A Comprehensive

Guide toOutsourcing

Everything You Need to Know AboutStarting Your O�shore Team

Contents

00

01

02

Foreword

Introduction toOutsourcing

Outsourcing andits Risks

What is Outsourcing and How Does it Work?

Managed Outsourcing Services

In-House Employees and Outsourced Team

What are The Types of Outsourcing?

List of Common Services That are Outsourced

How Much Does Outsourcing Cost?

Key Benefits of Outsourcing

Is it the Right Time to Outsource?

01.0

01.1

01.2

01.3

01.4

01.5

01.6

01.7

01.8

01.9

02.1

02.2

02.3

Why do businesses fail in outsourcing?

Common Outsourcing Mistakes and How to Avoid Them

Key Issues/Risks with Outsourcing and How to Mitigate Them

05

06

Outsourcing to the Philippines

Conclusion

04 The Outsourcing Journey Begins

04.1

04.2

04.3

04.4

05.1

05.2

Due Diligence in Outsourcing

The Transition Process: What is It and Why

You Shouldn’t Skip It

Getting to Know Your Outsourced TeamBest Practices to Managing Outsourcing Relationships

What Makes the Philippines a Top Outsourcing Destination

Is the Philippine BPO Market Ready for Automation?

03 Finding and Choosing a Service Provider

03.1

03.2

03.3

03.4

The Sourcing Methodology

for Service Providers

Tips on Choosing a Service Provider

Stop, Look, and Listen: Red Flags to Look Out for

00

What’s your take on building an o�shore team in the Philippines?

You’re probably interested to give it a try after hearing its benefits and perks,

specifically its ability to lower operational expenses. However, you’re still unsure

if it will work for you — that’s why you’re here.

This e-book aims to guide you through your entire outsourcing journey: from

learning the basics about outsourcing to maintaining positive relationships with

your chosen service provider. To prepare you further, we’ve also discussed the

common reasons why outsourcing deals fail, the common mistakes you should

avoid, and the risks you may encounter.

You can also find a simplified yet flexible sourcing methodology in the Chapter 3

of this e-book which you can follow or modify as you see fit.

In the last part of this e-book, we presented basic information about the

Philippine outsourcing market and why you should consider sending jobs to this

country.

As you read, pick up the information you find as valuable and use it as your guide

in building your o�shore team.

Good luck with your journey and may the odds be ever in your favor!

Ready to start your outsourcing journey? Here’s a reminder before you do it: Quality over quantity at all times. Choose an outsourcing company that can help you grow over time.

Foreword 01

What is Outsourcing and How Does it Work?

Outsourcing is the practice of hiring an external service

provider to manage certain business functions for your

company. It’s about understanding the business

operations you need to let go of in order to devote more

resources to your key initiatives.

Initially, businesses utilize outsourcing because of the

dramatic cost savings they can get. Apart from its

economical cost, they can also access top-grade

technology without purchasing additional equipment.

But as outsourcing continues to prove its superiority in

delivering quality services, many companies have been

using it as a strategic solution to fill in operational gaps

like specialist skills, technology, service delivery, and

data security.

Introduction toOutsourcing

01

The primary goal of outsourcing is to help

businesses fill in roles and resolve other

in-house limitations. But what exactly is

outsourcing?

So what happens when you outsource?

Once you’ve passed down the service to your chosen outsourcing company, it’s a requisite to give up partial

or full control of the function. Rather than overseeing work details, you can simply monitor your team’s

progress through a contact person. In cases where you need to hire more people to assist business growth,

all you need to do is inform your vendor and everything will be taken care of — recruitment, payroll, HR, IT,

accounting, and admin.

However, you should also note that the amount of work an outsourcing company can do for you depends on

the working arrangement you prefer. The usual business delivery models you can encounter during your

search are Managed Services, Sta� Leasing, and Sta� Augmentation services.

This business delivery model is most commonly known

as the “fully managed” or the “traditional end-to-end”

sta�ng solution that enables you to transfer an entire

function to a service provider.

Here, the outsourcing service provider will build a

curated team of highly-skilled professionals for the

specific business function you need to outsource. You

will be the one to identify the KPIs and SLAs while

their management team will oversee your o�shore

team’s day-to-day operations. They will ensure that

they are meeting your requirements to help achieve

your business goals.

For example, if your company has limited resources to

maintain a customer service team, you can hire a call

center to handle your customers’ inquiries.

01.1

Managed Outsourcing Services

Sta� Leasing ServicesSta� Leasing, also known as a “co-managed” sta�ng

solution, is the popular option of businesses nowadays.

It gives you full operational control over your team. You

will manage and give directives while your outsourcing

partner will oversee the operations and provide regular

reports. Additionally, the outsourcing service provider

will be your support arm that will take care of non-core

business activities such as recruitment, HR, IT, payroll,

and other processes for you.

To understand how it works, simply imagine having a

remote team or employees who are working from

home. This service delivery model is a suitable solution

for talent and specialist skills shortages within your

organization. To make outsourcing work, you should

see it as a strategy that requires a structured approach,

a considerable amount of planning and research, and

good judgment.

01.2

01.3

Sta�AugmentationThis outsourcing strategy is for businesses in

need of additional sta� temporarily to

augment the capacity of their in-house team.

In most cases, the clients under this service

only need a presence in the country and a little

back-end support, such as in HR, payroll, and

administrative tasks.

01.4

In-House Employees andOutsourced Team

Cost

Roles/JobFunctions

In-House Employees

In-House Employees

Outsourced Team

Outsourced Team

The median weekly earnings of full-time

American workers for the first quarter

of 2021 were $989, according to the

updated report from the US Bureau

of Labor Statistics. The amount still

varies depending on several factors.

For instance, men have higher median

weekly earnings than women. Race

and ethnicity groups, age, occupational

groups, and educational attainment

are also taken into consideration —

with $1,426 being the median weekly

earnings of employees holding at least a

bachelor’s degree.

Certain roles must be kept in-house at

all costs, specifically the functions that

are crucial to your core competencies.

Examples are executive roles, employee

training and development, strategic

planning, and risk management.

Aside from looking at the actual figures, it is also recommended to perform a cost-benefit analysis.

This will help you assess if outsourcing is a viable solution for your business based on its estimated

costs, benefits, or opportunities.

Based on the latest data, the median

monthly salary of full-time Filipinos is

$999.17*. If you’re going to divide this

number by four weeks, the weekly salary

will be $249.79.

*Based on the converted amount. The

original data shows that the average

monthly salary is Php48,200. As of 01

May 2021, $1 is equivalent to Php48.24

*

ManagementControl

ServiceQuality

DataSecurity andConfidentiality

TalentAvailability

In-House Employees

In-House Employees

In-House Employees

In-House Employees

Outsourced Team

Outsourced Team

Outsourced Team

Outsourced Team

As the employer, you have full oversight

over the tasks, performance, and results

Service or output quality depends on the

employee development programs, and

leadership skills. Finding an employee

who fits not only the job description but

also the company culture matters a lot.

Ensuring the security and confidentiality

of your data will depend on your IT

department.

Do you have employees who can

perform the role? How easy or hard is it

to fill in roles?

You will need to let go of some, or most,

control over your outsourced team. To

ensure good performance, you can set

KPIs which you will communicate to a

key person. As previously mentioned,

want to manage your outsourced team

directly.

Similar to in-house concerns, you must

also find a reliable outsourcing company

that can match you with the right talent.

As long as you can make the right choice

in selecting a service provider, you

can expect quality service from your

outsourced team.

Data security and confidentiality

are common concerns regarding

outsourcing. However, you should

also take note that many outsourcing

companies follow strict information

security protocols to prevent data

leakage.

Another advantage of outsourcing is

you can look for a service provider that

process of recruiting, hiring, and training

will all be under their care.

It’s crucial to decide where you will send the job before you o�cially start your outsourcing journey. Cost is a

key di�erentiator, as o�shore outsourcing companies o�er cheaper services compared to their onshore

counterparts. However, there are other elements you need to consider such as the time zone di�erence,

cultural disparities, and talent availability.

Moreover, knowing whether you will engage with a single (single-sourced) or di�erent (multi-sourced)

outsourcing partners is also important if you have plans to outsource several functions. Below, learn the

di�erences between onshore outsourcing vs. o�shore outsourcing and single sourcing vs. multi-sourcing.

01.5

What are the types of Outsourcing?

Onshore Outsourcing O�shore Outsourcing

Onshore outsourcing, also known as “local outsourcing”,

refers to the contracting out of jobs to companies located

in the same geographical location. A New York-based

company contracting its call center operations in Texas is

an example of onshore outsourcing.

O�shore outsourcing is the activity of sending jobs to

another territory. An example is a U.S.-based company

hiring its data entry team in the Philippines.

Single Sourcing Multi-Sourcing

Single sourcing takes place when you outsource a set of

services to a single service provider throughout the

contract term. This setup makes it easier to build and

maintain a close relationship with the provider. However,

it’s crucial to choose a subcontractor carefully to mitigate

risks. To make it more specific, the provider should meet

expectations and objectives, deliver the services

outsourced competitively, and create cost savings and

innovation.

Multi-sourcing happens when you outsource di�erent

services to multiple service contractors. The main

advantage of this model is you can select specialized

companies providing the actual service you need. This

setup is best for small- and medium-sized businesses.

01.6

List of Common Services that areOutsourcedFor this e-book, we will focus on two types of outsourcing:

Information Technology Outsourcing (ITO), and Business Process Outsourcing (BPO).

Information Technology Outsourcing (ITO)It involves IT-related functions such as:

Technical and Desktop Support / Help desk / Programming /

Application Development / Network configuration and management /

Software as a Service (SaaS) / Cloud computing / Telecommunications

Business Process Outsourcing (BPO)Considered a simpler version of ITO, business process outsourcing focuses on transactional processes.Here are the commonly outsourced BPO services:

Customer service / Data entry / Lead generation / Telesales /

Accounting / Payroll / Human resources management / Content

Moderation / Claims processing / Mortgage processing / Debt collection

01.7

The cost of outsourcing depends on several factors, with sta� salary being only a part of a broader

spectrum. When “shopping around” di�erent vendors, you must also consider the following:

How Much Does Outsourcing Cost?

Geographical Location

The labor market rate per country

or region varies. This is especially

important if cost-cutting is your

main reason for outsourcing.

Job title and skill levelof the resource

The role (e.g., customer service

representative, IT technician,

graphic artist) and the skill level

(i.e., entry-level, experienced,

expert) greatly impacts the base

salary.

Hours of work

The number of hours rendered for

your business is a huge factor

influencing the cost. Thus, it’s

important to determine if you’re

going to need full-time or part-time

employees.

Size of the team

The more employees you need, the

higher the cost will be.

Government-mandatedemployee benefits

Employee benefits usually depend

on the law followed in your country

of choice.

Service fees

This usually covers operating

expenses like utility bills, taxes, and

equipment.

You must also be inquisitive about any hidden charges or additional expenses so you can manage or

eliminate them. Understanding the cost structure enables you to make smarter decisions along your

outsourcing journey. This ensures you get the optimal benefits while mitigating risks.

In addition, always keep in mind that you get what you pay for. While it’s tempting to outsource to companies

o�ering cheaper prices, the service quality should always come first. Avoid falling for “too good to be true”

o�ers, as it may do more harm than good to your business in the long run. Always research the reasonable

market price in a certain country before making any engagements.

Outsourcing Pricing models

Fixed Price (FP) Model A mutual agreement on price and timeline will be undertaken. The standard

rate — inclusive of tools and workplace charges — will be billed on a monthly

or annual basis. It is ideal for public or not-for-profit organizations with small-

to medium-sized projects.

The T&M model is a popular choice among clients due to its agile nature. As the

term suggests, you will only pay for the time (hourly, daily, weekly, or monthly)

spent on labor, materials, and other expenses used to complete the work.

In this system, the price is set according to the total cost of service being

o�ered, plus the management fee. This pricing model is suitable for large-scale

outsourcing projects.

This is for projects that are easy to track and measure like article writing and

video production. You may want to consider this if you’re not looking for

long-term commitments since you will only need to compensate your chosen

service provider based on the outputs* they have produced for you.

*Sta� salary, hours rendered, and service fees are included in the computation.

For transparency, ask your service provider for a price breakdown.

This model — often used with a traditional pricing method like T&M and FP —

o�ers bonuses, commissions, or incentives for meeting target objectives stated

in the service level agreement (SLA). The main goal of using this method is to

encourage higher performance and productivity among the outsourced team.

You can utilize this if you’re outsourcing services with daily quotas such as lead

generation and sales.

It follows the same approach used in the incentive-based model but instead of

bonuses, you will be sharing risks and developments with your service provider.

Time and Material(T&M) Model

Cost-Based Pricing

Production-Based Price

Incentive-Based Model

Shared Risk-Reward Model

Note: While the information presented herein aims to guide you in decision making, it is still better to discuss

outsourcing costs and pricing models directly with the business development o�cer/s of your shortlisted

outsourcing companies.

Service and Contract LengthIdentifying both service and contract length is significant in determining the final cost of the outsourced

service. Here’s a quick overview:

Service Length Dedicated service Shared service

You will get 40 hours of dedicated service per

employee per week. Dedicated means the

employee will only work on your project. This is

recommended for high-volume projects or

complex tasks.

You will get less than 40 hours of service per

employee per week, plus the employee will also

be assigned to other projects. This is ideal if

there’s not too much work to do with the project.

For instance, if your business receives a low

volume of calls per day, utilizing the shared

service approach allows you to save more and

make the most of your money.

Contract Length Short-term Seasonal

For projects with short-term goals and are limited

by budget and timescale (less than six months)

Long-term

For projects with long-term goals (around six to

twelve months)

For projects with fluctuating/seasonal demands

(e.g., phone support during the holiday rush)

Higher cost savings

The benefits of outsourcing depends on a case-to-case basis. This is why it’s essential to lay down your

needs, goals, and objectives during your initial planning. By doing so, you can prepare key performance

indicators (KPIs) which you can use in measuring the results you would like to achieve.

Basically, here are the common benefits o�ered by outsourcing:

Outsourcing, especially to an o�shore location, allows you to cut substantial costs in recruitment, employee

salary, equipment, o�ce space, and some tax obligations.

Competitive service delivery

Its well-established procedures, exclusive focus on specialized roles, and consistent service quality

monitoring empower outsourcing companies to deliver high-quality services to clients.

Easy access to specialist skills

Outsourcing resolves skills and employee shortages. The service provider takes care of the end-to-end

process of recruiting, hiring, training, and talent management so all you have to do is to set goals and

expectations for your team.

High availability of essential resources

The outsourcing company provides the required technology, equipment, o�ce space, and admin support.

01.8

Key Benefits of Outsourcing

Scalable solutions

Outsourcing can support rapid business growth, allowing you to scale fast to prevent unnecessary delays. To

the same extent, a service provider can also assist you in scaling down to lower overhead expenses during

tough economic situations.

Flexible outsourcing deals

Outsourcing companies o�er customized packages to meet your needs and budget. Whether you need a

small team or a large one, dedicated service or part-time help, standard technology or add-on software, you

can discuss it with your chosen service provider.

Key Benefits of Outsourcing

Guaranteed data security and confidentiality

BPO companies enforce strict data protocols to ensure your data is protected and safe from any threats.

Faster speed of development

For startups or small businesses, outsourcing is the faster and more economical solution to fill in vital roles

instead of building an in-house team from the ground up.

Business continuity

Outsourcing companies have business continuity plans (BCP) in place to ensure your team remains

operational even amidst disruptive events.

More focus on core business

Letting go of non-core functions gives you more time and energy to focus on your key company initiatives.

01.8

Is it the Right Time to Outsource?There’s no “definite” time to start outsourcing. But some of the signs telling you it’s high time to try this

strategy are the following:

On the other hand, you should not outsource when:

To learn if you’re encountering any of these signs, it’s necessary for you to conduct a thorough

evaluation of your business.

You need to cut costs or you have insu�cient funds to maintain an in-house team.

There are skills or labor shortages in your business.

You or your employees are getting swamped with repetitive tasks.

You need to shift your focus to business-critical areas.

The fast growth of the company requires you to scale up fast.

There’s a sudden spike in service or product demand (This is typically for short-term outsourcing.)

Service or product quality becomes unsatisfactory resulting in numerous customer complaints.

There’s a threat to data security or confidentiality.

The service is too expensive — defeating one of the main purposes of outsourcing.

The job is part of your core business (e.g., management roles).

You’re in the middle of a major restructuring activity.

Taking risks is indispensable to growth

and success — as long as you do it

smartly. Here’s all you need to know

about the risks you may encounter when

outsourcing.

Why do businesses fail in outsourcing?

Everybody can outsource, but not everyone can turn it

into a story of success.

Even multinational companies that outsourced to

well-known service providers have experienced serious

setbacks. Regardless of these cases, outsourcing has

been a viable solution to addressing numerous business

needs. In fact, some of the successful companies we

know today such as Slack and Alibaba had utilized

outsourcing during their early days.

If it works, then why do some businesses fail?

Outsourcing andIts Risks

0202.1

Outsourcing failures are often attributed to several factors, such as the ones discussed below:

Failure to assess actual business needs

Limited knowledge of the real needs of your business can prevent you from realizing the full potential of

outsourcing. Jumping on the outsourcing bandwagon might sound like an alluring venture but you must also

take your time assessing your business’ strengths and weaknesses. This way, you will have well-grounded

objectives to guide you in selecting an outsourcing partner.

Ine�ective planning

Lack of planning often leads to project failure. When there are no clear directions, even with the best service

provider, you will be less likely to achieve the results you expect. This is the usual reason why multinational

companies fail with outsourcing. To avoid the same fortune, involve all key stakeholders in coming up with a

solid plan.

Wrong choice of a service provider

Entrusting a service to the wrong hands can result in monetary losses and might compromise data security.

Moreover, it can a�ect your customers’ experience and impression of your brand. Make sure to prioritize

cultural fit. At the same time, choose a service provider that has similar visions as you so you can work

together towards a common goal.

Miscommunication

Miscommunication is often the result of several other problems that hinder the e�ective exchange of

information between the service provider and the client. The language barrier is one of the issues, especially

when both parties speak di�erent languages.

Another cause of miscommunication is insu�cient documentation. There are three scenarios involved in this

case:

1. The service provider does not document properly the necessary data for the project

2. The client does not pay attention to the reports submitted by the service provider, or

3. Both parties are not concerned with proper documentation.

In some cases, some clients omit information because it seems obvious when in reality, the outsourcing

company is clueless about it. That’s why it is crucial to be as detailed as possible in writing a project brief.

Other factors a�ecting communication are lack of trust, openness, feedback, and questions. Take note that

good communication is a shared responsibility between the client and the service provider.

Conflicting interests

Failed outsourcing initiatives can also emerge from conflicting interests and cultures. To prevent this, it’s

important to lay down all pivotal information in the service level agreement (SLA) to have tangible proof each

time a process or service request is being questioned.

Mismatched expectations

This occurs when you and the service provider are looking at di�erent objectives, thus creating misaligned

expectations. Preparing a detailed SLA can prevent this from happening. Discuss this with your provider

before contract signing and make sure you understand its terms and conditions.

Once the project o�cially begins, keep yourself involved at every stage so you can immediately learn its

developments and resolve any issues.

Too much focus on cost-cutting

Focusing heavily on cost-cutting without considering its impact on employees, customers, and service

quality yields negative long-term results. While it is true that reducing operational costs is an outsourcing

benefit, it doesn’t mean overdoing it. Going after the cheapest solution may not be cheap at all and may

even cost you more in the long run.

So what should you do?If you’re going o�shore, it’s crucial to research the standard labor market rate of your target

country. Too cheap services is usually a red flag because there’s no guarantee that the

outsourcing company has highly skilled talents. Otherwise, they are depriving their sta� of

reasonable wages that may lead to demotivation and poor work performance.

Setting unclear objectives and instructions

The inability to set clear objectives creates misunderstanding. You may not

notice its e�ect in the beginning but as the project progresses, the

misunderstanding can ripple into the other areas of your outsourcing project.

Have a strong start by keeping your objectives and instructions as clear and

detailed as possible. State your expectations with the project, the problems

you need to resolve, its deadline, preferred communication methods, and

payments plans.

Not doing proper research

Lack of research limits your knowledge of the possible risks you may

encounter, the ideal sourcing methodology, and other vital information

necessary to succeed in outsourcing. With limited knowledge, you’ll be more

susceptible to mistakes.

Before going all in, conduct thorough research internally. Begin by assessing

your business. You can use the Strength, Weakness, Opportunity, and

Threat (SWOT) Analysis or other assessment tools that will let you figure out

if outsourcing works for you based on your current business condition.

Next, study your market. How can you meet their needs? By knowing this,

you can formulate precise objectives targeted at resolving your customers’

problems.

Once you’ve laid down the fundamental information, only then should you

start looking for a service provider. Research about their track records,

services, security guidelines, specializations, pricing models, client reviews,

and the like. This way, you can eliminate any personal biases and groundless

opinions and make decisions based on hard facts.

02.2

Common Outsourcing Mistakesand How to Avoid Them

Leaving out the interview process

When selecting candidates, schedule a meeting (face-to-face, phone, or videoconferencing) with a business

development o�cer or business executive to ask questions not answered by the available online resources.

Take it as a chance to clarify vague information you’ve encountered during your research.

Speeding up the transition

You can miss out on critical details if you hurry up the project transfer to the service provider. It’s important

to take your time during the transition stage to pass on knowledge and processes e�ectively. This stage also

enables you to build trust, good relations, and positive momentum with the provider. Be there to guide your

outsourcing partner in the right direction.

Not setting metrics to measure performance

Without metrics, you’ll be clueless about the progress of the projects, plus you won’t have enough data to

measure its e�ectiveness. A good set of metrics shows the direction of the relationship and lets you maintain

control over its processes. Use your main objectives in setting up metrics to know if your outsourcing partner

has hit the targets or not.

Neglecting your o�shore team

Your o�shore team is still a part of your team. Even if someone is tasked to manage and oversee their

performance, it’s still crucial to invest some time in connecting with them. This way, they can feel a sense of

belongingness which can encourage them to work better. Make them feel they’re a part of your business,

share your visions, provide feedback, and stay in touch. Not only will you create a stronger bond with them

but they will also feel more connected with your business.

Neglecting your o�shore team

Your o�shore team is still a part of your team. Even if someone is tasked to manage and oversee their

performance, it’s still crucial to invest some time in connecting with them. This way, they can feel a sense of

belongingness which can encourage them to work better. Make them feel they’re a part of your business,

share your visions, provide feedback, and stay in touch. Not only will you create a stronger bond with them

but they will also feel more connected with your business.

02.3

Key Issues/Risks with Outsourcingand How to Mitigate ThemOutsourcing without risks is called wishful thinking. Like other business initiatives, it compels you to get out of your comfort zone in search of better opportunities and processes to drive business growth. What makes outsourcing successful is the way you deal and move around threats. Learning the risks you will encounter gives you the upper hand to manage them before they cause harm to your business.

Loss of controlIt is only natural to lose some management control

over your outsourced team since outsourcing is about

freeing up internal resources so you can focus more on

your key initiatives. What you need to watch out for is

when you can no longer get the results produced by

your team.

It is important to have a key person who will report to

you directly. At the start of the engagement, there

should also be a signed agreement that enumerates

the provider’s obligation to report the status and

progress of the project.

Reputational risksReputational risks occur when the service provider

delivers substandard service to consumers. The best

way to mitigate this is to find an outsourcing partner

that can provide quality service for a reasonable

amount.

Poor service qualityThe root cause of poor service quality is choosing the

wrong service provider. Other factors are also involved

such as demotivated or unskilled sta�, too cheap

services, communication silo between the service

provider and client, and lack of good leadership.

Delays in service deliveryTime zone di�erences, language and cultural barriers,

and ine�ective communication could result in the

service provider’s failure or delay in service delivery.

Specify in the SLA the schedule and preferred mode of

communication you prefer so you can be in sync with

the service provider.

Technology dependencyBecoming heavily reliant on the technology and

processes of the outsourcing company makes it

di�cult, if not impossible, to switch to another service

provider or move back the job in-house. To mitigate

this, insist on documenting the development process

from the start of the engagement until the end. This

way, you will know the strategies you will need to use,

the best way to migrate your data, and the types of

software to purchase.

Information leakageSharing sensitive data is inevitable with outsourcing.

However, it runs the risk of information leakage,

especially when you outsource to a country with

lenient data security regulations. Before sharing

confidential information, sign a legal document like a

non-disclosure agreement (NDA) that will serve as

another layer of protection for your business.

03

The success of your outsourcing journey is

highly dependent on your choice of a

service provider. To make the right

choice, following a structured approach

paired with research and common sense

will let you find the most suitable

outsourcing company for your business.

The Sourcing Methodology

This sourcing methodology aims to provide you with a

simplified process in selecting a service provider. Based

on outsourcing best practices, each method seeks to

steer you away from possible pitfalls. It is divided into

three di�erent stages:

Finding and Choosinga Service Provider

0303.1

Business analysis and planning

Sourcing

Transition process

Stage 1:Businessanalysis andplanning

Using SWOT analysis, assess your business to determine which

functions can be outsourced.

Once you have the results, list down your business needs,

budget, and service requirements.

Prepare an outsourcing plan. State your expectations with the

project, the problems you need to

resolve, its timeline, your preferred communication methods,

and payments plans.

Set goals and objectives based on the current needs of your

business. What do you expect to achieve by outsourcing?

The first stage of the sourcing methodology will help you determine if outsourcing is a smart move or not, the business functions you can outsource, and your capability to outsource.

This stage follows the elimination process approach — you will start with a long list of service providers and trim it down until only one remains.

Stage 2:Sourcing

List vendors that o�er the service you’re looking for. Feel free

to list all decent outsourcing companies you can encounter

during your search.

Prepare vendor criteria enumerating the standards an

outsourcing company must meet to qualify in your list. See if

the criteria you created is aligned with your goals and

objectives.

Do more research on the companies on your list. Don’t forget

to read client reviews.

Trim down your list to those who can meet your requirements.

You can use your vendor criteria for this.

Message or call your prospective service providers. Many

outsourcing companies o�er free consultations to discuss their

client’s needs, requirements, and budget. You can use this as

an opportunity to validate vendor capabilities and filter out

1.

2.

3.

4.

5.

6.

7.

8.

9.

Stage 3:Transitionprocess

Set metrics and benchmarks to measure performance.

Prepare the SLA with your chosen vendor. Thoroughly review all its

content to make sure you understand the terms. If there are

unclear statements, clarify them with the vendor before signing.

Maintain close collaboration with the key person from the

company to ensure a smooth transition process. Take your time to

hand over essential information and processes because this will

have a lasting impact on many of your daily interactions with the

vendor.

Track the progress of your project.

13.

14.

15.

16.

10.

11.

12.

unresponsive companies.

Compare the proposals of your potential candidates.

If possible, do an ocular visit to learn more about the company,

their culture, and the work atmosphere.

Select your best bet — this is the service provider with the most

favorable o�er in terms of solution, service quality, and price.

Your actual outsourcing journey begins here. At this point, you’ll hand-over necessary information to your outsourced team. It’s important to note that your direct involvement is required at this stage to make sure your team can function well when your project is launched.

03.2

Manual vs E�cient Approach ofProspecting for Service ProvidersSearching for a reliable service provider can be a walk in the park or a tiresome process — it all depends on

the strategy you will use. See the comparison below to learn the di�erence between doing a manual search

compared to using the e�cient method.

Manual method

Manually searching for BPO companies

uses the traditional approach where you

need to sift through thousands of vendors

to find the right one. It’s a long, arduous,

and confusing journey that can leave you

paralyzed and unable to know where to

start. Some of the common resources for

this method include the internet,

directories, and business listings, among

others.

E�cient method

It involves asking your network with

previous or ongoing outsourcing

engagements for referrals. Their insights

can help you shortlist potential candidates,

thus resulting in a fast and e�cient way of

looking for providers.

Another example of an e�cient sourcing

method is by getting quotes from

outsourcing advisory companies. Using this,

you can find the best deals customized

according to your needs and budget.

Joining networking events to connect with

executives from outsourcing companies is

also a good idea though it requires more

e�ort on your end.

03.3

Tips on Choosing a Service ProviderTo further prepare you in building your outsourcing team, consider these tips:

Outsource the right service to the right company

You must also be inquisitive about any hidden charges or additional expenses so you can manage or eliminate

them. Understanding the cost structure enables you to make smarter decisions along your outsourcing journey.

This ensures you get the optimal benefits while mitigating risks.

In addition, always keep in mind that you get what you pay for. While it’s tempting to outsource to companies

o�ering cheaper prices, the service quality should always come first. Avoid falling for “too good to be true”

o�ers, as it may do more harm than good to your business in the long run. Always research the reasonable

market price in a certain country before making any engagements.

Read client reviews, feedback, and testimonies

Client feedback will give you more insights about the company that is not stated on the website. If they’re

receiving more negative reviews than positive. It’s a red flag signaling you to stay away. On the other hand,

positive reviews can provide essential information about the company’s culture, work ethics, talent pool, and a

lot more.

Ask the right questions when interviewing potential partners

Asking the right questions increases the chances of a successful partnership. It gives you the ability to bring out

crucial information that you may not know through research.

Learn more about their employee development programs

The outsourced company will be in charge of the direct supervision of your o�shore team. If they can keep your

sta� happy and engaged, they can perform better at work. Remember, excellent work performance is equal to

high-quality service.

Filter out lowest bidders

Companies o�ering prices below the standard rate often deliver sub par services to clients. Never compromise

quality over cost because it may cause more harm than good — higher financial losses than gains — to your

business in the long run.

03.3

Stop, Look, and Listen:Red Flags to Look Out forTo further prepare you in building your outsourcing team, consider these tips:

Substandard work samples

At the very least, the outsourcing company should

put some e�ort in organizing their work sample. If

they send you a sloppy one, consider removing them

out of your list as it can be a reflection of the service

they provide. If you cannot rely on them on simple

tasks like this, how much more with the function you

plan to outsource?

Upfront pricing

Bad financial standing

A good company works hand-in-hand with clients to

determine their concerns. They ask enough questions

and commit to understand the details of your project.

Once they have a full grasp of your requirements,

only then can they give you an estimate. Be wary of

companies sending you with up front quotations

without even trying to discuss your needs. It’s a

warning sign of being uninterested and uninvested

with your project.

A good company works hand-in-hand with clients to determine their concerns. They ask enough questions and commit to

understand the details of your project. Once they have a full grasp of your requirements, only then can they give you an

estimate. Be wary of companies sending you with up front quotations without even trying to discuss your needs. It’s a warning

sign of being uninterested and uninvested with your project.

High attrition rates

Stay away from companies with high attrition rates

because they’re often the ones with poor employee

programs, ine�ective policies, low market

compensation plans, and internal conflicts. When

employees don’t stay long, learning and development

within the company are also a�ected — there’s no full

mastery; you’ll get stuck with a team that needs

never-ending training.

Even with tempting o�ers, avoid engaging with them at

all costs. Don’t sacrifice the long-term goals of your

company for short-term cost reduction opportunities.

Lack of transparency

If a vendor is reluctant to disclose critical information

with no legitimate nor logical reason, look elsewhere.

You don’t want to work with a secretive partner, do

you?

04

After signing your outsourcing contract,

it’s your turn to know your team better

and play your role in managing the

outsourcing relationship.

Due Diligence in Outsourcing

Upon choosing a service provider and signing a

non-disclosure agreement, you and your chosen vendor

should conduct due diligence.

Due diligence is the legal investigation executed by both

parties (buyer and vendor) before contract signing to

guarantee that the outsourcing plans will proceed as

planned. It’s a two-way process requiring your vendor to

evaluate your proposed project and you to assess the

vendor’s expertise and qualifications to provide the

service and meet your objectives.

The OutsourcingJourney Begins

0404.1

Gathering a team of experts who can evaluate the rationale for the proposed relationship.

Doing an ocular visit to see if the service provider's o�ce is fit to serve your needs.

Asking the service provider for a formal and written disclosure of pertinent information such as relevant costs and operating procedures.

Preparing waiver clauses that you're done making all necessary inquiries to the service provider

Preparing a merger clause indicating the agreement between both parties.

When conducting due diligence, here are some of the best practices you must consider:

04.2

The Transition Process:What is It and Why You Shouldn’t Skip It

Phase 1Takes place after contract signing.

At this phase, both parties still

have mutually high expectations

with each other.

Phase 2The phase where the full scope and

intricacy of the transition period

comes into light. Moreover, this is

also when emerging problems occur

such as communication concerns

and governance issues.

Phase 3The most critical stage, it determines

how satisfied you will become with the

service you’ve been provided. A

well-executed transition plan can lead

to a smooth sailing outsourcing journey

while a poorly planned transition may

decrease your confidence with

outsourcing.

Transition is the stage where you hand over responsibilities and essential information to your service

provider — a critical phase that requires your full attention and commitment. This is when you invest enough

time to transfer information, resolve emerging issues, and pave the direction of the outsourcing relationship

so you can have more time later while being confident that your outsourced team is aligned with your visions.

As discussed in chapter two, this stage allows you to build trust, good relations, and positive momentum

with your service provider. There are no set rules in the transition process. It varies according to the nature,

size, and complexity of the project. It is often divided into three phases:

The transition process sets the reality between you and the service provider. This is why it’s crucial that both

of you are invested to make this partnership work. Meanwhile, the key elements of the transition phase you

should take note of are the following:

Transition plan

A document prepared by the service provider, a transition plan lays down the stage and timeline in

transferring the services including the e�orts needed from you. Ideally, this should be ready before

contract signing.

Project and knowledge transfer

Project and knowledge transfer marks the actual start of the transition process. This phase can be

pretty complicated and, therefore, requires careful planning. It typically includes transfer of IT

assets (e.g., equipment, software, premises) and information (e.g., workshops, training sessions).

Testing

Project and knowledge transfer marks the actual start of the transition process. This phase can be

pretty complicated and, therefore, requires careful planning. It typically includes transfer of IT

assets (e.g., equipment, software, premises) and information (e.g., workshops, training sessions).

Project launch

Depending on the complexity of the project or the geographical location of the outsourcing

company, launching its operations can take place in a single day or by phases.

1

2

3

4Transformation Stage

As the project progresses, it may call for transformation — the process of improving and

streamlining your outsourced service by introducing new solutions to achieve bigger cost savings or

greater e�ciency. This phase is normally taken care of by the service provider.

5

04.3

Getting to Know Your Outsourced Team

These are the key people whom you can expect to work towards the success of your outsourcing project:

Team leader The person who will manage your team. Your usual point of contact.

O�shore sta� A person or a group of people who will work on the tasks you’ve provided.

Operations manager Oversees the operational elements of the outsourcing company to ensure KPI

targets are met. He or she is also in charge of the planning and implementation of

strategies, process improvement designs, setting and assessing of quality

performance standards, and maintaining engagement with clients.

Quality AssuranceSpecialist

Monitors and reviews the service or output quality of your team.

Training specialist Responsible for training your employees before onboarding.

04.4

Best Practices to Managing OutsourcingRelationships

Maintain open communication

Keep your communication lines open to

avoid delays and misunderstandings.

Find time to catch up with your team to

learn their achievements, struggles, and

satisfaction with their tasks. By staying

in touch, you can build trust and

rapport with your team and resolve

issues before they get serious.

Set realistic goals and expectations

Understanding the abilities and

limitations of your service provider is

necessary for nurturing lasting

relationships. When you assign tasks

based on each individual’s strengths,

your team can perform better, plus this

will prevent them from experiencing

burnout.

Provide feedback

Let your team know how they are

performing, the quality of their output,

and the areas they need to improve.

Leaving them in the dark for too long

can leave them wondering if they are

doing a job not.

Reward excellent performance

Motivate your team to do better by

rewarding excellent performance. Use

measurable data as your reference to

figuring out who performed well and who

needs more coaching sessions.

Named as one of the top outsourcing

destinations in the world, the Philippine

outsourcing market continues to evolve

to meet new market demands.

What Makes the Philippines a Top Outsourcing Destination

In the recent Tholons Innovation Index 2021 report, the

Philippines’ capital city, Manila, has been named as the top

eight of the 100 super cities across the world. This means

that the country shows excellent results in terms of:

Outsourcing tothe Philippines

0505.1

An abundance of talent, skill, and quality

Its role as a business catalyst

Cost and Infrastructure

Risk and quality of life

Openness to innovation/Digital technology

From its humble beginning in 1992, the Philippine outsourcing market has grown into a billion-dollar

industry, thanks to the incessant government support and abundant number of professionals ready to take in

BPO jobs. Here’s a detailed information for your reference:

Dynamic government support

The BPO industry is considered one of the pillars of the Philippine economy. Contributing $26 Billion to the

Philippine economy in 2019 and with a total of 1.3 million Filipinos working in this industry, there’s no

wonder why the government o�ers full support for its further development.

In fact, several organizations have been established to oversee its growth such as the IT and Business

Process Association of the Philippines (IBPAP), Contact Center Association of the Philippines (CCAP), and

Philippine Economic Zone Authority (PEZA). PEZA-registered companies located within Ecozones can enjoy

tax incentives.

Meanwhile, the Technical Education and Skills Development Authority (TESDA) continues to work with

universities and the private sector for the reskilling and upskilling of Filipinos. This is to prepare the

workforce for the changes brought by automation.

Home of talented professionals

The Philippines has a functional literacy rate of 91.6% and thousands of university graduates yearly which

enables it to supply the manpower needed in the global outsourcing industry.

Filipinos have high regard for building positive interpersonal relationships. This drives them to use

hospitality, politeness of speech, and in direction of interpersonal behavior when talking with another

person. As a result, it prepares them for front-end jobs that require high customer interactions.

Their sensitivity to feelings, known as empathy, enables them to be flexible and adaptable in social

situations. This is the reason why it’s easy for them to connect and work with clients from di�erent cultures

and temperaments.

With America's 48-year colonization in the country, a huge percentage of the population are proficient in

speaking and writing in English. Its rich historical background also exposed Filipinos to various cultures and

beliefs.

The other outsourcing benefits you can expect when you choose to send your jobs to the Philippines are higher cost savings, competitive service delivery, faster speed of development, guaranteed data security, scalable solutions, and the other benefits discussed in chapter one of this e-book.

05.2

Is the Philippine BPO Market Ready forAutomation?A few years ago, automation threatened the existence of call center, data entry, and other routine

outsourcing jobs in the country. This has caused an uproar in the local outsourcing setting due to fear of

losing millions of jobs to technology.

Amidst this threat, the country’s Trade and Industry undersecretary Rafaelita Aldaba said in a 2019 article

that their department is already “working with the academe, the private sector, and other government

agencies” to prepare for the possible onslaught of automation. Their e�orts include upgrading skills and

communicating with training schools to revise curricula “to include subjects on digital and other skills that

job automation would require.”

The trade undersecretary also said that the country “should not fear the advent of new technology because

it would allow the country to improve its competitiveness. Develop new industries, and even create new

jobs.”

Two years later, the key Philippine sectors, including the IT-BPO industry, are indeed ready for automation.

A recent study revealed that the IT-BPO industry is “showing good progress in implementing fourth industrial

revolution (4IR) preparedness,” adding that at least half of the employers surveyed have already adopted 4IR

technologies into their operations.

However, the threat of losing jobs to automation still remains. To address this issue, constant upskilling and

cross-skilling e�orts should be adapted by individuals.

05.3

Outsourcing: A Worthwhile InvestmentThe benefits of outsourcing still far outweighs its risks as long as you do it right. Take your time in looking for

a service provider while considering the best practices and risks you might run into.

Hopefully, this ebook has helped you learn and understand better the processes involved with outsourcing.

For the latest updates and practical tips about the outsourcing industry, visit Booth and Partners’ blog. Click

here.

Right People, Right SolutionsReady to build your o�shore team in the Philippines? Let us help you in finding the right people for

your business.

Booth and Partners o�er outsourcing solutions that you can customize according to your needs

and budget. Consult with our experts today to learn more about our tailored sta�ng solutions.

www.boothandpartners.com /boothandpartners