The Advantages and Disadvantages of BPO Companies in Developing Countries

In developing countries such as the Philippines, the presence of so many BPOs or Business Process Outsourcing companies is not new nay surprising anymore. Central business districts or CBDs are a conglomeration of local and foreign companies with BPOs forming a significant percentage of the latter.

BPOs have helped local economies rise, thus putting local trade and stock markets in healthy positions. However, even with its favourable reception, it pays to know what the different advantages and disadvantages are of BPOs for developing countries.

Advantages of BPO Companies

First, it has to be the influx of local employment. Scarcity of jobs is common and it can be attributed to different factors. The rise in population is one. The lack of local investment is another. As more people exit schools with a college degree, the number of employment does not immediately commensurate to the number of job seekers. Especially if a lot of students graduate with almost the same range of specialisation, companies may not be ready to have them all on board due to the relatively limited resources companies have to hire. With BPOs, graduates who are not immediately accommodated by the companies they initially intend to work for can take them in instead. Since most BPOs are skills-based, for as long as you have the competency to be taught and to learn new things, you have the potential to make it big for your employer.

Second, with local employment from BPOs gaining momentum, the quality of life of employed individuals are generally improved. It is true that one can earn more by working for a BPO company compared to working for a local company. Compensation is higher and benefits are better, which can include health insurances, transportation allowances and other refundable expenditures. Moreover, for call centre agents who are in sales, they are also entitled to commissions for every deal that they close. It is not surprising why there are people who leave their relatively low-paying jobs and enter the call centre or contact centre industry to work. Much more can be earned and be put in the bank if one manages to save whatever he or she is earning from a BPO company.

Disadvantages of BPO Companies

Many of the disadvantages thrown at countries where BPOs are is that it drains out local employment in the originating country of companies that choose to outsource. For US MNCs or multinational companies, for instance, Americans are competing at very few employment opportunities because most MNCs would instead invest in the Philippines or in India for its operations. After all, if MNCs can be as productive, but with little cost on manpower and infrastructures, it would be natural for them to shift operations offshore.

Also, with the way BPOs shoot their success to the top, they can go down as fast and easy if they are not careful. Maybe there was a glitch in the managerial process that caused them to lose a lot of money. Should that unfortunate event happen, the brunt of it will be received first by those in the front line – the outsourced employees. It is for this reason why redundancies and mass unemployment are natural occurrences in BPO companies. Redundiated employees simply look for new opportunities in another BPO company or in another industry to be able to work again.