourcing-industry/
About Flat Planet:
Established in 2010, Flat Planet® is a family-owned, Australian-founded leading provider of high-value outsourced staffing solutions. Connecting US businesses with skilled talent in Southeast Asia, we offer a competitive edge through cost-effective, high-quality staffing solutions tailored to American business needs. With offices in the Philippines, Vietnam, and Malaysia, we employ over 400 staff serving global clients, with a growing focus on the US market. Our state-of-the-art infrastructure and unique blend of local expertise and Western management practices ensure excellence in service delivery. At Flat Planet, we’re committed to creating pathways to a brighter future – not only by providing US businesses access to a skilled competitive workforce but also by supporting initiatives like our Gift of Life project, which funds critical heart surgeries for children in need. Our solutions are designed to help US companies navigate time zone differences and cultural nuances effectively.
For more information on how Flat Planet can empower your business while making a positive global impact, visit flatplanet.com or email us at info@flatplanet.com.
