The old model was for a BPO company to invest in a brick and mortar facility and then hire local workers from a certain geographic area. This was executed by large BPO corporations with venture capitalization.
This has created a boom in developing economies such as the Philippines and India, where BPO is a strong economic driver. According to the Asian Development Bank in its 2010 outlook, "the Philippine BPO industry will increase employment from 100,000 to 450,000 in 2010" (ADB, April 2010).
However, this is constantly proving to be more and more costly for the investors as maintaining a regular workforce translates to increasing unnecessary costs in terms of facility maintenance, equipment procurement, government compliance, leasing arrangements, travel expenses, human relations, training, and hiring.
It's sole effectivity relies on the insulation of the business from the workers. Applicants are screened rigorously by the BPO consultancy firm and the client company is protected from the headaches of training and direct contact with labor.
However, this is anti thetical to the optimal model of outsourcing because the whole locus of the process is to efficiently outsource at the lowest possible cost and get the best services.
But with the advent of direct outsourcing services, offered by popular freelancing websites. Outsourcing is evolving to a new level of cognizance. One wherein the middle men are getting less and less important by the day.
BPO firms are becomingly increasingly irrellevant as both global firms and workers are now made aware of better opportunities and partnerships when it comes to direct outsourcing.
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| Traditional Business Process Outsourcing Diagram |
The primary advantage of BPO Consultancies rely on their role as middle men. But is it worth it? The Internet was invented to change how the world works. It's kind of amazing that companies are sticking to traditional business models while at the same time portraying these models as the "new thing".
One might argue that these middlemen ensure the quality of the service provided by carrying the costs for training, hiring, management, quality control and many aspects performed by the human resources department.
But with the increasing ability and proficiency of global workers, and the creation of low cost web based platforms that take care of these concerns, one cannot help but think that this obsolete process is a practice in excess.
That's why more and more small and medium scale businesses are finding oDesk.com, Elance.com, and Freelancer.com as good sources of labor. These websites are gaining traction in the outsourcing market by bringing the workers and the employers back together.
In this business, the less the middlemen interfere in the whole process between the service provider and the service buyer, the less expenses are incurred.
Businesses have finally come to realize that they could build their freelancers.
By shouldering training and operating costs like electricity, internet connection, food, transportation and equipment, freelance web workers have distinguished themselves as the centerpiece of the new BPO paradigm.
With no middlemen, there would be no need at all for brick and mortar facilities and consultancy fees.
Labor screening is even provided for free by the above mentioned websites, thereby eliminating problems concerning incompetent and unqualified workers.
In the future, direct outsourcing will have a firmer foothold in the market. BPO consultancies would continue to exist but in an increasingly lower level of participation. Workers will train themselves using Internet platforms. Disputes would be resolved more and more using web arbitration services.
Now, more than ever businesses are being built by freelancers and those who wish to partner with them.
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