Consider these numbers:
• 99% – The percentage of Fortune 500 companies using globally outsourced employees.
• $225 billion – The worth of the current global outsourcing industry.
• 40 million – The number of jobs that would be added to the global economy if just one small- to midsized business (SMB) added one outsourced employee.
• $600 billion – The increase the industry would receive with those 40 million jobs added.
The CEO of the Philippines-based Outsource Accelerator, Derek Gallimore, knows the global work industry. His company, an aggregator that matches outsourcing companies to clients, has more than 3,500 vetted partners that supply nearly 3,000 positions a month in the United States alone. And these positions go far beyond call centers. Most any type of company – even a small plumbing service or a corner bakery – can benefit from highly trained offshore labor and get it at a fraction of the cost.
“First of all, let’s dispel some of the myths about outsourcing or ‘offshore labor,’ which simply means it was produced in another country,” says Gallimore. “There has long been this specter that outsourcing is taking all the jobs and destroying our economy but outsourcing has been happening in earnest for about 30 years. If it was going to take U.S. jobs, everyone would be unemployed right now, but unemployment is sitting around the lowest level possible and it is in fact so low that it can actually start damaging the economy because you can’t get a workforce and most certainly can’t get a skilled workforce.”
The types of jobs done by offshore labor go far beyond the American Express and Facebook call centers and include developers, marketing, sales, social media, customer service, accountants, architects, engineers, office administration and the work can be done anywhere in the world by smart, highly trained professionals. Gallimore contends that this global trade matching workers to open roles benefits and stabilizes both the local and global economy.
[su_quote]“Philippines is obviously one of the major markets for outsourcing alongside India and my company lists more than 3,500 outsourcing firms across the globe. Outsourcing constitutes $250 billion revenues globally with about 10 million employees and it’s everything traditional calls centers to SMB staffing and everything in between. IT outsourcing is and has been very prevalent for years and the industry is growing at breakneck speed.” — CEO of Outsource Accelerator Derek Gallimore [/su_quote]
Fortune 500 companies are Outsource Accelerator’s primary clients and it’s no wonder because, currently, there is 99% penetration of offshore services with the big enterprises. There is no arguing these companies recognize and leverage the value of this labor. For SMBs, however, there is only 0.5% use, so it is a wide-open market that can bring massive global GDP numbers if those companies start following the lead of “the big guys.”
“It might sound kind of foreign but it’s only as foreign as having your clothes made in Turkey, your car made in Japan or your devices made in China,” says Gallimore. “This type of trade has been going on for five, six or seven decades. Now we’re going to work from one globalized market and one global workforce as jobs become more digitally and information based. The global workforce can mobilize and companies can take advantage of this.”
As the concept of paperless offices or a fully remote workforce seemed incredibly far-fetched 20 years ago, they are now not just accepted but becoming the default.
“Fifty years ago, we all had to go to factories, which created urban density because they offered the job opportunities,” he says. “And you still see that still with Amazon getting tax incentives to set up distribution centers in certain cities but as we move into the fourth industrial revolution – which is computers, IT and professional services – then it frees up the requirement of location and now most work is based on quality and output.”
Any business could use offshore staffing to their advantage even if it’s a small-town plumber or electrician. New and growing businesses can have their professional services outsourced and access this lower-priced labor to do administration, accounting, marketing, customer service, bookings, invoicing, etc.
“All of these things can be done from contributors that are sitting somewhere else so it’s really about role augmentation and these employees are treated like any other employees,” says Gallimore. “The employer manages them as they would any other. They build relationships and the employee shares in the culture and ambitions of the company but they are just sitting somewhere else. I think every business in the U.S. could benefit from that model.”
Like any other technology or platform across the globe, outsourcing used to be very expensive, but now it’s cheap, turnkey and normalized, according to Gallimore. And the large, expensive markets don’t have a monopoly on the highest-skilled labor anymore. Just as COVID helped companies realize remote work could open a national workforce that employers don’t necessarily have to pay so they can afford to live in New York, Chicago, Los Angeles or San Francisco, outsourcing can be a great equalizer too.
[su_quote]“You can save 70% on your staffing and remote work is has gone from fringe to acceptable and is moving toward default. Everyone is seeing it as normalized. When millennials and Gen Z are founding businesses, they will have a very different perspective on this. Across the high-cost English-speaking world – which is the U.S., Canada, the UK, Ireland, etc., there are about 40 million SMBs that collectively employ about 60% of the workforce and contribute about 60% of the revenues to the global GDP. Only 0.5% of them offshore whereas 99% of large enterprise does. Why the difference? Well, 20 years ago it was impossible for SMEs to outsource but now, with behaviors changing and remote work becoming normal, accepted and default, a seismic shift will occur in how we do business over the next 10 to 15 years.” — Derek Gallimore[/su_quote]
With a world network of available talent, this can benefit those employees and employers in small towns throughout the U.S. too.
“Take New York, it’s a major work market and has about 9 million people,” he says, “But when you expand that network to 8 billion people across the globe you start to get an incredibly powerful network. If I’m living in a small town and I need a nuclear physicist, I wouldn’t be able to find one, but if I expand my reach to the global field, I could have access to all of them. It might only be only 50 people but at least I have access to the entire globe. The small towns may feel like they’re losing out or America is losing its competitiveness, but it’s actually stronger for everyone to have a single network.”
Gallimore has shared his expertise in his new book, “Inside Outsourcing – How Remote Work Offshoring and Global Employment is Changing the World.”
Copyright © 2022 California Business Journal. All Rights Reserved.
This article was edited and published by Rick Weinberg, California Business Journal’s Founder, Publisher and Editor-in-Chief. Click here for Rick Weinberg’s biography.
For testimonials on the impact of California Business Journal articles, click here.
Contact us if you’d like an article written on your business: Rick@CalBizJournal.com / 949-648-3815