Finding the right outsourcing company to cater to your needs can be a challenging process, especially if your business has specialized needs. On the one hand, you need someone that knows your business inside and out; on the other, you need a partner that knows what they’re doing and will help you make decisions based on knowledge and experience.
There’s a more fundamental decision to make even before you choose an outsourcing company, however, and this is choosing the country in which to outsource. This is vital because every aspect will depend on this choice, and it’s a choice that will affect every project and every other decision you make for months or even years. As such, choosing the country where an outsourcing company does business is a factor that shouldn’t be underestimated.
There won’t be a real winner when it comes to being “the top outsourcing country” simply because it is dependent on what type of business you’re in, your reasons for outsourcing, and your current business needs. However, this article will show you the countries in Southeast Asia that, in their own right, excel in the field of outsourcing. Here they are, in no specific order.
The Philippines
Visit the Philippines and you will discover that it’s one of the countries in Asia with a high proficiency in the English language. It’s no surprise that English-speaking countries or companies choose the Philippines as one of the best outsourcing countries because collaboration is easier without the language barrier. Filipinos are also aware of Western culture and are keen on making outsiders feel at home, which means you’ll be working closely with people of a similar mindset and companies with, more or less, similar structures.
Top 4 Reasons to Outsource to the Philippines
Low costs
Cost is one of the major considerations when outsourcing, and the Philippines presents a competitive advantage when it comes to this aspect. With a comparatively low wage range and cost of living, outsourcing here can help you save up to 70% in labor costs. Not to mention, you get to reallocate overhead costs like office space, equipment, maintenance, and HR.
Minimal operational risk
Running a business can leave you open to legal liabilities and other operational risks. By finding the right outsourcing partner, you offload most of the risk to them. Even if you set up a virtual office offshore, you won’t have to worry about the logistics because working working with an outsourcing company ensures your bases are covered. Outsourcing companies are also well versed when it comes to the rules and regulations in their specific regions, and they will be the ones to handle business and compliance requirements so you can focus on your core business. Most outsourcing companies in the Philippines also include employee training and development in their services.
Special economic zones
An agency of the Department of Trade and Industry (DTI) in the Philippines, the Philippine Economic Zone Authority (PEZA) is designed to promote foreign investments in the country by providing assistance and incentives to foreign entities facilitating business within selected areas known as special economic zones. Being accredited by PEZA provides certain incentives, including income tax holidays, VAT zero rating, tax- and duty-free importation, and exemption from dues and fees like expanded withholding tax and other government payments.
Business is booming
According to a recent report, the Philippine BPO industry exceeded its forecasted growth for 2021 and did better than the recalibrated targets for 2022. The IT and Business Process Association of the Philippines (IBPAP) statistics show 1.44 million full-time employees employed in the BPO sector and $29.1 billon in revenue in the first half of 2022 alone, predicted to grow exponentially in the coming years. Although affected adversely by the pandemic in 2020, the BPO industry proved quick to adjust and continues to grow despite the circumstances. It has invested in infrastructure to help boost its growth and support a growing work-from-home workforce—in turn, preparing for its vital role in helping the Philippine economy recover from the effects of the pandemic.
Malaysia
Malaysia is gradually becoming a major player in the field of outsourcing, with policies that are both friendly to foreign investors and conducive to building up a business. In the 2019 Ease of Doing Business report by the World Bank, Malaysia ranked 12th among 190 countries across the globe. The Malaysian government has also made strides in encouraging foreign investments through its Economic Transformation Programme (ETP), which highlights the country’s outsourcing industry as one of its Entry Point Projects (EPP) aimed at boosting economic growth.
Top 3 Reasons to Outsource to Malaysia
Low cost of living
Compared to US cities, Malaysia has a lower cost of living, with consumer prices 61.5% lower and rental fees 78.6% lower. However, it’s still relatively higher compared to the Philippines, which has 62.5% lower consumer prices and 79.3% lower rental fees. Generally, the result of more affordable living conditions is a lower average salary.
Solid digital infrastructure and regulations
Malaysia is known for its technology parks and cybercities that help speed up economic growth by grouping together similar sectors in special industrial zones. These zones leverage advanced technologies like big data analytics, artificial intelligence (AI), and machine learning (ML). Malaysia also makes it a point to provide both businesses and individuals online via strong cybersecurity and IP laws, which are some of the strongest and most comprehensive in Southeast Asia.
Pro-business government policies
Although some question Malaysia’s political stability, the government’s policies on business and foreign investments help provide support to businesses looking to tap the Malaysian market. Initiatives include the government-organized Malaysia Digital Economy Corporation (MDEC) that drives investments to the digital sector, the National ICT Association of Malaysia (PIKOM) that helps companies scale through venture capital (VC), and outsourcing Malaysia (OM) that aims to support and strengthen the country’s shared services industry.
Indonesia
Considered a “young” nation, 60% of Indonesia’s population comprises people aged 40 and below, with over 129 million working individuals. The country is an ideal outsourcing destination because of its digital presence and pleasant business environment.
Top 3 Reasons to Outsource to Indonesia
Digital resonance
Digital resonance, simply put, is a country’s level of digital transformation, which helps in its provision of services in the IT and BPO industries. In Kearney’s 2021 Global Services Location Index, Indonesia ranked 4th among 60 countries worldwide in digital resonance, financial attractiveness, people skills, and business environment. The country is also competitive in the cloud services, telecoms, and digital finance market sectors.
Business-friendly outsourcing policies
The Indonesian government supports the growth of foreign investments in the country by making it easy for businesses to outsource there. It made amendments to its investment law to ensure equal treatment of foreign and domestic investors and allows 100% foreign ownership of businesses in certain sectors that include eCommerce, manufacturing, and pharmaceuticals. Ownership thresholds are set for other sectors, including insurance, banking, and raw production. Procurement of business licenses has also been expedited with a 15-day maximum processing limit.
Political and economic stability
Robust consumer demand has more than made up for the lower spending of the Indonesian government according, to the Asian Development Outlook (ADO) 2022. Despite threats to its growth, the country’s economy copes well due to consumer spending and high demand for commodity exports. Risks are also on a downward trend in 2023 because of financial volatility around the world and a tighter macroeconomic policy in the country.
It’s the Journey, Not the Destination
The digital world continues to change at a rapid pace despite the pandemic; in fact, it can be argued that the pandemic may have pushed businesses worldwide to grow and adapt to new technologies quicker. The rates of success vary, of course, but the fact remains that economies who fail to make a digital transformation risk losing business opportunities and a decline in the outsourcing industry. Outsourcing companies need to keep up by providing outsourcing options that help businesses realize their goals quicker and more efficiently.
Finding the right outsourcing partner and location can be daunting, but the top outsourcing countries list above, hopefully, sheds some light on what to look for when the time comes for you to outsource certain aspects of your business. Schedule your free consultation today to see what outsourcing options are available to you and what steps you should take to get started on your startup outsourcing venture.