PRICING ONE'S SELF OUT OF THE MARKET

Yesterday's article in PE.com illustrated what most of the BPO insiders know but are not talking about. Read the article here.

Technology has made it possible for some tasks to be done from distant locations. As a result, offshore companies who are into customer services, information technology, transcription, animation, architectural & engineering design, medical research, etc. has successfully penetrated the US and European markets.

As the demand for outsourced work continuous to grow, the existing service providers are observed to be increasing their prices. This is mostly due to sharp increases in their factors of production (loss of government incentives and rising cost of wages, office spaces, etc.).

Unfortunately for them, customers are not complacent. After a while, the same creative minds that made them resort to outsourcing will tell them to continue and look for new places to send their outsourcing requirements. For example, the garments industry which left the US years ago, has started departing from the Philippines towards China. In addition, the call center and transcription businesses which used to be synonymous with India are now known to be successfully being hosted by other Asian countries like the Philippines, China, Pakistan and Indonesia.

In the Philippines, BPO firms which used to be predominantly located within Metro Manila have started to expand to the provinces in order to lower their costs (land, labor, taxes, electricity, etc.). At this point, the call centers can still afford the cost of doing business in the country. However, the industry should take heed.

Be careful not price yourselves out of the market. When you keep on increasing the cost of servicing a client, the customer will be forced to move on to the next provider.