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Business Cost and Equation of Outsourcing

Outsourcing is one of the best strategies a company can use when it comes to growing their operations and gaining a competitive advantage over their peers. There are many reasons for this belief, ranging from how outsourcing can quickly provide a company access to the resources it needs in order to grow, to how it can save a company a considerable amount of money when it comes to overhead costs.

However, it would be a disservice to our quest to provide information about outsourcing if we only extol its benefits and not speak of the potential issues that businesses may encounter should they choose to adopt outsourcing. In this article, we hope to bring to light those issues, so that those who are truly willing to take up outsourcing can know full well what they’re getting into and prepare accordingly.

The Growing Pains of Outsourcing

There is no doubt that one of outsourcing’s biggest draw is its cost-effectiveness, especially when the service supplier is from a top outsourcing destination such as the Philippines. Without this particular benefit, outsourcing probably wouldn’t be as popular as it is currently, or even get off the ground as a viable business strategy. After all, cost cutting is one of the most important tenets of keeping a business going. By keeping costs low and maintaining customer and employee satisfaction, a business will remain operational and profitable for the foreseeable future.

However, it must be acknowledged that at the earliest stages of its implementation, outsourcing may in fact cost a bit more than the enterprising business owner may like. This is because a business would have to invest quite a bit more money in setting up the “soft” infrastructure that would allow the outsourced personnel to seamlessly fit into the organization and contribute to work.

Let’s illustrate this with an example scenario. First, let’s say that an individual with enough resources at his disposal is trying to build a tech company with a medium customer service component. In an ideal setting, he would be building this company in Silicon Valley, allowing him to assemble his production team from the world’s most talented and tech-proficient workforce pool. Logically, his customer service team will also be taken from that very same pool and will be working in the same building as his production. Such a setup would allow for the maximum amount of cohesion when it comes to understanding and addressing customer issues and complaints, which in turn create a high degree of customer satisfaction.

Now, working off the above ideal scenario, we can easily see that it would cost such a company an immense amount of money to stay afloat. Silicon Valley is, after all, set right at the heart of San Francisco, arguably one of the most expensive cities in the US when it comes to living and occupancy expenses. The bill for renting even a small office here would be huge. An office that can accommodate a production team and a customer service team would cost even more.

Then there’s the fact that the company owner would have to pay out a salary commensurate to the average Silicon Valley tech employee’s salary, which can easily balloon up to six or seven figures monthly. Combine that with other miscellaneous expenses and the salary/space expenditures needed for the in-house customer team, and you have an overhead cost that could easily bankrupt even the most moneyed and financed business owner.

As expensive as it will be, we should still point out that the result is a very well-oiled and efficient machine. Despite the high asking price, the business owner will still be getting what he paid for: the world’s best employees on the job, and a highly-adept customer service team that has direct access to the people who can make things happen. This can easily translate to high profit margins if the business manages to carve out its own niche and set itself apart from its competitors early. Such a setup would have a lot less friction when it comes to setting and hitting goals and achieving success.

Now, let’s compare that to a similar business venture, but with an outsourced customer service team instead of one that’s developed and cultivated in-house. Specifically, the business owner chose to work with a competent firm in the Philippines that should be able to reliably handle customers.

Right off the bat, the tech company with the outsourced customer service team will be spending significantly less than the one with the in-house customer service in terms of overhead and salary costs. Not only will the former save money by not having to buy or rent the infrastructure needed for an in-house customer service team, its decision makers also won’t have to worry about paying their own outsourced customer service team Silicon Valley salaries or get them health insurance. They will only need to worry about paying the outsourcing firm the price they agreed upon, which would be a flat service fee and nothing else.

So the savings that outsourcing promises will be there right at the outset. However, these enormous savings will be somewhat countermanded by the business owner having to spend a bit more on top of that outsourcing fee to get things going.

These extra expenditures are due to the inherent difficulties related to employing a team that’s based overseas. These difficulties are as follows:

  • The team is in a different country, which means they will be operating in a completely different time zone.
  • Cultural and language barriers exist, which can make communication and collaboration a bit challenging at first.
  • Face-to-face meetings may be difficult to set up, which could result in miscommunication of instructions, company directions, and/or demands.
  • Production efforts facilitated through telecommuting or remote work may not be as efficient or adept as in-house production.

While these difficulties may sound serious enough to make anyone reconsider outsourcing, in reality they can be easily addressed through the investment of “soft” infrastructure, like we mentioned earlier. For example, time differences can be managed by hiring a few more in-house employees and using a shifting schedule. In this way, there would still be in-house employees to instruct and supervise the outsourcing team once they log on for the day, no matter what time of the day it is. As such, the business owner would have to spend a bit more, on top of the outsourcing fee.

The cultural and language barriers can be addressed by more meetings over VOIP, as well as hiring interpreters or other in-house employees that can understand the outsourced team’s native language, and thus work as a middleman for instructions and demands. Again, these steps entail more spending on the part of the business owner.

Finally, to ensure that both the outsourcing team and the in-house employees are on the same page in terms of company direction and instruction, the company would have to invest resources and time on creating more policies, guides, manuals and other instructional/failsafe systems. This is the only way to ensure that no unfortunate mishaps due to misunderstandings or missed instructions happen.

All of these solutions will lead to the business spending quite a huge chunk of the money saved through outsourcing. Not to mention that the company will need to have a dedicated personnel who can facilitate and disseminate these solutions.

We can therefore conclude here that while outsourcing is a lot more cost-effective than in-house solutions, it can still cost business owners quite the handsome amount. This is arguably the biggest downside to outsourcing that many of its proponents often gloss over.

Outsourcing Is Still Worth It

With that said, outsourcing is still something we heavily recommend. This is because of the following reasons:

  • These growing pains are simply that. Once the business owner pays all the “hidden” fees and his in-house employees get through the learning curve in dealing with their offshore counterparts, all the difficulties cease to exist. What results is a well-oiled machine geared towards profit. Communication between teams is normalized and made more efficient.
  • It forces the business and its employees to mature quickly. All companies will inevitably have to scale up their training resources and staff. With outsourcing, the need to scale up soft infrastructure is just presented a bit earlier than usual, which can be a great boon in preparing the company for any turbulent times ahead.
  • Ultimately, it’s still a lot cheaper. Even if we sum up all the added expenses a business owner would have to pay when they dabble in outsourcing, it would still be considerably cheaper than if they had gone with an in-house team. There’s just no contest, whether we compare GROSS values or NET.

But most importantly, we continue to recommend outsourcing because of the simple fact that the Philippines, arguably the best destination for business process outsourcing, still remains primed to help western companies get the business growth and success that they deserve.

No Better Time to Outsource to the Philippines than Now

Outsourcing has long become an integral part of the Philippine economy. There’s no ifs and buts about it. The industry contributes significantly to the country’s economic health and standing in the world stage. Information technology businesses and organizations bring in 10% of the country’s GDP, and outsourcing’s importance comes to the fore even more.

As such, we can easily and safely predict that the cost of outsourcing to the Philippines will remain very affordable to Western companies. The government and the local BPO-related organizations know all too well that while the Philippines is currently at the top, its competitors are hot on its heels, itching to take the crown and the huge business that such a position entails. There is a need to price BPO services competitively to stay in that position. If the cost of services in the country gets too high, then companies may start looking four service providers from other parts of the world.

Pricing aside, what about the quality? Will that remain constant as well? We believe so. We must remember that the BPO industry has been responsible for the boom in the middle-class population in the Philippines, with many families rising out of poverty because one of their members gained employment into one of the many call centers that had sprung up in the country back then. Consider that every year, hundreds of thousands of fresh graduates are on the lookout for high-paying jobs. A large portion of those graduates will inevitably end up in the BPO industry regardless of their course, simply because BPO companies offer higher and more lucrative salaries, even in entry-level positions.

We must also consider that most Filipinos have access to Western culture and language. English is commonly used as the language of instruction in schools and colleges. Students thrive on the internet and social media where English is needed in order to communicate with others. Most TV shows feature English in one way or another, and local movies are always dubbed in. This will not likely change soon.

All these elements make the Philippines perfect as an outsourcing destination. There’s just no contest.

Conclusion

Outsourcing is not something that a business owner or company manager should look into lightly. While it does offer enormous savings and other essential benefits, those seeking to adopt it should be prepared to shoulder the growing pains and costs needed to truly facilitate outsourcing. Once they manage this, the benefits—both in the short and long term—will pay off in a huge way.

Freelancers OR Outsourcing Companies???

We’re now witnessing a bright age in global workforce expansion. The internet, mobile workstations, and ease of transacting online have all made their mark on industries worldwide, especially in the IT sector, the financial sector, the creative sector, the service sector, and many others.

We have 2 types of remote workers to thank for these developments and for the competitive edge they’ve helped smaller businesses achieve. These are the freelancers or individual contractors and the outsourced agents. The 2 are often the subject of lively debate: are freelancers the best option to grow businesses on a budget, or is it a smarter decision to rely on full-fledged business process outsourcing (BPO) companies? Either mode has its own unique set of perks and drawbacks, as well as the potential to yield some world-class results.

f you’re part of a business that is aiming to change up its expansion strategy and are looking for help in the different corners of the globe, you should weigh your decision on the following factors: recruitment, marketplace conditions, safety, standard of work to be achieved, and costs. Read up on these takeaways per issue and see which mode has the strategic advantage over the other.

  1. Recruitment. Even if you’re trying to cut down on labor costs, you won’t want to scrimp on employing premium talent for your office. The great news is that there’s no lack of skilled and well-educated global contractors out there. In that talent pool, there are freelancers who practically have name-brand recognition for the specialized work that they do, and outsourcing agents that are a commanding force in their industry. In this respect, we think that the playing field for freelancers and outsourcing agencies is wide as well as even.
  2. Marketplace conditions. On the other hand, the quality of labor you’re seeking out might also depend on where it’s sourced from. Various freelancing sites accumulate high traffic and serve as hubs for thousands of freelancers. But not all of them contribute to the gig economy at an even pace. In fact, the breadth of portfolios available on these sites can cause choice fatigue, and there’s a risk that the quality of work won’t be worth the time you spent browsing. The same can apply to combing the Google rankings for the best outsourcing agents.
  3. Safety. If we bring up marketplace conditions, it’s impossible to mention the possible safety concerns of transacting within them. Take note of some scams to watch out for on popular freelancing sites, as not all registered users have the best intentions for you as a client. In this regard, outsourcing has the advantage. Most outsourced companies adhere to trade regulations and sound business practices. You’ll be investing in their reputation and trustworthiness as well as their talent.
  4. Standard of work. Some clients will find working one-on-one with freelancers very fulfilling. The best freelancers can bring a very personal, tailor-fit exclusivity into the quality of their work. That’s why work that’s set on a per-project basis and that is demanding of very specialized and creative skills seems a good fit for freelancers. However, if there’s a great volume of work to be done and you are looking for a uniform standard of service delivery, it may be better to put your trust in a full-fledged outsourcing company. It’s also easier to bank on outsourcing agencies for long-term engagements as they will likely have the manpower and the protocols to see these through.
  5. Costs. Down the line, this is probably the biggest reason why you want to contract with a freelancer or with an outsourcing agency. It’s a common misconception that it will be cheaper to hire a freelancer over an entire company and that it is the best way to cut costs at the moment. The fact of the matter is this: hiring an individual isn’t the only way to get a bigger bang for your buck. The important thing is to assess the costs per service, hours to be rendered, and experience level, which varies from job to job. It’ll be possible to obtain very fair rates even with the machinery of a BPO company.

 

It was a good week

dict_aptusIt was a good week for the Department of Information and Communications Technology and its mission to improve the nation’s broadband services. Not only did the restructuring of the Mislatel Consortium, the new third telecom provider, pass approval in the senate, but the department also received a P23.8 million grant from US Embassy to put towards the roll-out of broadband services.

There was more good news from the government. Three proposed bills that will amend the Foreign Investment Act, the Retail Liberalization Act of 2000, and the Public Service Act, and which intend to reduce restrictions on inbound foreign investment, received a warm reception from the Joint Foreign Chambers of the Philippines. The flexible work arrangements bill that aims to formalize regulation of remote working also passed its second reading in the senate. Even the controversial TRABAHO bill, with its provision to support training, has received the acceptance of the Nordic IT-BPO sector, according to the Nordic Chamber of Commerce of the Philippines.

Welcome Bea!

China’s cotton seed sprouts on moon but will be left to die

A cotton seedling that sprouted on the moon has been left to die as China’s historic lunar lander continues a freezing night-time nap that will last as long as two earth weeks, scientists said.

The Chinese space agency announced earlier this week that the seed had germinated inside a special canister aboard the Chang’e-4 probe, after the spacecraft on January 3 made the first-ever landing on the far side of the moon.

The mini biosphere — which operated for over 212 hours — was shut down as planned on Saturday, said Chongqing University, which designed the experiment.

The lander also carried potato and arabidopsis seeds — a plant of the mustard family — as well as fruit fly eggs and yeast.

Temperatures inside the ecosystem were expected to plunge below minus 52 degrees Celsius (minus 61.6 degrees Fahrenheit), and the organisms will be “in a frozen state”, the university said in a statement on Tuesday.

The experiment ended hours before Chang’e-4 entered “sleep mode” on Sunday as the first lunar night fell since the probe’s landing. Temperatures plummet to about minus 170 degrees Celsius (minus 274 degrees Fahrenheit).

A lunar night lasts for about two earth weeks, after which the probe is expected to wake up, the statement said.

“Life in the canister would not survive the lunar night,” Xie Gengxin, who led the design of the experiment, told the official Xinhua news agency.

Once the temperatures start to rise next month, the organisms will be allowed to “slowly decompose” in the permanently sealed canister.

Chang’e-4 is also equipped with instruments developed by scientists from Sweden, Germany and China to study the lunar environment, cosmic radiation and the interaction between solar wind and the moon’s surface.

The lander released a rover, dubbed Yutu-2 (Jade Rabbit), that will perform experiments in the Von Karman Crater.

China’s space agency said it is planning four more lunar missions, confirming the launch of a probe by the end of the year to bring back samples from the moon.

Beijing wants to establish a lunar research base one day, possibly using 3D printing technology to build facilities, the agency said Monday.  — Agence France-Presse

Credits to GMA News.

China to collect samples from moon this year

BEIJING — China will launch a probe to collect samples from the moon around the end of this year, a space official said on Monday, weeks after Beijing hailed the successful touch down on the far side of the moon.

The Chang’e-4 lunar probe landed on Jan. 3 and transmitted the first-ever “close range” image of the far side of the moon.

China’s National Space Administration applauded the event as a first that “lifted the mysterious veil” of the far side of the moon and claimed it as a major achievement for the country’s ambitious space program.

The tasks of the Chang’e-4 include astronomical observation, surveying the moon’s terrain and mineral makeup and measuring the neutron radiation and neutral atoms to study the environment of its far side.

The Chang’e-5 mission, set to collect samples from the near side of the moon, will be carried out at the end of the year, while another probe will be sent to Mars by 2020, Wu Yanhua, deputy head of the space administration, told a briefing, according to an official online transcript.

The Chang’e 5 mission will lay the ground work for further probes to be sent to the moon’s south pole and possibly to return samples from the far side of the moon, depending on the results collected in the upcoming mission, Wu said.

Tests carried out by future missions could lay the groundwork for building on the moon’s surface, by testing technologies like 3D printing or the use of moon soil in construction, he said.

“China, the United States, Russia and European nations, among others, are all exploring whether or not to build a base or research station on the moon,” he said.

The moon is tidally locked to Earth, rotating at the same rate as it orbits our planet, so most of the far side—or “dark side”—is never visible to us. Previous spacecraft have seen the far side, but none has landed on it.

China has made space exploration a top priority in recent years, as it races to catch up with Russia and the United States and become a major space power by 2030. Beijing plans to launch construction of its own manned space station next year. — Reuters

Credits to GMA News.

Hyundai shows off walking car project

LAS VEGAS — South Korean car maker Hyundai on Monday gave a look at work it is doing on a vehicle with robotic legs to let it walk or crawl over treacherous terrain.

Hyundai showed off its Elevate project on the eve of the Consumer Electronics Show gadget extravaganza, billing it an unprecedented “Ultimate Mobility Vehicle” that combines technology from electric cars with robotics.

“What if a car designed with robotics could save lives in disasters,” said Hyundai executive John Suh, who heads a Cradle arm of the company devoted to innovation.

“The need for search and rescue, and humanitarian aid, is growing around the world.”

Elevate is designed with four mechanical legs with wheels for feet, according to a small-scale model shown at the press event.

Elevate vehicles can roll along on extended legs or retract them to be driven like a car.

 

 

The future is here!! SF’s Manager of Design and Innovation Strategy, David Byron @byrondesigns, demonstrates #HyundaiElevate’s ability to switch out it’s various modular bodies for specific use cases for @Hyundai_Global’s press conference at #CES2019pic.twitter.com/p0gbPMdZ6Y

— Sundberg-Ferar (@SundbergFerar) January 8, 2019

Extended legs could also be used to climb or crawl while keeping the passenger compartment level, according to David Byron of Sundberg-Ferar, an industrial design consultancy, which is working with Hyundai on the project.

“This design is uniquely capable of both mammalian and reptilian walking gaits, allowing it to move in any direction,” Hyundai said in a release.

Elevate can climb over walls as high as five feet (1.5 meters) while keeping the vehicle body level with the ground, Byron said.

Hyundai has been working on the walking car for three years, according to the company.

Examples of how this might be used included being able to carefully extract injured people from disaster zones or rugged terrain.

“It can go where no vehicle has gone before,” Suh said.

An scaled-down model of Elevate along with video of how it would perform were displayed at the CES press event.

“This technology goes well beyond emergency situations – people living with disabilities could hail an autonomous Hyundai Elevate that could walk up to their front door, level itself, and allow their wheelchair to roll right in,” Suh said.

“The possibilities are limitless.”

For example, an Elevate stuck in snow on a roadside could get up and walk back to lanes of traffic, or the vehicle could be put to work exploring other planets.

AutoPacific market research vice president Daniel Hall considered the Hyundai project “interesting,” noting that while robotic vehicles are already used by the military to deal with bombs “climbing obstacles in certain situations can be helpful.”

For Hyundai, the project is also a chance to demonstrate that, like rival car makers, the company is pursuing innovation, Hall added. — Agence France-Presse

Credits to GMA News.

Facebook CEO Zuckerberg plans 2019 forums on tech’s role in society

NEW YORK – Facebook Chief Executive Mark Zuckerberg unveiled his personal goal for 2019 on Tuesday: convening a series of public forums on how technology can better serve society.

“My challenge for 2019 is to host a series of public discussions about the future of technology in society — the opportunities, the challenges, the hopes and the anxieties,” Zuckerberg wrote on Facebook.

The announcement follows a difficult period for the social media company, which has come under fire for its handling of private consumer data and its brass-knuckles approach to company critics, among other issues.

Zuckerberg, without directly acknowledging the criticism, said he recognized the need to get out of his comfort zone.

“I’m an engineer, and I used to just build out my ideas and hope they’d mostly speak for themselves,” he wrote.

“But given the importance of what we do, that doesn’t cut it anymore. So I’m going to put myself out there more than I’ve been comfortable with and engage more in some of these debates about the future, the tradeoffs we face, and where we want to go.”

Zuckerberg plans a series of forums that will be broadcast on Facebook, Facebook-owned Instagram or other media.

Zuckerberg has made a practice of setting a personal goal each January, such as running 365 miles during the year, or visiting all 50 of the United States.

But Zuckerberg’s statement on Tuesday suggested he recognized there was still work to do on the 2018 goal of “fixing” problems at Facebook, such as safeguarding the site from misinformation and propaganda that many experts believe affected the 2016 US presidential election and the Brexit vote in Britain.

“Last year, I focused almost all my time on addressing important issues around elections, speech, privacy and well-being,” Zuckerberg wrote.

“Facebook is a different company now than it was a couple of years ago because of a much greater focus on these questions. These issues are complex and we will continue focusing on them for years to come.” —Agence France-Presse

Credits to GMA News.

Canada’s Trudeau raps Japan PM on whale hunt

OTTAWA – Canadian Prime Minister Justin Trudeau on Tuesday took issue with Japan’s plan to resume commercial whaling in a telephone call with his Japanese counterpart Shinzo Abe.

According to a statement from his office, Trudeau said he “raised the important issue of whale conservation and committed to working with international partners to protect whale species.”

Japan announced last month that it was withdrawing from the International Whaling Commission (IWC) and would resume commercial whaling this year, sparking criticism from activists and anti-whaling countries.

The commercial hunts, however, would be limited to Japan’s territorial waters, said a top Japanese government spokesman.

And Japan will not be able to continue so-called scientific research hunts in the Antarctic and elsewhere that it has been exceptionally allowed as an IWC member.

The IWC, established in 1946 to conserve and manage the world’s whale and cetacean population, introduced a moratorium on commercial whaling in 1986. —Agence France-Presse

Credits to GMA News.

WHO study likens palm oil lobbying to tobacco and alcohol industries

GENEVA, Switzerland – The palm oil industry is deploying tactics similar to those of the alcohol and tobacco industries to influence research into the health effects of its product, a study published by the World Health Organization said on Tuesday.

Evidence of the health impact of palm oil is mixed, with some studies linking consumption to several ailments, including increased risk of death from heart disease caused by narrowing arteries, the report said.

The study, “The palm oil industry and non-communicable diseases”, called for more research and tighter regulation of the $60 billion industry, and said researchers should be wary of being influenced by lobbyists.

“The relationship between the palm oil and processed food industries, and the tactics they employ, resembles practices adopted by the tobacco and alcohol industries. However, the palm oil industry receives comparatively little scrutiny,” it said.

Oil palm plantations, mainly in Malaysia and Indonesia, cover an area roughly the size of New Zealand, and demand is expected to grow as more countries ban trans fats, which the WHO wants banned globally by 2023.

Trans fats are prepared in an industrial process that makes liquid oils solid at room temperature, and are now widely recognized as bad for health.

Palm oil is naturally more solid than most other vegetable oils, and the demise of trans fats will leave it as an easy choice for ultra-processed foods, said the study, co-authored by researchers at the U.N. children’s fund UNICEF, the London School of Hygiene and Tropical Medicine and Britain’s University of Exeter.

The study said labeling is often unclear, and palm oil can be listed under any one of more than 200 alternative names, turning up frequently in foods such as biscuits and chocolate spread.

“Consumers may be unaware of what they are eating or its safety,” the study said.

The authors of the study, published in the Bulletin of the World Health Organization, said they found nine pieces of research showing overwhelmingly positive health associations, but four of them were authored by the Malaysian Palm Oil Board.

“The contested nature of the evidence suggests the need for independent, comprehensive studies of the health impact of palm oil consumption,” they wrote.

The study also pointed to the health effect of the production of palm oil in countries where it is grown, with slash-and-burn agriculture causing air pollution and haze linked to premature deaths, respiratory illness and cardiovascular diseases.

“Of major concern is the effect of exposure to particulate matter on fetal, infant and child mortality, as well as children’s cognitive, educational and economic attainment.” — Reuters

Credits to GMA News.