The Role of Offshore Outsourcing in Healthcare

On March 9, 2012, in Outsourcing, by Business Development Group
Countries like the Philippines recognizes the potential and is gearing up its infrastructure to attract organizations from the west to send manual and labor intensive work for processing. The other major driver for this is the vast difference in cost of labor between the east and the west. While this dynamic has existed in the past, the main impediment to this has been technology. Developing countries did not have the technology infrastructure in place to offer such services. This is rapidly changing and India in particular has taken the lead by ramping up telecommunications backbone to enable such initiatives.

Countries like the Philippines recognizes the potential and is gearing up its infrastructure to attract organizations from the west to send manual and labor intensive work for processing.

A recent sub trend in outsourcing is offshore  outsourcing. Offshore outsourcing implies going to other countries for these services at lower costs. While this has become an important trend in core software and large application development (most large software companies in the US have dedicated development centers in the Philippines) it has also started to gather steam in the BPO segment. It is very likely that these BPO initiatives will move in the same direction as it has for the software industry.

Countries like the Philippines recognizes the potential and is gearing up its infrastructure to attract organizations from the west to send manual and labor intensive work for processing. The other major driver for this is the vast difference in cost of labor between the east and the west. While this dynamic has existed in the past, the main impediment to this has been technology. Developing countries did not have the technology infrastructure in place to offer such services. This is rapidly changing and India in particular has taken the lead by ramping up telecommunications backbone to enable such initiatives.

The following are the key drivers and factors for growth in offshore BPO:

Globalization  and Consolidation

As organizations become more global, they are looking at the most efficient, least cost operational model. Mergers and acquisitions also results in redundant back-office processes, often leads to business functions being consolidated and carried out at the lowest possible costs with the greatest efficiency. Sending back-office transactional functions (which do not add value from a business perspective) to countries like the Philippines enables them to streamline operations.

Read related article: BPO Real Time Outsourcing Customer Engagement – Giving your Customers More!

Reduce Back-Office Cost Further

Organizations who are already outsourcing business processes to other vendors in the US are investigating the possibility of reducing these costs further. BPO vendors in the US are tying up with other vendors in the Philippines and reducing their internal processing costs. The benefits are hard to ignore.

Read related article: How to Successfully Transition to Outsourcing

Lower Labor Costs at Better Service Levels

Labor costs in the Philippines are substantially lower than those in the US. Hence an offshore BPO initiative results in savings that translates into shareholder value. Moreover, the workforce that carries out back-office processing is more qualified than its western counterparts, this results in higher service levels in terms of accuracy and productivity.

Read related articleOutsourcing Services Effectively

The Pervasive Nature of Technology

The internet and advances in telecommunication have made it possible to open remote BPO centers half way across the globe. The operating is one which provides the same results as if processing was being done in one location and the customer does not notice any difference. The only physical difference, albeit a shrinking one, is that of geography.

Read related article: Call Center as a Marketing Channel

Potential to Offer Multiple Choice to Clients

For existing BPO vendors, having an offshore center or a tie-up with an offshore processing center or a tie-up with an offshore BPO vendor enables them to go back to their existing clients and offer the same services, with higher service levels and at a lower price point. Some of the larger players are already taking the first mover advantage by going this route. It is only a matter of time before others follow.

Read related article: Philippine Outsourcing: What is a BPO Virtual Captive?

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3 Responses to “The Role of Offshore Outsourcing in Healthcare”

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