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Philippines emerges as top off-shoring destination for Australian firms

Philippines emerges as top off-shoring destination for Australian firmsFinds Australian Contact Centre Outsourcing Market Study 2011, released by Callcentres.net in collaboration with Aegis

While 81% of all outsourcing was undertaken in Australia, 19% was now outsourced to the Philippines and 4% to India. Even Malaysia at 5% had leapt over the top of India, according to the Australian Contact Centre Outsourcing Market Study 2011 released by Callcentres.net in collaboration with Aegis.

The study divides outsourcing into five categories - customer interaction (contact centres), back-office processing, IT, finance and HR.

The Philippines was ahead in all categories - undertaking 20% of customer interaction compared with 13% for India, 33% of back-office processing compared to zero in India, 18% of IT compared to India's 9% and 25% of finance compared with zero in India.

The study showed that Australia is still dominant - undertaking 73% of all customer interaction, 67% of back-office processing, 91% of IT, 75% of finance and 100% of HR. Interestingly, 18% of IT was outsourced to Malaysia and 9% to China.

'As Australian businesses continue to have a strong focus on reducing operational costs there is continued growth in the outsourcing of business and customer related processes. There will also be an increase in the amount of work that will go off-shore. Service work will continue to be outsourced and off-shored to where it is most economically comparatively advantageous to perform. We call this the Services Shift,' Dr Catriona Wallace, Director of callcentres.net and Australia's leading commentator on contact centre outsourcing, said.

'Although only 1 in 5 Australian and New Zealand consumers state that they are happy to speak to an off-shored customer service representative, they may soon have to get used to it,'

Aegis' Australian President and Country Head Denice Pitt said: 'This trend to the Philippines is consistent from what we are seeing in the market.   It is becoming prohibitively expensive for companies to keep all operations in-house because it requires agility, scalability, training and technology that could be better employed elsewhere.

'The ability to provide blended offshore and onshore solutions such as those in the Philippines enables companies to create efficient outsource programs whilst reducing their costs. By leveraging our global resources we are able to offer our clients complex, yet flexible, tailored outsourcing solutions that deliver scope and high value.'

Increase in contact centre seats

The report predicts an increase of 10% in 2011 of seats outsourced by Australian companies. In 2010, 41,500 of 199,500 contact centre seats were outsourced to companies such as Aegis. In 2011 this is expected to rise to 45,600 seats.

The largest outsourcers in 2011 are expected to be in the telecommunications/utilities (20% of the industry total), finance, banking and insurance (19%).

Levels of outsourcing

The report says that the current level of outsourcing by Australian companies is reasonably high with just over 53% outsourcing at least one business function. This was made up of:

· Customer interaction activities (60%)

· Back office application and form processing (44%)

· IT (16%)

· Finance (12%)

· HR (12%)

· Other (12%)

Importantly for companies such as Aegis, 32% of companies surveyed said they intended to outsource at least one function currently undertaken in-house. Back office application and form processing topped the list at 35%, customer interaction activities at 29%, HR at 29% and IT at 24%.

Why do companies outsource?

The report says that outsourcing is not driven totally by cost savings, but it was still the primary driver. And companies expect to save considerably.

6% of companies expected to save 50% of the cost of performing the process in-house, 21% expected to save 40%, 29% expected to save 30% and 26% expected to save 20%.

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