What Is ITO Offshoring in the Philippines?

Building an in-house information technology (IT) team is disruptive, time-consuming, and expensive. Still, businesses nowadays need a strong IT team to help with digitalization. This group of skilled professionals integrates tools and systems to support technological advancement.

This is where partnering with an offshoring provider in the Philippines comes in. The country is among the world’s leaders in IT and business process outsourcing (BPO).

Read on to learn how IT outsourcing (ITO) and offshoring to the Philippines can help your business succeed.

Offshoring vs. Outsourcing

Before we discuss ITO or offshoring to the Philippines, let us first differentiate outsourcing from offshoring. Often used interchangeably, these two terms have different meanings.

Outsourcing involves hiring a third-party provider with sufficient resources to manage processes or certain aspects of a business. Businesses can outsource to service providers whose headquarters are in the same country. But they can also offshore business functions or contract third parties in another country. 

Commonly outsourced functions include IT, contact centers, and data entry services.

What Is IT Outsourcing (ITO) in the Philippines?

ITO or IT outsourcing to the Philippines is when a company transfers its management of one or more business processes to an external vendor in the Philippines, where labor costs are low. Sources show that outsourcing cuts labor costs by up to 70%. Businesses use ITO for technical support, maintenance, software development, and programming.

Here are two ways to use ITO or offshoring to the Philippines:

1. A company in the U.S. can hire an individual programmer from the Philippines because hiring, training, and retaining a local developer are more expensive.
2. Alternatively, the company can contract an outside data management provider because running and maintaining IT in-house take too much trouble.

Some businesses build dedicated IT subsidiaries outside their home country. Others offshore only a portion of their technical functions.

Hybrid offshoring is a growing trend in ITO. This business model involves both insourced and outsourced services.

A hybrid approach is an excellent strategy for companies looking for ITO or offshoring solutions to the Philippines. Determine your strong suits and identify which technical functions are better handed off to an outsourcing collaborator.

Common IT Services You Can Offshore to the Philippines

Technical support outsourcing is among the most common solutions Philippine BPO providers offer. But they also cover other IT functions such as:

• IT help desk services. Customers that encounter problems or have tech-related questions regarding a company’s products or services use the help desk as a primary contact point. Help desk agents assist customers in troubleshooting issues and provide support via email, phone calls, and live chat.
• Network and data security. Employ an offshore cybersecurity provider if you work with confidential and sensitive information. The service provider helps keep your network and data secure by installing cybersecurity software such as firewalls and managing your IT infrastructure to avoid unauthorized access and data breaches. 
• Software development. This service includes developing commercial software for companies or creating a custom application for a client. Some solutions might revolve around only writing codes and debugging existing software.
• Web hosting services. These are similar to renting space to allow customers to access your website via the Internet. Vendors offering these services give clients the necessary technology and tools to run website operations. The service provider is responsible for maintaining the server and ensuring security and optimal performance.
• IT operations and management (ITOM). ITOM offers various services involving the solutions above. It takes on the holistic management of a company’s IT infrastructure and related tasks. It also involves establishing physical servers, installing software, and maintaining equipment and network security.  

Benefits of Offshoring IT Services

Companies outsource tech solutions because of the benefits that outsourcing provides. Affordable and reliable communications and tech infrastructure in the Philippines enable service offshoring, allowing efficient outsourcing of IT services.

Now, let us discuss the benefits of ITO or offshoring to the Philippines.

• Streamlined service processes. Offshoring can streamline your IT operations. The remote team can complete any unfinished work the in-house team leaves after the workday and vice versa. You can leverage the different work shifts and time zones between the two locations to ensure a smooth turnover and increased staff availability.
• Considerable infrastructure savings. You need not add new infrastructure because the offshore provider already has the necessary equipment, office facilities, and physical utilities. This means that you can spend less on an IT development center and that projects can start faster.
• Round-the-clock services. Many BPO providers operate on a schedule that supports you around the clock. This continuity of support and IT services enhances the work efficiency of both in-house and remote teams. It also helps improve business processes and increases the cost-effectiveness of the service cycle.
• Greater collaboration between teams. The offshore team serves as an extension of your in-house department despite the different shifts and time zones. The remote staff can finish the incomplete tasks that the in-house team leaves. Efficient and seamless collaboration between parties completes, tests, and deploys projects faster.
• Enhanced focus on customer-facing activities. Back-office outsourcing lets your in-house team concentrate on client-facing work, while the offshore team handles behind-the-scenes tasks. For example, WhatsApp outsourced the app’s development, but once done, the in-house team focused on customer support.
• Cost-effective solutions. Saving on overhead is one of the major benefits of offshoring to the Philippines. For instance, a software developer in the U.S. earns $110,094 yearly. Meanwhile, the same talent in the Philippines has an average salary of $8,376 per annum. An offshore team also has the same proficiency level.
• Productive business partnership. An offshore ITO collaborator is a powerful business ally. You and your partner share a goal of ensuring your company operates at its maximum potential and efficiency. Your ITO vendor provides you with resources you can allocate for various projects.

Why Do Clients Choose the Philippines as an ITO Provider?

Companies prefer ITO or offshoring to the Philippines due to the country’s vast talent pools, English proficiency, and cultural compatibility. The nation’s ITO costs are among the world’s lowest, making it a top choice for many clients.

• High-quality talent. The country is home to over 100 million citizens, many of whom are young and working. Local universities produce millions of graduates each year. The abundance of skilled workers means more trainable and employable human capital.  
• Innovative IT solutions. Philippine BPO providers are keeping up with the latest tech infrastructure and innovation. They provide sufficient power supply and state-of-the-art telecom facilities.
• Low ITO costs. The cost of living in the Philippines is lower than in most countries. Hence, labor and ITO costs are also lower. Companies can allocate more budget to core competencies and improve products and services with their savings.
• Cultural compatibility with the West. Cultural affinity with Western nations is one advantage that makes the Philippines an excellent offshoring destination. Filipinos effectively work with foreign employees due to their familiarity with Western culture and weak cultural barriers. Filipinos can relate to and make end users feel comfortable with such similarities.
• Excellent English communication skills. Filipinos are excellent English speakers. English is one of the country’s official languages and the primary medium of instruction, spoken by over 90 million people. Filipinos also speak with a neutral accent, making them easier to work with.
• Strong government support. The local government strongly supports the ITO and BPO industries since they contribute to the country’s economic growth. The government provides permit exemptions, tax benefits, and duty-free imports. Philippine law-making bodies also enacted RA 10173 to mitigate threats to data privacy.
• Time zone advantage. Filipino business process outsourcing companies operate based on the client’s schedule, so the time zone difference is no problem. In contrast, the time difference gives clients an advantage because their businesses can operate around the clock with the provider’s help.

Tips for Looking for an Offshoring Provider in the Philippines

Outsourcing Journal states that high-value tech services will see immense growth with the advent of Industry 4.0. This development is primarily due to the digital shift. As companies try to keep up with industry changes, adopting a modern system lays the foundation for improved business growth.

ITO or offshoring to the Philippines helps you leverage new technologies and ensures your company reaches its full potential.

Follow the tips below to get started.

• Do your research. Weigh the pros and cons of offshoring before deciding. Assess your needs, budget concerns, and risks. Be discerning when looking for a service provider. Refrain from basing your decision on ads, social media, and websites; check reviews and testimonials about the vendor.
• Prepare the right tools. Managing an offshore team without the right tools is challenging. You need proper software to monitor employee performance and track progress. Project management, worker engagement, and team correspondence tools are essential.
• Partner with experts. The only way to ensure you hire the best offshore team is by partnering with a reliable BPO provider. For example, when offshoring contact center as a service (CCaaS) solutions, check the provider’s experience and infrastructure. This step helps you find a vendor that can help your organization grow.

The Bottom Line

ITO involves hiring an external service provider to manage tech operations and staff recruitment. This outsourcing category covers various IT solutions, from network and system maintenance to programming and software development.

The Philippines is a top destination for offshore services, including IT. The country has a large pool of skilled workers, robust infrastructure, and proven experience in BPO. Partnering with a Philippine service provider guarantees data security, cost savings, streamlined recruitment, and a smooth transition.

If you want an offshoring collaborator that can offer these benefits, contact us now.