In twenty relatively short years, the rise and meteoric growth of BPO in the Philippines has been nothing short of astonishing. In that time, the Philippines has become the world’s top call center outsourcing hub, and the country currently ranks just behind India as the world’s second-largest BPO destination. The industry currently employs more than 1.4 million Filipinos and generates more than US$28 billion in annual revenues, accounting for 8% of the Philippines’ GDP. Even better for the Filipino economy: this growth shows no signs of slowing down.
“Those figures prove that outsourcing to the Philippines works. If it didn’t, major US corporations like Amazon, Facebook, and American Express would not invest so heavily in outsourcing their business processes to the Philippines. These industry giants have also found that their all-important Customer Experiences (CX) were at least maintained, if not improved by this process,” says Ralf Ellspermann, CEO of PITON-Global, an award-winning BPO in the Philippines.
But for every company that is outsourcing to the Philippines the correct way, partnering with premium BPOs that have the resources to ensure the best offshore outsourcing experience, there are just as many who chase the dangling carrot offered by low-cost BPO providers. “This savings-above-all-else strategy usually comes with disastrous consequences that can wreak havoc on customer relationships,” says Ellspermann.
In today’s business climate, positive CX has become an essential part of building and maintaining a profitable business. In fact, 2020 statistics reveal that companies that prioritize and effectively manage CX are three times more likely to meet or exceed their business goals than their competitors. How important has positive CX become to companies and consumers alike?
84% of customers feel experiences are as important as a company’s actual products and services.
42% of consumers worldwide would pay more for an excellent experience.
65% of US customers find a positive experience with a brand is more influential than great advertising.
32% of consumers will walk away from a brand they love after just one bad experience.
Driven by flawed cost-cutting strategies, some American companies give little thought as to how working with low-quality BPOs in the Philippines will impact their crucial CX. And as the above figures indicate, you just don’t mess with your customer experience! The fact is, more than half of all offshore outsourcing projects fail, and 90% of these program failures typically occur with low-cost vendors.
The risk of partnering with low-cost vendors
Two of the biggest advantages of outsourcing to the Philippines are English-language fluency and a close cultural affinity with the US. While the majority of Filipinos speak English, there are big gaps in overall English language proficiency. Those on the lower end of English-language skills are most likely to populate the offices of low-cost Filipino providers.
This is because low-cost vendors simply cannot pay the salaries the top English-proficient agents demand. As a result of this language divide, effective communication between agent and customer can often be seriously compromised. “In fact, frustration with language is the number one customer complaint of BPOs in the Philippines. As excellent CX has become vitally important to all companies, hiring an offshore provider who cannot communicate effectively with customers doesn’t make good business sense,” says Ellspermann.
Smart companies spend money to save money
The solution? Outsourcing savvy companies are increasingly choosing BPOs in the Philippines based on quality and domain expertise rather than hourly rates. Today, US Fortune 2000 corporations are happy to pay BPO companies in the Philippines US$12-18 per agent even though they could get an hourly rate of US$8-10 from low-cost vendors. “These companies understand that low-cost providers compete on price, not quality, and have to make significant compromises in order to keep costs low. They also know that by partnering with premium providers, they can obtain high-quality services that are sustainable and still save 40-50% versus standard onshore vendor rates,” explains Ellspermann.
The bottom line
Maintaining or increasing CX and improving operating efficiencies should be the focus for companies considering going offshore. “In today’s business climate, cost-costing strategies that jeopardize the all-valuable customer experience are generally doomed to fail. BPO to the Philippines indeed works, but only when it’s done correctly,” concludes Ellspermann.