More and more businesses nowadays are trying to outsource workforce because of its many benefits. To name a few – access specialized skills, improve efficiency, and reduce costs. The Philippines is widely regarded as one of the primary providers of a skilled workforce with a favorable business climate and cost-effective labor. However, outsourcing in the Philippines has its challenges and risks too.
This article will explore some of the possible challenges that businesses may face when working with Filipino contractors. Some of the common ones are cultural differences, data security concerns, and currency exchange rates. By understanding these risks, companies can hire the right people and ensure a successful outcome for both parties.
Cultural Differences: One of the biggest challenges of contracting work to the Philippines is overcoming cultural differences. Although many Filipinos are proficient in English and familiar with Western culture, there are still notable distinctions in their work practices, communication styles, and business perspectives. These distinctions may result in confusion and ineffective communication. To lessen this risk, companies should invest in cross-cultural training for their staff and encourage regular communication and collaboration with their subcontracting partners.
Data Security Concerns: Partnering with a Filipino outsourcing provider also carries certain data security risks. Despite the strong security protocols that many outsourcing vendors implement, there is still a possibility of security incidents, such as data breaches. To minimize this risk,businesses should collaborate with subcontractors that have a proven history of data security and adhere to global data protection regulations.
Infrastructure Limitations: The infrastructure in the Philippines may also present challenges for companies subcontracting there. Power outages, slow internet connectivity, and limited transportation infrastructure can all affect the quality and timeliness of freelance work. To lessen this risk, companies should work with offshoring providers who have invested in reliable technology networks and who can provide backup power and internet connectivity.
Legal and Regulatory Compliance: Utilizing Philippine-based talent also requires compliance with local laws and regulations, which may differ significantly from those in the company’s home country. This can include issues such as employment laws, tax regulations, and data privacy regulations. To prevent legal and financial penalties, businesses should collaborate with offshore partners who possess knowledge of local laws and regulations and can assist in ensuring compliance.
Language Barrier: While many Filipinos speak English fluently, there may still be some language barriers, particularly when it comes to technical terminology or jargon. In turn, this can impact the quality of the outsourced work due to misinterpretation and miscommunication. To address this risk, companies should work with service providers who have a strong command of English and who can provide technical and language training to their staff.
Employee Turnover: The turnover rate among workers in the Philippines can be elevated, particularly in fields like call centers, where exhaustion is frequent. According to a study by QATC (Quality Assurance & Training Connection), the typical turnover rate for call center agents ranges from 30% to 45%. This can lead to disruptions in out-tasked work and may require additional resources to train new staff. To minimize this risk, businesses should collaborate with outsourcing providers that implement effective employee retention initiatives and offer career growth prospects for their workforce.
Quality Control: Leveraging the expertise of Filipino professionals may also present challenges when it comes to quality control. Distance and time zone differences can make it difficult for companies to closely monitor and manage freelance work. To ensure that outsourced work meets their standards, companies should establish clear quality control processes and metrics, and work closely with their service providers to monitor performance and address any issues that arise.
Intellectual Property Protection: Tapping into the Philippine outsourcing market also carries certain risks when it comes to intellectual property protection. Businesses might be apprehensive about the misappropriation or misuse of their intellectual property by offshore vendors or their employees. To address this risk, businesses should partner with contractors that have robust policies for protecting intellectual property and comply with global intellectual property laws and regulations.
Currency Exchange Rates: Currency exchange rates can also present a risk for companies engaging Filipino contractors. Fluctuations in exchange rates can affect the cost of outsourcing services and may lead to unexpected expenses. To address this risk, businesses should collaborate with outsourcing providers that offer transparent and straightforward pricing and can provide assistance with currency exchange rates.
Hidden costs: While partnering with a Filipino outsourcing provider can be cost-effective in terms of labor costs, there may be hidden costs such as training, management, communication, travel, legal and regulatory, and technology costs that can add up over time.
Conclusion:
Outsourcing to the Philippines can provide many benefits to companies, but it also poses challenges and risks. Businesses should recognize the mentioned risks and take action to reduce their impact. Additionally, if they’re a good company that knows how to take care of their employees, they may build a good relationship that can last a lifetime.
