Effects of Outsourcing on the IT Industry

With technology becoming the man focus in almost every aspect of life, including industries like banking, manufacturing etc, Information Technology or IT industry makes for one of the most sought after industries in the world. Like most of other industries though, even IT industry was hit by the economic slump or recession in the late 2000s. Today, even though the world is still recovering from the recession’s after-effects, IT industry is on a go again! However, the trend now is a bit different.

With everyone chanting the ‘outsourcing’ rhyme, IT industry too could not stay away from its charm. In fact, it was precisely due to the outsourcing trend that IT industry could recover that fast from the slow-down. In the present scenario, US has more than 500,000 IT-related jobs lying vacant because there are not enough qualified personnel to take up these jobs. How then can an industry grow if it lacks properly trained people? Outsourcing came as a natural answer! Several third world nations such as India and China bring out thousands of well trained engineers and IT personnel every year. With the abundance of skilled man-power available in these countries, it was obvious for the IT companies from more developed nations to shift their base. Not only is finding a skilled personnel easier here, but it is also costs less than their home country.

With technology changing every day, establishing proper R&D infrastructure, hiring trained staff and yet saving on the costs made outsourcing a better option. With BPOs ready to take on the task of hiring and managing workforce, IT companies could increase their performance manifold. Besides, customer satisfaction also enhanced through outsourcing. Getting latest technology too became a cost-saver, what with outsourcing of several processes requiring latest technology. Hence, companies would save on refurbishing their older technology every time a new version came.

Nevertheless, fears are ripe within the developed nations that the kind of outsourcing happening in the IT sector might ultimately affect the youth in their home nations itself. Since outsourcing curbs the number of jobs created, fears of unemployment become heightened. According to a report, more than 3 million IT jobs will be outsourced from United States to other nations by 2015. However, IT companies are of the view that cost saving, access to better technology and enhancement of company’s performance make for a better economy than lesser jobs.

It may hence be rightly concluded that amongst most other industries, it is the IT industry that has been most widely affected by outsourcing. While the developing nations are enjoying from the vast benefits of inflow of foreign currency, fears of unemployment are eating discussions within the outsourcing nations.

PAL Hires PLDT for their Call Center Operations: A Win-Win Situation!

The whole idea of outsourcing jobs has created much stir in the business environment. However, it works on the basic principle that one man’s loss is another’s gain! Whether it be the loss of jobs in America, which created great opportunities in outsourcing destinations or whether the recent Philippines Airlines(PAL) decision to hire Philippine Long Distance Telephone Co. (PLDT) for their call center operations, along with other catering and many other airport services!

This massive contract will save PAL P1.5 Billion a year and bail them out of a tough financial situation, but at the same time will affect 300 PAL employees who will lose their jobs as a result of this deal. However, about 600 new positions will spring up at PLDT where these ex-PAL employees will be given the first preference! This, unlike other outsourcing options will work out to be very convenient where new jobs will be created and kept within the country.

The Philippines should promote more such deals which are a win-win situation for both the parties involved. The government will also welcome such deals and is sure to grant some benefits to similar deals in the future. PAL could have also shipped their jobs to a foreign location but made a wise decision by awarding the project to PDLT. Philippines has a great workforce and is one of the big players in the call center industry. Cheap labor, the main reason for which jobs are outsourced is available here in abundance!

The labor union of PAL, known as PAL Employees’ Association (PALEA), has taken stiff opposition to this contract. The job cuts are not something they are happy about and they have filed a notice to go on strike. They definitely need to see this in a broader perspective and understand the wonderful implications that deals such as these will have on the economy of Philippines.

Australian BPO Company in the Philippines and its Effect on the Call Center Industry

Seeing the entire furor that the Philippines call center industry is creating in the world, Australian firm, Salmat, could not stay away from it all. Salmat, the Australian business process outsourcing firm, recently announced that it will be opening up its operations in the Philippines. It is expected to open up an establishment in McKinley Hill in Taguig City, paving way for an 800 seat facility. This is touted as one of the first investments of the company outside Australia. The new establishment is expected to cater to accounts from Australia and New Zealand, while they switch between voice and non-voice services. The company is further expected to expand into areas like web content management, call centers, IT enabled services, data entry and computer programming. All this is bound to have a positive effect on the Philippines BPO industry.

Over the past few years, the Philippines has seen a major growth in terms of attracting investors and clients willing to the country’s call center industry’s abilities. When it comes to knowledge-based positions and workers, the Philippines is being touted as number one throughout the world. Being just one place behind India in terms of employer preference, the Philippines is fast growing and expanding its services to provide more expert-knowledge and services to the clients. With the Australian firm coming to the Philippines call center industry, the Philippines is sure to become even more widely recognized throughout the world for catering high-end business processing outsourcing. Already, the projected earnings of the call center industry is expected to contribute to 6% of the total GDP of Philippines. The next ten years have further projected the total revenues to increase up to US$100 billion from the call center industry alone. With so much to offer, the number of jobs and total household income too will increase exceptionally, thereby changing the entire outlook of the nation.

US Bill Proposed to Charge BPO with Taxes

Outsourcing of jobs has been a topic of much debate in developed economies such as the USA. This form of business has been subject of much criticism. The main reason for this has been the loss of US jobs, which are shipped to cheaper destinations. Senator Charles Schumer recently proposed to introduce a bill which will tax calls which are transferred outside the United States. This will be done by making the companies disclose their calls going outside the country.

The Senator feels that by doing so, they will be able to reduce the number of jobs being outsourced to other destinations. "This bill will not only serve to maintain call center jobs currently in the United States, but also provide a reason for companies that have already outsourced jobs to bring them back," he said. However, the bill might just backfire with leading organizations choosing to move to other countries and keeping their American operations to a bare minimum!

Big Companies today are no more confined to a single location. They are truly global entities. The bill will surely not affect work being outsourced by these mammoth organizations. The bill will only affect their US operations but not any of their other markets. This will, however, affect smaller, all American organizations that outsource their work to foreign locations.

Organizations in the Philippines have gained solid reputation for providing unmatched services to such companies. There are a lot of virtual call center units that are functioning primarily to serve their American customers. This bill will definitely affect business from smaller US companies, unless they go all out against the passing of this bill. However, business opportunities are aplenty in the call center industry and the bill should not harm outsourcing business in the Philippines in a big way. This will be an ideal opportunity for companies to look beyond the USA and concentrate on other markets.

The Philippines has come a long way and established itself as a top destination for virtual call centers. This bill does threaten to lessen incoming business from the USA but with the right approach, it can be tackled with ease!