The Benefits of Outsourcing: Why Companies Are Turning to Southeast Asia
Since the early 90s, Southeast Asia has experienced steady growth. A vast region in Asia, it consists of eleven countries that reach from the east of the Indian subcontinent and the south of China. Southeast Asia can be divided between the mainland (Burma/Myanmar, Cambodia, Laos, Thailand, and Vietnam) and island (Brunei, East Timor, Indonesia, Malaysia, the Philippines, and Singapore) zones.
The growth of GDP per capita in the region is an impressive accomplishment. Factors such as government policies, demographics, entrepreneurial activity, and a stable international environment have contributed to this success. Most of the world’s emerging markets are located in Southeast Asia with Singapore and Vietnam leading the pack.
Southeast Asia offers a business-friendly environment for foreign investors. As a result of this, the region has undeniably become a major outsourcing destination. The revenue from the Business Processing Outsourcing (BPO) Industry alone is expected to hit 79.3 billion USD this 2023 with an annual growth rate of 7.75%.
Outsourcing in Southeast Asia is a business move that could grow a company. It has benefited many companies due to its cost efficiency, contact with skilled talents, and efficient business processes and technologies. Get to know more about Southeast Asia’s outsourcing industry below.
Southeast Asia Is a Top Choice for Outsourcing
Southeast Asia is on track to become the world’s largest market by 2030. All the countries in the region are becoming more open to international trade and high-level investments. The Asian Financial Forum has even called Southeast Asia “the best investment destination” — and this is true, especially for the outsourcing industry.
The region is a giant in the industry because it is capable of providing high-quality services at a fraction of the cost. Many foreign companies pick Southeast Asian countries as their outsourcing destinations over other regions. Furthermore, Southeast Asia is made up of countries with helpful governmental policies that are open to foreign investments for economic boost. These countries also have favorable tax policies to foster the growth of the outsourcing industry.
Southeast Asia is a rising star in the IT and BPO industries. Rapid urbanization, industrialization, and a digitally savvy consumer base have created more opportunities for foreign businesses. The region’s demographic serves as a unique business advantage with young, highly skilled, and English-proficient talents. Their colorful culture also helps to unlock a company’s diversity and expand its talent pool. The region’s outsourcing industry also outsources a diverse amount of roles.
These are some of the roles you may want to outsource to Southeast Asian talents:
- IT Support
- Software Development
- Web Development and Design
- Content Creation
- Business Knowledge Processes
- Payroll Outsourcing
- Human Resources
- Back Office Functions
- Virtual Assistance
- Customer Service
- Financial Accounting
- Energy and Logistics
The Benefits of Outsourcing to Southeast Asia
Partnering with outsourcing companies in Southeast Asia can give your company a big boost. These are some benefits that you should consider:
1. Low Labor Cost
Southeast Asia is where you can find some of the lowest labor costs in outsourcing without sacrificing the quality of work. It just so happens that the cost of living in these countries is lower compared to other regions so the cost of their labor is much cheaper.
2. Large and Young Talent Pool
The Southeast Asian workforce consists of 350.5 million people with 60% below the age of 30. A workforce this big and young is a positive thing for business owners looking for potential talents that can help grow their companies. Most of these workers are skilled employees with Southeast Asian countries boasting high literacy rates.
3. Literacy Rate
As previously mentioned, the region enjoys a high literacy rate with most countries supporting their students and urging them to get undergraduate or university degrees. In 2021, The Global Economy reported that the highest value was Brunei’s 97.95% and the lowest was Cambodia’s 83.91% — still very high in comparison to other countries outside of the region.
4. Technological Infrastructure
As the world goes digital, Southeast Asian countries have continued developing and building various technological infrastructures to support their daily lives. This also helps their employees thrive in the new digital era. With these improvements, the rest of the world can easily outsource their businesses and build long-lasting partnerships with their Southeast Asian counterparts.
5. Business-Friendly Policies
Most of the governments in Southeast Asia have been more open to foreign investments and companies. They have created laws and policies to make doing business easier. One example is Thailand’s soft loans for enterprises adopting robotics and automation technologies into their processes. Another is Singapore’s friendly tax systems and legal frameworks.
6. Language Skills
Outsourcing partners in Southeast Asia are usually fluent in the English language. It is rare to encounter language barriers when you need to accomplish your projects when outsourcing. This is because some countries in Southeast Asia have histories of colonization by English-speaking countries. Other countries have also encouraged their people to learn English because it is the language most used by professionals and the business community.
7. Data Protection Laws
Outsourcing to Southeast Asia could mean preventing cyberattacks. Some countries in the region each have data privacy rules and regulations to avoid any breach. The Philippines has data protection laws that allow foreign companies to practice outsourcing safely. Similarly, Vietnam has a data protection act that is applicable to all organizations and individuals to protect their data.
8. Stable Economic Growth
Southeast Asia’s economic outlook is bright. The six largest economies of the region (Indonesia, Thailand, Malaysia, Singapore, Vietnam, and the Philippines) are estimated to grow 4.2% this 2023. It’s a steady growth with a pace that is outgrowing the 1.1% estimation for the developed world. In more years, this growth is projected to be more significant as Southeast Asia remains an attractive region for foreign companies to do business in.
9. 24/7 Services
Employees in the Southeast Asian region work on their projects during their business hours when Western employees are sleeping due to their timezone difference. This means work is processed 24/7 and there is always someone available in your team. Outsourcing in Southeast Asia may also offer 24/7 service opportunities depending on your outsourcing partner.
10. Global Hubs
Southeast Asia is becoming a global hub for many big companies. These multinational businesses chose to establish themselves in Southeast Asia’s market. They have built their headquarters and outsourced many business functions in the region. It’s a positive signal to other companies that Southeast Asians can be trusted with whatever job they are given.
Notable Industries And Companies Outsourcing to Southeast Asia
These are the industries commonly outsourcing to Southeast Asia:
- Human Resources
Human resources (HR) isn’t usually the first business function you would think of when you want to outsource. However, outsourcing your HR can save time and money. It improves employee retention, prevents costly labor errors, and frees management to focus on their essential tasks.
- Customer Service
Southeast Asia is the place to be for customer service outsourcing. The region is known for call centers because Western-based companies can receive round-the-clock customer support. The Philippines is especially known for this and has been dubbed the “Call Center Capital of the World”.
- IT Support
The region offers many highly skilled IT talents at a lower price. As a result, IT services are always in demand. Many companies have formed solid partnerships and only outsource IT with trusted partners. The industry is also well-developed with infrastructure support and more students being encouraged to learn IT and software development.
Some notable companies you might be familiar with are:
- Wells Fardo
- The Coca-Cola Company
- American Express
Southeast Asia’s Outsourcing Potential for Your Business
Effective outsourcing depends on finding the right partner for your business. Look no further than the jewel of the outsourcing industry, the Southeast Asia region. The countries located in this area are big names in the outsourcing world. They are proven to offer high-quality work at a cheaper price. These countries also employ skilled talents who are capable and efficient in what they do. With these people in your team, you will surely unlock your company’s business goals.
Southeast Asia can be tricky. So many fantastic outsourcing destinations are available for your different business needs. These countries also have business-friendly policies that can make doing business easy. Maybe the first step is to narrow down the services you need and pick the best location to get those top-notch services!
For less confusion, let us help you with outsourcing to Southeast Asia! Book a FREE appointment with Outsource Asia experts today.