Business dealings is a term in the world of business process outsourcing (BPO) that refers to moving a particular company’s business dealings from a certain area to another, specifically from one country to another. They call it “offshoring”.
The term is mistakenly used sometimes. It is actually different from “outsourcing,” the latter being the transfer of some in-house business operations to another company, whether domestic or abroad. This article hopes to enlighten readers on the relations as well as differences.
Offshoring operations could be anything from manufacture and construction to production and fabrication to editorial and transcription. Some firms went beyond to develop the following:
- Creative animation
- Engineering design
- Real estate
The reason for transfer or relocation is usually for the intention to cut down costs of certain business processes, going to places where operational costs are lower.
The 21st century saw the rapid development and expansion of the Internet, which not only boosted offshoring business activities, but also created new jobs such as call centers, medical transcription, and legal transcription among others.
Individuals and parties utilize offshoring not only to protect their resources, but also to ease their dues and taxes, depending on the needs of their own consumers.
Though the reasons may be the same, various offshore activities are intended for various purposes. Offshoring operators include intellectual property holdings, subsidiary holdings, and real estate holdings companies.
Looking at the Philippine experience
In the Philippines, offshoring business activities started as a result of closure of American industrial firms during the 1970s. This ushered a massive structural changes, resulting to the establishment of new factory units in the country and throughout the world.
The very first offshore business process was the call center industry, which has been the most famous since 2001, employing hundreds of thousands of employees, generating billions of dollars of revenues, and having almost a hundred percent annual growth rate.
Many of these call centers handle a wide array of inbound and outbound calls from clients or customers, dealing with business activities such as telemarketing, product inquiries, technical support, and travel bookings and assistance.
Average monthly salary for a customer representative in the Philippines is as cheap as $300 as compared to $2,000 received by a person doing the same job in the United States. Meager as it is, though, that kind of amount is attracting hundreds of job seekers every day.
Current key locations of call center companies include not only long-time urban centers such as Makati City, Quezon City, and Muntinlupa City, but other provinces as well, especially in areas where they have already built the necessary infrastructure developments. These areas are:
- Baguio City
- Cagayan de Oro City
- Davao City
- Cebu City
Provinces of Laguna and Cavite
Call centers continue to dominate the arena, and yet other outsourcing services such as animation, transcription, software development, and web design are catching up, so long as there is good Internet communication technology available.
While call centers continue to expand and boom, software development is on the rising stage. IT firms have established their presence and many more are still to come, as it currently employs thousands of IT professionals.
Foreign investors are attracted to pool its capital on the country due to the fact that it has abundant natural resources combined with premium leisure amenities, making the environment very conducive and comfortable.
The local workforce is steadily increasing, making the delivery of quality service and creation of quality products more competitive in the global arena. In addition, they are intellectually advanced people who are good English speakers and Western-oriented.
Offshoring is seen by the government as a huge potential investment to keep the nation out of poverty, and ultimately achieve economic stability. In fact, many local firms continue to send their employees abroad for intensive training in order to become rare assets in this particular industry field.