Today’s digital age gives way to the birth of outsourcing companies that operate mainly through the help of the Internet. Like any other industries, it is very challenging, especially to those neophytes trying their footing in this so-called “unsettled business frontier.”
The companies across the world face various challenges. Even those successful firms offering low labor costs and excellent infrastructure are suffering once in a while from the effects of financial meltdown and economic instability. These challenges are categorized into two kinds: internal and external challenges.
What are these challenges and difficulties faced by an outsourcing company and the entire industry?
Internal challenges are those that happen within the firm and directly affect the operation of the organization. These can easily be addressed through implementation of new business guidelines, policies, and rules and regulations.
1. Lack of competent managers and employees
Due to the fact that various companies offer different salary rates and other benefit packages, both managers and agents tend to look for the firm that provides the best salary and benefits. This results to high attrition rates that bring bad effects to an entire business operation.
2. Terms and costs of deal
The agreement between two negotiating firms is governed by a contract — identified either as short-term or a long-term deal. This means that the cost for a particular transaction is fixed for the specified project duration.
Contract deals and terms become a problem because the pricing might get out of date months before the project is completed. Although the international market dictates the pricing, it can be classified as an internal challenge since the client and provider have the power to negotiate the terms and come up with an agreeable transaction.
External challenges hounding the BPO sector are those that originated from the outside of the organization but bring negative impacts to its overall aspect. These cannot be manipulated and are harder to solve.
1. Competition inside and outside of the country
The growth of the industry has really changed the way ordinary businesses and dealings were conducted. This development really contributed to the progress of the global economy. As an effect, an outsourcing company has to compete with other local and international establishments providing the same type of service or product. Leading countries include the Philippines, India, China, Ireland, Malaysia, Russia, Egypt, South Africa, Mexico, and Thailand.
2. Threats from international laws
Just recently, the industry has been challenged by a proposed US House Bill seeking to ban the industry and offshoring non-core activities of American firms to other countries. It is, indeed, very alarming since the industry has become a primary source of economic growth and job opportunities for thousands of people.
These are just few of the numerous challenges faced not just by a single outsourcing company but by the whole industry. The government and the private sector should work hand in hand to ensure the steady supply of manpower and help raise the bar in the quality of services.