Undeniably, the Asia Pacific region has become a major outsourcing destination. Revenue from the business process outsourcing industry is expected to reach $79.31 billion dollars in 2023, and continue growing at an annual rate of 7.75% ... reaching more than $US106.90 billion by 2027.
The reasons behind such growth lie greatly in Asian governments who have invested heavily in infrastructure to support the growing outsourcing market. Of course it helps that Asian countries tend to have a large, well-educated labor pool with English-speaking populations, and lower labor costs also make the region attractive for outsourcing, as well. For example, the monthly minimum wage in Vietnam in 2022 ranged from about $140 to $202 US dollars, depending on the region, while minimum wage in the Philippines comes out to a mere $9.98 USD per day.
As companies re-evaluate their strategies after the disruption of the COVID-19 pandemic, many are bumping up their outsourcing efforts, especially to low-cost markets. Outsourcing allows companies to eliminate some expenses from non-core activities, freeing up money for innovation and growth. Outsourcing also allows companies to quickly scale their workforce as demand increases post-pandemic without hiring full-time workers.
Outsourcing in Asia provides many benefits to Western companies. The primary benefit is cost savings. Many Asian countries feature low-cost economies. Businesses can receive the same high-quality work but at a fraction of the cost. They can use the cost savings to fund business growth or other projects.
The difference in time zones can be another benefit of sourcing to Asia. Customer service and sales functions are able to provide around-the-clock coverage. Companies in other industries can assign work to offshore assistants when they leave the office and have the work completed by the next business day.
Global outsourcing, especially to Asia, can also provide access to multilingual agents much more easily than a company could find through onshore work. Because many Asian countries are leaders in the outsourcing market, English is spoken fluently.
Asian countries also typically provide a large workforce that has furthered its education in key industries through government incentives.
While many countries in the Asia Pacific region provide essential outsourcing services, the following eleven locations are recognized for their impressive annual revenues earned solely via outsourcing efforts.
China has long been a top outsourcing destination for manufacturing companies. However, in recent years, the Chinese economy has grown and broadened based on its large, highly educated talent pool. China is now a popular outsourcing destination for many IT-related services, such as animation, mobile apps, and gaming software. Indeed, Kearney labels it as one of the world’s top five hubs for transportation, energy, and financial technology. The country’s GDP has experienced an average growth rate of 9% since 1978. Moreover, China has become much friendlier to foreign businesses recently, when it lifted many restrictions and offered appealing tax subsidies.
India has traditionally been an excellent location for outsourcing IT services, call centers, and customer service centers. With a population of more than 1.4 billion people, the country has a incredibly vast labor pool—and one that is especially low-cost. A software developer, for example, might be paid $400 a month, yet have the same skills and experience as one working in the West whose salary would be four to five times higher. A final added benefit is that Indian workers have high English proficiency due to English being one of the country’s official languages.
In recent years, the outsourcing industry has snowballed in the Philippines, making it a BPO powerhouse. In 2000, BPO accounted for less than 0.1% of the country’s GDP. Now, BPO accounts for more than 10% of GDP. In fact, BPO is now the second-largest industry in the Philippines.
Because BPO is becoming crucial for job creation, the government has further developed policies to strengthen its capabilities in various sectors. As a result, English proficiency and literacy are very high. The Philippines is also one of only three ASEAN countries with a data protection law.
Vietnam has undergone a series of economic reforms, resulting in a booming modern economy with a middle class that equals more than 40% of its population—and with an expected 36 million more middle class citizens by 2030. The Vietnamese people have high literacy and labor participation rates, and its government seeks to improve IT services capabilities by opening vocational training centers and investing in e-learning. Consequently, Vietnam’s steadily growing GDP should surge by at least 7% this year, according to the World Bank.
Malaysia offers many benefits for the BPO industry, not least of which being the fact that the country has earned a third-place spot among Asian Pacific countries in terms of English fluency. Like most of Southeast Asia, it can provide significant labor cost savings compared with Western nations, and offers a significant IT labor pool, which explains the rise the country has experienced in IT outsourcing over the past 20 years. Malaysia’s strong cybersecurity and intellectual property regulations enable outsourcing managers to feel confident starting a partnership with a Malaysian BPO partner.
Indonesia is another strong outsourcing destination. It is the fourth most populous country in the world and is home to more than 270 million people—about half of those people being members of the working population. Indonesia also has the largest economy among Southeast Asian countries. The government has undertaken several initiatives to increase its popularity in the outsourcing industry, including investing in infrastructure and developing investor-friendly policies. Finally, Indonesia workers average monthly earnings are about $170 USD, which is considerably lower than in Western countries.
In recent years, Singapore has seen explosive growth in its IT sector, partly due to the intentional focus the government placed growing technology and innovation. As an example, the Singapore government’s investment of $29.5 million dollars in support of 5G research led to greater network connectivity, which skyrocketed the country’s software outsourcing industry. Having been a British colony for 144 years, Singapore citizens have excellent English fluency ... and the country’s favorable tax policy is attractive, too.
Japan’s extremely advanced technologies makes it a popular IT outsourcing destination, accounting for about $28 billion dollars in annual revenue. However, outsourcing companies in Japan offer much more than just IT work, with additional common services covering back-office functions, such as call centers, payroll processing, and bookkeeping. Moreover, Japan offers a top-tier infrastructure and a highly educated workforce with a strong affinity for US culture.
Sri Lanka and its skilled workforce are favorite options for many companies that choose to outsource work, with decisions often centering around lower-than-average outsourcing tax rates; government focus on telecommunications and infrastructure; English as the primary business language; and, of course, cost savings. For example, the average monthly salary in Sri Lanka is $285 USD, as opposed to the monthly average of $4,400 in the United States.
Bangladesh has been a rising star in the outsourcing industry ever since its IT industry began blossoming over the past 14 years. Labor costs are low, with literacy and education levels ever-increasing due to well-placed government funding. Among Bangladesh’s recently adopted business-friendly policies was a plan to further improve infrastructure and advance technical training. This approach embraced robotics, IoT, and artificial intelligence. Additionally, their government launched several initiatives to build up its IT and outsourcing industries, including tax exemptions.
Because Asia encompasses so many countries and regions, with so many different communities and areas of local expertise, it shouldn’t surprise anyone that the continent can handle almost any work you may be looking to have outsourced.
Still, there are several industries that come up time and time again in Asian-Pacific outsourcing. Here are some of the most-frequently assigned outsourcing efforts sent to Asian service providers.
Human Resources can be complicated. Small business owners must spend a lot of time hiring, firing, and interpreting labor laws to keep their HR functions in-house. However, outsourcing your human resources can save time and money while greatly reducing the risk of making costly errors. It also frees up company management to focus on other essential tasks within their business. Enabling technologies and collaboration readily facilitates outsourcing HR to Asian countries. Companies can also outsource compensation and benefits, payroll, administrative, and talent acquisition tasks. As a matter of fact, India, the Philippines, and China are the top-rated locations for outsourced shared services, including human resources.
Companies also can outsource accounting and other back-office functions to Asia. Utilizing financial shared service centers are a popular way to accomplish this. Many Asian countries provide a large labor pool of skilled financial professionals at a fraction of the cost of their Western counterparts. For example, the average salary of an accountant in the Philippines is just under 430,000 Philippine Pesos annually, or about $7,300 USD. By contrast, the average salary of an accountant in the U.S. is over $53,000 per year.
Social media and digital marketing services are commonly outsourced to Asian countries. Outsourcing social media management helps ensure a consistent flow of posts that will create customer trust and loyalty. Numerous Asian locations offer highly skilled digital marketers at cost-effective prices. Singapore, for example, has a highly advanced digital marketing industry. It also ranks second among Asia Pacific countries in mobile connectivity with 99% of citizens accessing social media with their mobile phones.
Asia has become an insanely common choice for outsourcing customer service functions—especially in call centers—because it guarantees a US-based company can provide its customers with ‘round-the-clock customer support. With benefits from time zone difference and low-cost services combined, countries such as the Philippines and India have earned a position among the most popular call center locations in the world.
IT outsourcing helps businesses access experts in IT services for a much lower cost than they would pay to have an in-house IT staff. The cost savings are particularly apparent when outsourcing with trusted partners in Asia. The Asia Pacific region is already a mature software development outsourcing destination, with many countries offering highly skilled talent for low prices. For example, Vietnam has about 50,000 IT graduates annually. Furthermore, the information technology industry is tremendously well-developed in Asia. Ultimately, their IT industry is expected to generate $US244 billion in 2022.
The Asia-Pacific healthcare outsourcing market is poised for significant growth, according to a report cited in Healthcare Asia. The healthcare business process outsourcing market currently produces about $US33.42 billion but is expected to reach $US61.96 billion by 2027. Hospitals and other healthcare facilities outsource BPO functions such as IT services, accounting, and billing.
Companies can outsource graphic design needs to obtain professional services for marketing materials, printed designs, and websites for a fraction of the cost required in Western countries. India and the Philippines are especially well-known for their skilled graphic design outsourcing, but high-quality providers also exist in other Asian countries.
Effective outsourcing depends on choosing the right partner. Top outsourcing partners will have several years of experience providing the service and access to a high-quality talent pool. These partners and their staff must also have a high level of English proficiency.
Here are some questions to ask when choosing an outsourcing partner.
Although outsourcing is generally a good move for many businesses, the process has some drawbacks. While the difference in time zones is a plus for providing 24/7 contacts, it can at times be challenging to communicate between your home office and your Asian outsourcing service provider. Once your company becomes accustomed to asynchronous work, though, you can resolve most issues with email or task management software. Some cultural differences may also arise, and certain accents from speakers in Asian countries could cause a slight break in customer communication. However, proven and effective training programs for your outsourcing partner can resolve most of these issues before they even occur.
Fortunately, you don’t have to tackle outsourcing alone. You can choose a consultant with expertise in the outsourcing industry to guide you in this important process. The consultant will collect your business and personal data to find the best outsourcing services provider to meet your needs.
TDS Global Solutions is a leader in helping businesses find their ideal-fit outsourcing provider. We have helped more than 750 companies across a broad range of industries to grow and scale their businesses with expert talent at affordable rates. TDSGS understands the outsourcing industry in Asia, and we can help you find a top outsourcing partner to meet your goals in any industry. Contact TDSGS today.