The Development of Outsourcing: From The World to the Philippines

Did you know that outsourcing of customer service had already existed four decades ago? It is not a novelty anymore as businesses all over the world started to expand and took advantage of economic scalability during the 1950s and 1960s. The reason why many companies already did this was to avoid overspending and protect their profits. And in the period of 1970s and 1980s, businesses in different countries have tried to compete internationally even though there was a shortage of labor pools.

To resolve this problem, big companies came up with a new strategy to meet their goals and focus on the core of their business. And also to achieve labor and operational cost reductions. And that is what we call outsource customer service now.

However, outsourced customer support only began to be recognized as a business strategy in the 1980s. When business expansion took place, entrepreneurs realized that they could no longer stay self-sufficient. To operate smoothly and effectively without sacrificing the core aspects of the business, they choose to transfer some non-core tasks such as customer service to the external provider they believe can be handled better by the internal staff.

Outsourcing of customer support is effective not only to focus on the core tasks of your business, but you can achieve the cost-effectiveness it offers, especially for the labor cost reduction. Thus, the appearance of traditional outsourcing, where companies transfer some business operations, though not the core, is essential to run the company smoothly.

Companies started to apply outsourcing of customer service from the early 1990s to the early 2000s, not only because of the cost reduction but to get access to the external expertise that companies can benefit from. It is called strategic outsourcing because it is based on outsourcing strategic business processes. The main goal is to achieve a competitive advantage by taking advantage of external resources such as experts in their respective fields, improving internal competency, and developing processes.

Strategic outsourcing of customer service turned into transformational outsourcing from the early 2000s. The primary purpose of companies in outsourcing is to provide flexibility in adopting new technological advances and come up with the fast transformation of business needs. Through the help of traditional outsourcing, companies were able to increase their sales and profits, develop market share, and improve shareholder value.

When outsourced customer support is widely used globally, many countries applied this business strategy, took advantage, and enjoyed the benefits it gave. The Philippines is one of the countries where the outsourcing industry boomed and helped the country’s economy and labor sides. In 1992, a man named Frank Holz established the first contact center in the country 1992. After that, who would think this archipelagic country in Southeast Asia became the world’s BPO capital? That was the beginning of the flourishing of the outsourcing industry in the country.

In 1997, the first multinational account was set up in the Philippines. It developed the state of telecommunication and over-the-phone customer services in the country. In 1999, Jim Franke and Derek Holley, both former McKinsey and Company employees, built the very first officially accepted call center in the country. That’s when outsourcing customer service started to shine and gave more job opportunities to the Filipinos.

In 2000, outsourcing customer service in the Philippines started to shine and became the pillar of the economy. From that year until 2021, the outsourcing industry continues despite some economic setbacks and the coronavirus pandemic that still exists in the world. Aside from online customer service, several business tasks such as human resources, administrative functions, content management, and influencer marketing international companies outsource in the Philippines.

OnlineFactory in Manila is one of the outsourcing firms in the country that has already earned the trust of international companies, particularly in Sweden. From a small number of employees, they already have more than 100 employees who handle outsourcing customer service, influencer marketing and content management needs, and many more.