How Does Outsourcing Help Developing Countries?

How Does Outsourcing Help Developing Countries

Outsourcing benefits companies through a number of ways, from cutting costs, increasing the quality of their products and services to helping them grow their bottom line. This is a fact known to both multinational companies and SMEs based in developed countries who have been outsourcing aspects of their businesses, particularly to developing countries, for years. But how does it help the people at the receiving end of the process? How does outsourcing help developing countries?

 The Economic Impact of Outsourcing to Third-World Countries

For more than 20 years, companies in developed nations have increasingly outsourced parts of their business processes to developing countries like India, the Philippines, Indonesia, and others. This phenomenon has given rise to what is now known as remote working or, in millennial speak, being a “digital nomad.” This is because most outsourced or remote workers today typically have their own home offices set up at their convenience or can be seen lugging their laptops in cafés or wherever they go.

The concept of outsourcing is simple and straightforward: non-critical business functions are passed on to economies that have lower labor market rates. Such functions include customer service, bookkeeping, accounting, marketing and human resources, among others.

Outsourcing is a welcome concept not just for companies looking to outsource, delegate or sub-contract business activities but also for third-world nations like India and the Philippines—the two English-speaking Asian countries whose talent pools are being tapped for outsourcing jobs. Outsourcing has positively addressed the growing unemployment rate in developing nations and developed the labor forces of these countries for specific industries. 

In the Philippines, the outsourcing industry has become the economic lifeline for almost the entire nation. Over 500,000 Filipinos are employed by business process outsourcing (BPO) companies and BPO’s are now the top foreign exchange earner in the Philippines along with foreign exchange remittances, bringing in close to US$ 20 million (PhP 1 billion) total revenue. Metro Manila, the country’s capital region alone, is now a growing hub for many outsourcing sub-industries like the call center industry, and because of this, the Philippines is now known as the Call Center Capital of the World, with 16% to 18% of the global market share.

As for India, Bangalore alone is home to over a hundred thousand tech workers, many of whom are employed by US companies. Across the nation, 1 million people are working for US-based companies like GE Capital and Microsoft. American technology companies have been outsourcing to India for years. In fact, tech giant IBM is employing 130,000 people in India, which is already one-third of the country’s workforce, and is continuously shifting some of its critical business operations to the South Asian nation.

 Addressing Social Issues

But the bottom line is not just what outsourcing companies are after. They are also helping stabilize communities and transform societies in third-world nations. Many governments and non-government stakeholders in developing countries are also recognizing the positive socio-economic impact of outsourcing businesses.

For instance, information management company Convergys has the Community Action Network (CAN) that promotes education among impoverished communities and provides food and shelter to the homeless. BPO giant Teleperformance is focusing on providing learning opportunities, while Sykes’ Global Giveback effort supports local clinical health services and physical fitness. Likewise, three community boards of telecom company Telus, which are located in the Philippines, El Salvador and Guatemala, are distributing $100,000 each to local grassroots charity organizations.

At Outsourcing Angel, we do our part too, by reinvesting our profits into community projects in the Philippines. We have contributed to feeding programs for hillside tribes, conducted donation drives of essential medical supplies, and have supported the efforts of Tribu Ni Bro (TNB) in their efforts to provide solar energy generation capabilities to remote tribes. In addition, we are involved in a partnership with the Virlanie Foundation, where our virtual assistants volunteer their time and knowledge to teach disadvantaged kids computer literacy skills. To find out more about or to extend a helping hand, please visit our OALoveProject website,  

Important Jobs

Outsourcing can provide people in developing countries with well-paid jobs that might not be available to them otherwise. These jobs are not just low-end, low-skilled jobs that were created to support minor business functions. Outsourcing companies are not merely looking for cheap labor; they are seeking professional and skilled individuals who can support mission-critical aspects of the business.

Outsourcing also provides workers with a sense of pride and fulfilment knowing that they have a job that can support their families. Outsourced jobs are important to the people who get them, as most of them are college graduates who feel that they could never get jobs that could pay them US$400 to US$500 a month—the starting salary for most call centers—without this kind of opportunity. They are not only given employment opportunities but also a chance to climb up the career ladder. This helps create young workers that are confident about themselves, dignified, and optimistic.

The many job opportunities that Outsourcing Angel has given to our virtual assistants have helped them gain the time and freedom to be with their families for important milestones and have helped them gain much financial freedom as well. From building their dream homes, to spending quality time with their families, to having an online career, this opportunity to work from home is much cherished and makes an immensely positive impact on the lives of our angels.   

 What’s out there for outsourced workers in developing countries?

What’s out there for outsourced workers in developing countries?

Thus, outsourcing, in general, presents a bright future for India, the Philippines, and other developing  countries—enriching the overall economies and strengthening the economic well-being of those who are employed by outsourcing companies. Does outsourcing help developing countries? Yes, it most certainly does!  

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