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Onshoring is quickly becoming a popular trend in the global economy, with companies reconsidering their strategies and localizing more of their processes over offshoring to an overseas service provider. In this post, we will provide an in-depth overview of onshore BPO — or business process outsourcing — and discuss the relationship between the onshore model and the practice of outsourcing business processes. By the end of this, you will be able to understand if onshore BPO is the best solution for your present business needs.
Onshoring — also called domestic outsourcing — is a business practice where a company utilizes the BPO services of a local company. Onshore outsourcing is different from offshoring, which is defined as the outsourcing of business processes to a foreign country, like the Philippine, to bolster operational efficiency.
In addition, onshoring is often driven by a desire for better quality control, as well as the desire to reduce unemployment in the home country. However, cost savings can also be a factor, as labor and raw materials in the home country may be less expensive than in a foreign country.
Onshore BPO should not be confused with insourcing — which involves a company using its own employees to perform business operations instead of outsourcing to an external service provider. To put it simply, onshoring involves finding service providers within the same country, while insourcing is limited to the company's current workforce.
Finally, onshore outsourcing differs from nearshore outsourcing, where the latter involves outsourcing to neighboring countries.
Onshore outsourcing and offshore outsourcing are two distinct business practices with key differences:
Onshore BPO refers to bringing business processes back to the home country, while offshore outsourcing involves outsourcing operations to a foreign country.
With onshore outsourcing, a company has more control over its operations as they are located in the same country, while offshore BPO outsourcing may result in reduced control due to distance and cultural differences.
The cost of labor and raw materials can be a factor in both onshoring and offshore outsourcing, but the specific costs will depend on the location and the nature of the business operations being performed.
Outsourcing allows a company to tap into a wider talent pool across the globe, while onshoring may limit the available pool of skilled workers.
Domestic outsourcing can improve the quality of operations as the company is closer to the service providers, while offshore BPO outsourcing may result in reduced quality due to language barriers, time zone differences, and other factors. That’s why it’s important to choose the right outsourcing partner to mitigate these problems associated with moving business operations abroad.
There are several factors that contribute to the growing popularity of the onshore model in recent years. Let's check them out below:
As countries like China and India continue to experience economic growth, the cost of labor in these countries has also increased. This makes it more expensive for companies to manufacture goods in these countries as wages and benefits for workers rise. As a result, some companies are starting to consider bringing production back to their home countries, where labor costs may be lower.
Political tensions between countries can sometimes result in trade disputes, which can lead to the implementation of tariffs on goods imported from certain countries. For example, the United States has imposed tariffs on Canada, China, and Mexico. These tariffs make it more expensive for companies to import goods from these countries, motivating some companies to bring production back to the United States instead.
Supply chain disruptions caused by health crises, natural disasters, and other factors can lead to delays in the delivery of goods, further exacerbating the risks of relying on these complex and far-reaching supply chains. As a result, many companies may reconsider their supply chain strategies and look for ways to reduce their dependence on suppliers in other countries. This may include bringing production closer to home, as domestic outsourcing makes it easier to control and monitor the supply chain and respond quickly to any disruptions.
Many companies are transitioning to onshoring to better align with sustainability goals, ethical sourcing, and fair labor practices, which are more challenging to enforce overseas.
Consumers are increasingly valuing products and services produced domestically, prompting companies to onshore in order to build brand trust and local loyalty.
Companies that work with an onshore outsourcing company for their business processes can reap the following benefits:
When a company engages in onshoring, they have more direct control over their production processes, enabling them to produce products that meet their standards. They can also address issues faster, further improving the quality of the final product.
Because a company's production facilities are closer to the point of consumption, they can reduce the costs of shipping and contribute to a lower carbon footprint.
Companies resorting to the onshore model of business process outsourcing are more capable of responding to changing customer demands and preferences, leading to higher customer satisfaction and loyalty.
By onshoring, companies can demonstrate their commitment to the local economy and community, improving their reputation and brand image. This can also help business owners build trust with consumers and other stakeholders.
Onshore outsourcing can reduce the risks associated with transferring sensitive information across borders, as the information remains within the country where the company is based. This can be particularly important for companies in regulated industries.
Onshore outsourcing can reduce a company's dependence on distant suppliers, minimizing the impact of disruptions and improving the resilience of their supply chain. This helps ensure the availability of products even amidst crises.
Onshoring can lead to cost savings in certain regions, where labor and production costs may be lower. This enables companies to be more competitive and improve their bottom line. However, it's important to consider all the costs associated with onshore outsourcing, including the cost of setting up production facilities and the cost of training workers.
Onshoring can be applied to various industries as well, depending on their specific needs and requirements. But here are some of the industries that are more likely to onshore their business processes:
Many manufacturers have been onshoring production in recent years due to a combination of factors, including rising wages in developing countries, the high cost of transportation, and increased concerns about intellectual property protection.
By bringing production back to the home country, manufacturers can reduce their shipping costs and have greater control over the quality of their products. Additionally, they can benefit from the use of advanced technologies and the availability of skilled labor in their home country.
Retail companies have been onshoring certain operations — such as product assembly and distribution — to have better control over the quality of their products and ensure timely delivery to customers. Retailers may also choose onshore operations to reduce the risk of product recalls and improve their responsiveness to changing consumer preferences.
Technology companies may onshore certain functions — such as technical support and customer service — to be closer to their customers and improve response times. By availing of these functions in an onshore call center instead of outsourcing to offshore call centers and offshore BPO companies, technology firms can better understand local market needs and provide better support to their customers. Additionally, onshoring technical support and customer service can also help companies comply with local data protection regulations.
Healthcare companies may onshore certain functions, such as medical billing and coding, to ensure better data security and compliance with privacy regulations. Onshoring these functions can help healthcare companies maintain the confidentiality of patient information and ensure that sensitive information is handled by trained and qualified personnel.
Financial institutions may onshore some of their operations — including back-office functions — to reduce costs and improve efficiency. By bringing these functions back to the home country, financial institutions can enjoy lower labor costs and ensure better control of the quality of their services. Additionally, onshoring back-office functions can help financial institutions comply with local regulations and maintain the confidentiality of sensitive financial information.
While onshoring is deemed effective for some local companies, it can also have negative impacts on the labor market. Here are some of them:
Onshoring can have a significant impact on workers in countries where jobs were previously outsourced to a foreign BPO partner. When companies bring production and jobs back to their domestic markets, workers in countries where the jobs were previously located can face unemployment. This can have a significant impact on local economies and result in a decrease in the standard of living for affected workers and their families.
Onshoring can result in higher production costs due to factors such as increased wages, regulatory compliance, and supply chain disruptions. For example, if a company moves production back to its domestic market, it may have to pay higher wages to its workers, which can increase the overall cost of production.
In addition, companies may face increased costs due to regulatory compliance and supply chain disruptions, as they may need to adjust their supply chain processes to meet new regulations and meet the demands of a new market. This can result in higher costs for both the company and the consumer, as the increased cost of production is often passed on to the consumer in the form of higher prices.
Onshore outsourcing can also result in a skill mismatch between the available skills of workers and the skills required by new jobs. When companies bring production and jobs back to their domestic markets, workers may need to acquire new skills to meet the demands of new industries. This can negatively impact the labor market and result in a decrease in the standard of living for affected workers.
Onshoring can also disrupt global supply chains, leading to higher costs and longer lead times for manufacturers and suppliers. When companies move production back to their domestic markets, they may need to adjust their supply chain processes to meet the demands of a new market.
Consequently, it leads to longer lead times for manufacturers and suppliers, as they need to find new sources for raw materials, components, and other supplies. This can increase costs for both the company and the consumer, as the increased cost of production is often passed on to the consumer in the form of higher prices.
As businesses move operations back onshore, there is often a growing need for training initiatives to help workers adapt to new job requirements and emerging technologies.
Companies that have been dependent on onshoring often encounter the following challenges:
Onshore outsourcing often involves higher labor costs than offshoring, as wages and benefits are typically higher in the domestic market. This can make it difficult for companies to remain competitive, especially if they are used to the lower labor costs associated with offshoring. Additionally, onshoring may require investments in new equipment, facilities, and other infrastructure, which can further increase costs.
Onshoring requires a highly skilled workforce that may not be available in some regions. This can lead to difficulties in finding and retaining the right employees. Companies may also need to invest in training and development programs to bring new hires up to speed, which can be time-consuming and expensive.
Onshore workers may not be as flexible as offshore workers, making it difficult to accommodate changes in business needs or product demand. For example, onshore workers may be more likely to resist changes to work hours, shifts, or responsibilities, which can limit a company's ability to respond to market demands.
Onshore outsourcing often leads to longer lead times due to the need for additional transportation and handling. This can make it more difficult for companies to meet customer demands, as well as increase the risk of product damage or loss.
Onshoring may involve more complex supply chain management and increased logistics and transportation costs. For example, companies may need to coordinate with multiple suppliers and carriers, which can be time-consuming and expensive.
Onshoring may require businesses to navigate complex legal and regulatory requirements, such as labor laws, immigration laws, and taxes. Companies may need to consult with legal experts and accountants to ensure that they are compliant with all relevant laws and regulations.
Offshore BPO companies often offer significantly lower rates, requiring onshore providers to justify higher operational costs through superior quality or service.
Migrating operations back onshore may require extended phases of restructuring, retraining, and integration, which can temporarily disrupt productivity.
Before fully transitioning to an onshore outsourcing model, businesses should carefully evaluate the following key considerations:
Companies must assess not just labor savings but also the cost of infrastructure, training, compliance, taxes, and operational overhead.
Businesses need to ensure that the domestic talent pool can adequately meet their technical and operational needs.
Onshoring may limit scalability compared to offshore models, where larger talent pools offer more rapid expansion opportunities.
Operating locally may involve stricter legal, tax, and industry-specific regulations that businesses must comply with.
For companies serving a specific geographic region, being closer to customers can enhance responsiveness and customer satisfaction.
Leveraging automation can help offset higher domestic labor costs, making onshoring more cost-effective over time.
Choosing between onshoring and offshoring for your business needs depends on several factors, including:
Offshore outsourcing can result in significant cost savings as labor costs in other countries may be lower. However, you need to factor in communication, travel, and cultural differences that can offset the initial cost savings. Onshoring may be more expensive in terms of labor costs, but it can reduce these additional costs and increase efficiency.
Onshore outsourcing provides better control over the quality of work as the team is in-house and easily accessible. Offshoring may result in quality issues due to language barriers and differences in business practices. Additionally, it can be challenging to monitor the work remotely.
If your business requires close coordination and collaboration with your team, being in the same time zone is important. Onshore teams provide the advantage of being in the same time zone, reducing the potential for miscommunication and delays.
If your work involves sensitive data, onshoring may be more secure since it gives you greater control over access. Offshoring may result in security risks due to differences in data protection laws and a lack of control over data access.
Offshoring may result in compliance issues if local laws differ from those in your home country. It is essential to research and understand local regulations before offshoring work to ensure compliance and avoid potential legal problems. It's also important to carefully weigh the pros and cons of each outsourcing model and consider the specific needs, priorities, and constraints of your business. It may be helpful to consult with experts and gather input from stakeholders before making a decision.
KDCI is the premier outsourcing service provider for those seeking to build and manage the best offshore team in the Philippines. With our extensive pool of Filipino talent, we are prepared to provide the best services, quality assurance, and customer satisfaction. We offer scalable offshore staffing solutions for a wide range of services from creative design and marketing to ecommerce, customer support, finance, and web development.
Our team of experts is always available to ensure a smooth process, ensuring that your business has the right offshore team to meet your organizational goals and objectives. Are you interested to learn more about our offshore staffing solutions? Contact us now!
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Outsourcing to low-cost countries (LCCs) has become a strategic move for businesses looking to scale faster, reduce operational costs, and access specialized global talent. Regions such as the Philippines, India, Vietnam, Eastern Europe, and parts of Latin America have emerged as top destinations for outsourcing services across industries like IT, customer support, design, finance, engineering, and digital marketing.
But while outsourcing to LCCs offers significant advantages—such as cost efficiency, workforce scalability, and round-the-clock operations—it also introduces concerns around communication challenges, data protection, cultural alignment, quality assurance, and long-term control.
That’s why today’s key question is no longer “Should we outsource?” but rather:
“How can we outsource to low-cost countries effectively while minimizing risk?”
In this blog, we’ll dive into the advantages and disadvantages of outsourcing to LCCs, explore the most common challenges businesses face, and share practical strategies for mitigating risk while maximizing value—especially when partnered with a trusted outsourcing company.
In the outsourcing world, “Low-Cost Countries (LCCs)” refer to locations where labour and operational costs are significantly lower than in developed markets, yet sufficient infrastructure, education and business-service ecosystems exist to support offshored functions. For businesses, LCCs offer a blend of cost savings and access to talent—in other words, the potential to scale operations without the expense of fully onshore staffing models.
When you outsource to an LCC, you’re paying less per hour for services, but you’re also expecting the quality, reliability and integration of those services to meet your global standards. As one benchmarking study puts it, global outsourcing rates “range from $6/hour in Southeast Asia to over $100/hour in North America.” Thus, in a business context, an LCC is selected not simply by cost alone—but by the balance of cost, talent quality, infrastructure readiness, cultural alignment and regulatory environment.
Some of the most widely adopted LCC destinations include:
The takeaway: businesses aren’t just choosing “cheap labour” locations—they’re choosing global hubs where cost + capability align.
Across industry verticals, LCC outsourcing is widespread—here are some of the most common use-cases with data:
If you need to scale a team for a digital product, customer experience operation, back-office finance workflow or creative/design pipeline—and you want cost efficiency with scalability—LCCs are a go-to option.
Outsourcing to LCCs offers businesses more than just labor savings—it provides a pathway to scalability, global market adaptability, and long-term growth. When done strategically, outsourcing enables organizations to operate efficiently, boost ROI, and access specialized skills that may not be readily available domestically.
One of the most compelling reasons companies outsource to LCCs is the significant reduction in operational expenses. According to Deloitte, cost savings remains the top driver for outsourcing decisions, with 57% of organizations citing it as their primary motivation.
Here’s why outsourcing delivers higher ROI:
In short, outsourcing doesn’t just lower costs—it increases return on investment by optimizing both workforce spending and resource utilization.
Outsourcing to LCCs gives businesses instant access to deep, specialized global talent pools without the challenges of local hiring.
Examples of skilled expertise available in LCCs:
According to Statista, over 92% of top global firms outsource IT functions, largely due to the abundance of well-trained engineers in LCCs.
Benefit: Companies can quickly onboard highly skilled professionals without spending months on recruitment, training, and onboarding.
Agility is critical in today’s fast-changing business environment. Outsourcing supports rapid scaling without the heavy burden of in-house hiring.
Key benefits include:
This flexibility is especially valuable for startups, e-commerce platforms, SaaS providers, and growing enterprises navigating unpredictable demand.
Outsourcing to different time zones—especially in markets like Asia or Eastern Europe—enables continuous operations across the clock.
The “follow-the-sun” support model ensures:
For example, a U.S.-based company outsourcing to the Philippines or India can maintain uninterrupted service while internal teams are offline—boosting service continuity and customer satisfaction.
By outsourcing operational and support functions, businesses can redirect time and resources toward mission-critical activities.
Internal teams can focus on:
Meanwhile, outsourced teams manage execution-heavy areas such as customer support, back-office tasks, IT operations, or digital production.
The result? Higher productivity, improved business agility, and accelerated growth through better allocation of internal expertise.
While outsourcing to LCCs offers undeniable economic and operational advantages, it also comes with inherent challenges. Failing to address these risks proactively can lead to communication breakdowns, compliance issues, or inefficiencies that negate the cost savings. Understanding these disadvantages is the first step toward building a more resilient, well-managed outsourcing strategy.
Language proficiency and cultural communication styles can sometimes lead to misunderstandings or delays in project execution. While countries like the Philippines rank highly in English proficiency, others may have varying levels of fluency, which can affect clarity in technical discussions or client interactions.
Additionally, differing time zones can delay collaboration, especially in organizations that rely on real-time communication for decision-making. Without structured communication frameworks and overlapping work hours, response times may suffer, slowing project momentum.
Risk if unmanaged: Misaligned expectations, project delays, reduced productivity.
Working across diverse cultural backgrounds can lead to differences in communication tone, decision-making styles, and interpretations of urgency or responsibility.
Examples of cultural misalignments include:
When not addressed, these differences can affect team cohesion, collaboration efficiency, and stakeholder satisfaction.
Risk if unmanaged: Misaligned teamwork, lower engagement, unclear accountability.
Outsourcing often involves sharing sensitive customer, financial, medical, or proprietary data with external teams—raising concerns around data privacy, regulatory compliance, and intellectual property protection.
Key challenges include:
Risk if unmanaged: Legal liabilities, financial penalties, loss of trust, reputational damage.
Not all outsourcing partners in LCCs adhere to global performance benchmarks. If providers lack strict hiring standards, domain expertise, or quality assurance processes, businesses may encounter:
Maintaining high standards becomes especially difficult when working with multiple remote contributors without strong QA systems or performance tracking mechanisms.
Risk if unmanaged: Rework costs, customer dissatisfaction, disrupted brand consistency.
While outsourcing is marketed as a cost-effective solution, there may be unforeseen expenses linked to implementation and oversight, including:
If the outsourcing partner lacks mature systems or structured processes, the business may need to invest more time and money into oversight, reducing expected ROI.
Risk if unmanaged: Profit erosion, management burnout, diminished cost advantages.
Though outsourcing to Low-Cost Countries comes with certain risks, these challenges can be effectively managed with the right strategy, partner selection, and governance framework. Businesses that approach outsourcing deliberately—not just as a cost play—are able to build high-performing offshore teams that deliver long-term value, scalability, and consistent quality.
Cost savings shouldn’t be the only deciding factor when choosing an outsourcing provider. The most effective outsourcing relationships are built on expertise, reliability, scalability, and transparency.
Key evaluation criteria include:
A partner that understands your goals, brand values, and quality standards will always offer higher ROI than a low-cost provider with inconsistent performance.
Effective communication is critical when managing global teams across different time zones and cultural contexts.
Best practices:
Structured communication eliminates confusion, increases accountability, and ensures everyone is aligned toward the same business objectives.
Quality control starts with clear expectations and continues through measurable tracking.
Recommended strategies:
A data-driven performance model ensures output quality stays high and aligned with brand standards.
Security and privacy must be built into the outsourcing process from day one—especially when dealing with customer, financial, or healthcare data.
Critical data protection steps:
Choosing providers with certified security frameworks reduces legal liabilities and safeguards business reputation.
For companies hesitant to fully outsource, hybrid or co-managed models offer a safer, more controlled pathway.
How hybrid models work:
This model ensures better quality consistency, easier governance, and seamless integration between onshore and offshore operations.
With the right partner, tools, and management structure, outsourcing to LCCs becomes not just a cost-saving initiative—but a long-term strategic advantage.
Among Low-Cost Countries (LCCs), the Philippines consistently ranks as one of the top outsourcing destinations globally—particularly for customer experience (CX), digital services, finance, IT, and creative roles. Its success is driven by a unique blend of cultural alignment, skilled talent, and strong government support, making it a strategic choice for companies seeking both cost efficiency and service quality.
One of the Philippines’ strongest competitive advantages is its high level of English fluency and Western cultural alignment.
Culturally, Filipinos are highly familiar with Western media, communication styles, and workplace norms, making collaboration easier and reducing friction in client interactions and team integration.
Result: Seamless communication, customer satisfaction, and strong client alignment.
The Philippines is home to a fast-growing pool of skilled professionals across multiple industries.
Industry strengths include:
According to the IT & Business Process Association of the Philippines (IBPAP), the IT-BPM industry is projected to reach US$59 billion in revenue by 2028, fueled by talent demand from international markets.
Result: Businesses get access to skilled, scalable teams that can support complex, high-value functions—not just transactional work.
The Philippine government has long recognized outsourcing as a key economic growth driver and continues to support the industry through tax incentives, infrastructure investment, and workforce development.
Notable advantages include:
With more than 1.3 million Filipinos working in the outsourcing sector, the country has built a mature, well-supported ecosystem that ensures business continuity, workforce sustainability, and service reliability.
Result: A stable outsourcing environment designed for long-term success.
At KDCI Outsourcing, we help companies maximize the cost-efficiency and scalability of Low-Cost Countries—without the usual pitfalls of outsourcing. By operating out of the Philippines, one of the world’s leading outsourcing hubs, we build dedicated offshore teams that are fully aligned with your brand standards, performance goals, and long-term business strategy.
KDCI doesn’t offer one-size-fits-all staffing—we build specialized, role-specific teams designed to meet your exact operational requirements. Whether you need a single high-performing role or an entire department, we help you scale with talent experienced in global standards.
We help businesses successfully:
Each team is matched not only by skill—but also by industry experience, communication fit, cultural alignment, and scalability needs.
KDCI ensures consistent quality and low operational risk through structured delivery models and compliance-driven processes.
Our risk management and compliance practices include:
This ensures that when you outsource customer service and sales, outsource finance and accounting services, or outsource software development and IT services, you’re working with teams who deliver high standards consistently and securely.
We don’t just assign remote staff—we build fully integrated, dedicated teams that function as an extension of your in-house operations.
Our dedicated team model enables:
This approach ensures that whether you outsource engineering services, outsource human resources solutions, or expand your digital capabilities, your offshore team becomes a true strategic asset—not just a workforce cost saver.
KDCI provides flexible engagement options that allow you to control cost, scale at your own pace, and maintain oversight at every level.
Our models support
This flexibility ensures that you can start lean and strategically grow with confidence—whether you're looking to outsource graphic design, scale a DevOps team, or build a full-service finance and accounting department offshore.
With KDCI, outsourcing becomes a strategic advantage—not a gamble. We help you scale smarter, faster, and safer using world-class Philippine talent backed by structured delivery, security, and performance excellence.
Outsourcing to Low-Cost Countries (LCCs) offers businesses a powerful opportunity to scale faster, optimize costs, and access global expertise across functions like IT, customer service, design, engineering, finance, and HR. However, success doesn’t come from choosing the cheapest provider—it comes from working with a partner who prioritizes quality, compliance, scalability, and seamless team integration. With the right outsourcing model and governance in place, companies can transform offshore teams into long-term growth engines that drive innovation, resilience, and operational excellence.
At KDCI Outsourcing, we help global businesses leverage the advantages of outsourcing—without the risks. Whether you want to outsource software development and IT services, outsource customer service and sales, outsource graphic design, outsource engineering services, outsource finance and accounting services, or outsource human resources solutions, we build dedicated offshore teams in the Philippines that are aligned with your goals, culture, and performance standards. Ready to scale smarter with a high-performing offshore team built for long-term success? Contact us today and let’s build your global workforce together.
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When Amazon Web Services (AWS) experienced a major outage on October 20, 2025, the internet felt it instantly.
From global streaming platforms and gaming apps to smart home systems like Alexa and Ring, critical digital services went offline within minutes. Major news outlets including Reuters, CNN, BBC, and Al Jazeera reported disruptions that affected millions of users and countless businesses worldwide. For companies relying on AWS to power their websites, e-commerce systems, or customer support operations, every second of downtime translated to lost revenue, damaged trust, and operational chaos.
And this wasn’t just a technical glitch—it was a warning.
This event reminded business owners, CTOs, and startup founders of a hard truth: even the world’s most reliable cloud provider isn’t immune to failure. As more companies move their operations into the cloud, the risks of over-reliance on a single provider become harder to ignore.
So, what exactly happened during the AWS outage? Why did it take down so many major platforms? And more importantly—what does this mean for businesses moving forward?
Let’s break it down and uncover what the outage truly signals about the future of digital resilience.
When a platform like AWS goes down, it doesn’t just affect one company—it affects the foundation on which thousands of companies operate. Amazon Web Services is responsible for powering a massive portion of the world’s digital infrastructure, which means any disruption has immediate, global consequences. To understand the magnitude of the October 20, 2025 outage, we first need to look at what AWS is and how deeply it is embedded in business operations worldwide.
Amazon Web Services (AWS) is Amazon’s cloud computing division—a platform that provides on-demand access to computing power, storage, databases, artificial intelligence (AI), machine learning (ML), analytics, security tools, and more. Instead of maintaining expensive physical servers, businesses across the globe rely on AWS to host their websites, run their mobile and web applications, manage their data, and scale operations with ease.
AWS isn’t just popular—it’s dominant. According to market share reports from multiple industry analysts (such as Statista and Synergy Research Group), AWS remains one of the top cloud providers globally, serving companies from startups to Fortune 500 enterprises. Its widespread adoption is driven by:
Because AWS is the backbone for so many websites, mobile apps, streaming platforms, e-commerce systems, IoT devices, and enterprise workloads, any outage doesn’t just “slow the internet”—it sends shockwaves through global business operations.
On October 20, 2025, businesses and consumers across multiple regions began reporting widespread disruptions to major apps and websites that rely on Amazon Web Services. According to Reuters, the outage was first detected when monitoring platforms and users began flagging service interruptions across popular platforms hosted on AWS.
While full details were still emerging, early analysis and historical outage patterns suggest a likely connection to heavily used data hubs such as US-East-1, one of AWS’s most critical regions. This region has been historically prone to high-impact incidents due to its central role in handling traffic for North American clients and several global services.
As AWS continued to investigate the root cause, businesses relying solely on affected regions experienced full-service disruption without failover mechanisms or multi-region redundancy.
When AWS went down, it triggered a domino effect across consumer, enterprise, and IoT ecosystems. According to TechRadar’s live coverage, services ranging from entertainment platforms to smart home devices were hit within minutes of the outage spreading.
CNBC reported that several e-commerce websites, streaming platforms, and fintech apps dependent on AWS infrastructure were affected, resulting in checkout failures, login issues, and delayed transactions.
NBC News confirmed that multiple U.S.-based retailers experienced site interruptions, preventing users from completing purchases during peak shopping periods.
Global news authorities confirmed the scale of disruption:
From personal communication and gaming to critical e-commerce and financial services, the outage demonstrated just how dependent modern businesses and consumers have become on AWS's underlying infrastructure. While large enterprises with multi-region redundancy saw limited disruption, thousands of SMBs without robust failover systems experienced a complete halt in operations.
Early reporting points to issues inside AWS’s own networking and control-plane layers—specifically around how traffic is monitored and routed. Reuters reported that AWS traced the disruption to “a malfunction in the health monitoring system of network load balancers” within the EC2 internal network, with the incident originating in US-EAST-1 before cascading across dependent services.
Other coverage described closely related symptoms. The Verge’s roundup highlighted widespread DNS resolution problems tied to the EC2 internal network, which would explain why so many applications simultaneously failed to reach critical backend resources.
International outlets reinforced the emerging picture: Al Jazeera summarized Amazon’s initial diagnosis and the scale of impact as AWS worked through recovery, noting the concentration of effects in core U.S. regions that underpin global workloads.
On the community side, engineers debated likely failure modes on Hacker News, with several threads discussing how a fault in monitoring or routing for high-traffic services (e.g., CloudFront, load balancers) can produce internet-scale ripple effects—useful context even while Amazon’s formal post-mortem is pending.
For the official record, AWS publishes Post-Event Summaries (PES) after incidents that meet a defined impact threshold. Expect a PES to clarify the exact chain of events once AWS closes the investigation.
From an engineering standpoint, the facts reported so far map to three common AWS failure classes:
At the time of writing, AWS’s Health Dashboard status stream shows the sequence of advisories and recoveries for October 20, 2025—useful for correlating internal remediation with external symptoms.
AWS communicated through two primary channels:
For near-real-time situational awareness beyond AWS channels, reputable news outlets also maintained live coverage and confirmations throughout the day, which many teams used to triangulate customer-facing comms while internal SREs focused on mitigation.
KDCI perspective: incidents like this underline why resilient architecture (multi-AZ, multi-region, tested failover) and clear escalation paths matter. Our guidance to clients is simple: design for failure, rehearse the playbook, and staff a follow-the-sun ops capability so you can respond the moment the Health Dashboard turns yellow.
An AWS outage is not just a technical incident—it’s a business emergency. When AWS services go offline, the effects reach far beyond server rooms and engineering teams. E-commerce sales stall, financial transactions fail, customers lose trust, and operations come to a halt across entire industries. Because AWS underpins so much of the digital economy, every minute of downtime can translate into thousands (or even millions) in lost revenue and long-term reputational damage.
Downtime is incredibly expensive, especially for businesses that operate in real-time digital environments.
During the 2025 AWS outage, marketplaces, subscription services, and digital platforms reported significant transaction failures, with some businesses calculating losses in the hundreds of thousands before systems came back online.
In today’s digital-first world, users expect instant access—and when platforms go down, frustration builds fast.
Even when services are restored, the damage lingers. Customers may question reliability, churn to competitors, or hesitate to trust platforms lacking clear outage response strategies. In industries like fintech, healthcare, or IoT, trust is a core value—once lost, it’s difficult to win back.
Business continuity relies heavily on the smooth coordination of interconnected systems. When AWS falters, internal operations suffer alongside customer-facing services.
In organizations with just-in-time logistics or rapid turnaround workflows, even short-lived disruptions can compound into shipment delays, missed SLAs, or strained client relationships.
Not all businesses are equally prepared for outages—and that’s where the gap becomes costly.
SMBs that lack in-house DevOps or cloud resilience expertise often remain offline longer and have difficulty communicating realistic recovery timelines to their customers.
Takeaway: The AWS outage highlighted a crucial reality—cloud dependency without resilience planning can put businesses at financial risk, damage customer trust, and disrupt long-term growth trajectories.
The 2025 AWS outage isn’t just an isolated breakdown—it’s a reminder of the risks companies take when they put their entire digital infrastructure into the hands of a single provider. While AWS is one of the most trusted cloud platforms in the world, even industry leaders are not immune to failure. For businesses relying solely on a single cloud provider without backup or failover strategies, an outage can quickly escalate into a full-scale operational crisis.
When an entire business ecosystem is built on just one cloud service—like AWS—any disruption to that service instantly becomes a single point of failure.
The key lesson? Scalability without resilience is risky. While AWS allows companies to grow rapidly, relying on one cloud without a safety net exposes businesses to major continuity risks.
This isn’t the first time AWS outages have disrupted businesses at scale. A look back at historical events reveals a concerning pattern:
These recurring incidents prove one thing: No cloud, no matter how advanced, is outage-proof.
Enterprises that survived these past outages with minimal disruption typically had:
Those that did not often experienced extended downtime, growing customer frustrations, and post-incident churn.
Despite the known risks, a surprising number of companies still lack formal Business Continuity (BC) and Disaster Recovery (DR) strategies for cloud failures.
The AWS outage exposed these gaps, revealing which companies were architected for resilience—and which were just hoping for uninterrupted service
Key takeaway: Outages are inevitable, but failure doesn’t have to be. Businesses that strategically plan, diversify infrastructure, and stress-test resilience can withstand future cloud disruptions without collapsing.
While companies can’t prevent third-party cloud providers from experiencing outages, they can dramatically reduce operational risk through smarter architecture, proactive planning, and the right talent strategy. The businesses that stay resilient aren’t the ones who avoid disruption entirely—they’re the ones that prepare for it.
Depending on a single provider like AWS introduces a clear failure risk. That’s why forward-thinking companies are increasingly turning to multi-cloud or hybrid cloud models.
Benefits include:
When AWS experiences a service degradation, businesses with workloads spread across multiple platforms can fail over to unaffected providers, minimizing downtime and preserving customer experience.
Cloud resilience requires intelligent system design. Businesses that suffered the least during the AWS outage were those with automated backup and failover capabilities.
Key components of an outage-ready architecture include:
The goal is to ensure your systems don’t just detect an outage—they respond to it instantly.
A well-written BC/DR plan is only effective when tested, updated, and understood by the entire organization.
Best practices include:
Companies that treat outage drills like fire drills are better equipped to respond with confidence rather than confusion.
Resilience requires expertise—not all businesses have that expertise in-house.
That’s why many companies choose to outsource software development and IT services or outsource engineering services to experienced partners who understand how to build, manage, and monitor fault-tolerant cloud ecosystems.
By outsourcing cloud operations and infrastructure management, businesses gain:
With the right outsourcing partner, businesses can build reliable infrastructure while freeing internal teams to focus on innovation and growth—not firefighting downtime.
Cloud outages are not just a technical problem—they’re a business continuity risk. When minutes of downtime can translate into lost revenue, churn, and damaged reputation, having the right people in place to detect, respond, and recover quickly is critical. That’s where outsourcing becomes a strategic advantage—not just as a cost-saving measure, but as an operational resilience solution.
In a digital economy that never sleeps, uptime monitoring and incident response can’t be limited to local working hours. Offshore teams enable continuous coverage across time zones, ensuring issues are caught and resolved before customers even notice.
With an offshore outsourcing model:
For companies with customers in multiple regions, outsourcing offshore helps maintain a consistent, always-on digital experience.
A resilient infrastructure doesn’t happen by accident. It requires proactive architecture design, continuous observability, and constant optimization—areas where outsourced DevOps and IT specialists excel.
How outsourced DevOps and IT teams contribute to resilience:
With outsourced experts focused on uptime, in-house teams can prioritize strategic development rather than emergency firefighting.
At KDCI Outsourcing, we help businesses future-proof their operations by building cloud-ready, resilience-focused remote teams tailored to their needs.
Examples of roles we provide to support business continuity:
What sets KDCI teams apart:
By partnering with KDCI, companies can build dedicated remote teams that not only maintain business operations during outages—but proactively prevent disruptions and strengthen long-term digital resilience.
The October 2025 AWS outage wasn’t just another tech incident—it was a wake-up call for every business that depends on cloud infrastructure. When critical systems fail unexpectedly, the companies that survive are not the ones with bigger servers, but those with stronger resilience strategies and the right people managing them.
Outages are inevitable. Whether caused by network failures, configuration errors, or cascading system breakdowns, cloud disruptions are part of the modern digital landscape. What separates resilient businesses from vulnerable ones isn’t the ability to avoid outages—it's how well they prepare for and respond to them.
When uptime equals revenue, trust, and competitive edge, resilience becomes a board-level priority.
No cloud provider, not even AWS, can guarantee 100% uptime forever. Historical data proves that failures will occur—and often at the worst possible times.
So the real question is no longer:
“What happens if AWS goes down?”
It’s:
Companies that wait for the next outage to act will always be playing catch-up. Those who act now will lead with confidence.
At KDCI Outsourcing, we help businesses build the kind of offshore teams that don’t just support uptime—they protect it. Whether you need dedicated DevOps engineers, cloud support specialists, or full IT and engineering teams, we create scalable workforce solutions designed for reliability and performance under pressure.
When the next outage hits, don’t hope your systems will survive—know your team is ready.
Don’t wait for the next outage to expose vulnerabilities in your cloud strategy. Build a dedicated offshore DevOps, IT, or engineering team with KDCI Outsourcing and ensure your business stays resilient, scalable, and always online—even when the cloud isn’t. Ready to future-proof your operations? Contact us today and let’s build your uptime-ready team today.
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This 2026, running a successful Ecommerce brand is no longer just about great products or fast shipping. Well, the truth is, it hasn’t been limited to that since the past couple of years. If anything, consumers make buying decisions based on aspects that are beyond the products themselves — one of those factors is customer service. In fact, the cost of bad customer service for businesses worldwide is estimated at $3.7 trillion, with 43% of consumers claiming that terrible customer experiences discourage them from making repeat purchases.
If you’re running an online store, the demand for an always-on and highly personalized customer experience sure sounds familiar. From pre-sale inquiries to post-purchase support, the way you communicate with customers can define (in a make or break way) your brand reputation and directly affect your business’ bottomline.
That’s why many growing online stores today choose to outsource Ecommerce customer service to expert providers. While it’s usually for reasons involving cost savings, outsourcing customer service functions also help unlock scalability, multilingual reach, and even 24/7 contact centers while ensuring that your customers feel genuinely cared for.
In this guide, we’ll highlight the top 10 providers to outsource Ecommerce customer service in 2026, including their strengths and what makes each a standout partner for online stores. Whether you’re a global retailer or a fast-scaling online brand, this list will help you make an informed choice and find a partner that fits your growth strategy.
Let’s get started.
Before we dive into the list, we’ll discuss the “why” first. In the past couple of years, customer service has always been among the most commonly outsourced functions. This allows businesses to maintain a reliable contact center while focusing on other core functions.
For Ecommerce businesses where the demand for customer support is quite unique, customer service outsourcing has proven to be an ideal solution for a number of businesses, too — and for several good reasons.
Let’s go through some of them.
When working with an outsourcing provider, it’s easier for online stores to add more customer support agents as sales grow, especially during peak seasons. In the same way, it’s more convenient to scale back as the demand changes.
The beauty of working with offshore outsourcing partners (particularly those based in the Philippines) is the opportunity to take advantage of varying time zones. Because of time zone differences, customer service providers can take calls 24/7, without the need to manage overnight shifts or different time zones.
Outsourcing companies train agents specifically in Ecommerce platforms, CRM systems, and brand tone adaptation. This way, you get fully-trained agents who are dedicated to serving your customers.
Since they are solely focused on customer service alone, outsourced customer service teams help boost satisfaction and loyalty. With highly-organized systems to expert communication skills, you can fully trust outsourced customer service teams to represent your online brand well.
Since BPO companies handle the entire onboarding process of customer service agents, you also save on hiring, training, and overhead expenses when outsourcing. Once the team is set up, they will be ready to handle all customer inquiries, making sure that every customer interaction counts.
Now that we have covered the why, let’s talk about the who. When done right, outsourcing transforms customer service into a loyalty engine. To maximize returns and ensure that Ecommerce customer service outsourcing works for your online store, it’s crucial to find the right outsourcing partner.
Get to know some of the companies who can help you connect with your customers through better customer experiences.
Below are some of the leading BPO companies in the Philippines who excel in offering outsourced Ecommerce customer service solutions:
Based in Pasig City and specializing in end-to-end Ecommerce customer support for medium to large global brands, KDCI Outsourcing is a top choice for those looking for flexible engagement models and personalized customer solutions.
When it comes to outsourcing Ecommerce customer service, KDCI stands out as the leading choice for brands seeking a flexible, scalable, and genuinely human approach to customer experience. They specialize in building custom customer service teams that align with your brand voice, handle high-volume inquiries, and support every channel — from live chat and email to social media and marketplace communication.
KDCI’s edge lies in tailored strategies as KDCI designs workflows, scripts, and escalation paths that reflect each client’s unique operations and brand personality. Their solutions are ideal for online stores using Shopify, WooCommerce, Magento, and Amazon, among others. KDCI works with businesses in the US, Australia, or Europe that want to scale customer service operations offshore without compromising service quality or customer experience.
Teleperformance remains one of the most recognized names in the BPO world, specializing in working with enterprise Ecommerce brands with international operations. They offer enterprise-grade customer experience management with deep expertise in omnichannel support and analytics. Their core strengths include advanced analytics and CX automation as well as strong compliance and data security standards
Their Ecommerce teams manage high ticket volumes across multiple regions, providing coverage in dozens of languages — ideal for retailers selling in global markets. If you’re running an enterprise that needs global 24/7 coverage and want to combine human and automated support seamlessly, Teleperformance is an ideal partner for you.
For online retailers looking to modernize customer experiences, Concentrix is a good option. Concentrix combines CX strategy, technology, and delivery, making it perfect for Ecommerce businesses looking to transform their entire customer support function — not just outsource it.
Their team helps brands integrate AI, chatbots, and automation into customer journeys while ensuring every touchpoint feels consistent and personal.
Concentrix excels in consulting and process optimization, AI-powered automation, and integration with CRM and marketing platforms.
TTEC takes a unique approach — blending marketing, sales, and service to help brands deliver profitable customer experiences. They focus on connecting customer care with customer acquisition, upselling, and retention.
Their Ecommerce customer service offering is particularly strong when it comes to:
TTEC is usually chosen by Ecommerce companies worldwide who are looking to turn support into sales and improve lifetime customer value.
TaskUs is popular among fast-growing digital brands for its modern, agile approach to customer experience. The company is known for handling support across chat, social media, and online communities, and for maintaining a youthful, energetic team culture.
With expertise in digital-native brand support, focus on social media and community moderation, as well as flexible scaling and fast onboarding, TaskUs is ideal for brands targeting Gen Z and millennial audiences through social-first engagement.
Next on our list is Foundever, which combines AI efficiency with human empathy, enabling brands to handle large support volumes without sacrificing personalization. Their teams are trained to balance automation (like chatbots for basic queries) with empathetic live interactions for complex cases and customer inquiries.
Foundever is an ideal partner for retailers managing massive order volumes, returns, or marketplace queries. They are best known for their:
TELUS International stands out for combining CX delivery and AI data operations. They’re the go-to provider if you want to use machine learning or conversational AI to improve your Ecommerce customer service workflows.
TELUS offers multilingual customer service operations, AI training and data annotation for call center agents, and advanced automation and analytics to streamline workflows and processes. For brands exploring AI-enhanced self-service or AI-assisted agent support, TELUS is an ideal customer service outsourcing partner.
VXI Global Solutions combines large-scale customer support delivery with intelligent automation and data-driven performance management. They specialize in designing workflow systems that improve resolution times, reduce operational inefficiencies, and maintain service consistency at enterprise volume.
With strong QA frameworks and a highly secure delivery model, VXI is a reliable choice for brands that require compliance, visibility, and continuous optimization in their customer service operations. For enterprise organizations aiming to enhance efficiency without compromising customer experience, VXI is a strong outsourcing partner.
Enshored is known for supporting high-growth DTC and subscription-based ecommerce brands that value authenticity and brand-aligned customer interactions. Their teams are intentionally smaller and more agile, allowing them to adopt brand voice, internal processes, and product knowledge quickly. This makes them particularly effective for lifestyle, apparel, beauty, and niche consumer brands where tone and personalization matter.
For companies seeking a boutique, collaborative outsourcing experience rather than a large-scale call center environment, Enshored is an ideal partner.
Digital Minds BPO is a cost-efficient customer service outsourcing provider headquartered in Manila. They specialize in providing offshore CX teams that are both budget-friendly and fluent in Western communication styles, making them especially attractive for brands expanding global support coverage.
Their approach focuses on dependable service delivery while maintaining a strong understanding of ecommerce workflows, particularly order management and post-purchase inquiries.
Digital Minds is chosen by their clients for:
With all these options available (and a lot more that are not included in the list), selecting a provider can be overwhelming. Keep in mind, however, that choosing your Ecommerce customer service outsourcing partner isn’t just about pricing but also about finding the right operational and cultural fit.
To help you find the right match, here’s a quick checklist that you can refer to:
Once you’ve assessed these key criteria and identified the right Ecommerce customer service outsourcing partner who can help you with your business goals, you can get started on building your offshore customer service team.
Here’s how:
Launch a small-scale pilot to test alignment and workflows before scaling full volume. If you’re just testing the waters, working with a few agents and establishing clear systems with a small team can help you prepare and mitigate the risks of having a full-scale, offshore customer service department.
The key to any good Ecommerce partnership is setting clear expectations. In the context of outsourcing customer service functions, Key Performance Indicators (KPIs) help you assess the quality of service you’re getting. As such, it’s important to set measurable goals for CSAT, average handle time (AHT), and response time upfront.
While Ecommerce call center agents from trusted outsourcing companies already have the technical and communication skills, they still need guidance when it comes to delivering personalized experiences to your customers. The best way to make sure that the service is tailored to your business’ customers is to provide guidelines on tone, empathy, escalation, and product FAQs.
Collect customer feedback during the first 90 days to refine scripts and processes. After all, it’s your customers who are directly interacting with the customer service agents. Use their feedback in order to identify the strengths and address the gaps in the customer service workflow.
As with any business process, the initial steps will naturally involve assessments, feedback, and ongoing improvements in your customer service process. Think of it as a long-term investment in your business growth. Once quality stabilizes, that’s when you can add more channels (voice, chat, social) to your contact centers.
The future of Ecommerce customer service is AI-assisted, data-driven, and globally distributed. Brands that thrive will be those that blend human empathy with intelligent automation to create experiences that are efficient, consistent, and emotionally resonant.
Outsourcing partners like KDCI Outsourcing are already leading this shift in trends — combining human expertise with CX analytics and automation to help brands deliver top-tier experiences at scale. In 2026, ecommerce success hinges on how well you care for your customers. The right outsourcing partner helps you do exactly that: enhance customer satisfaction while freeing your internal team to focus on growth.
So, if you’re looking for a trusted partner for your Ecommerce customer service operations, look no further than KDCI Outsourcing.
Scaling your operations for your online store is easier when your customers feel valued every time and across every channel.
At KDCI Outsourcing, we help global Ecommerce brands build customer service teams that deliver consistent, empathetic, and results-driven customer experiences. From chat and email support to omnichannel strategies, we tailor every outsourcing solution to strengthen loyalty and elevate your brand reputation.
Talk to our Ecommerce outsourcing specialists and discover how we can help your store scale smarter in 2026. Contact us to learn more.
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The comparison between managed services vs outsourcing has grown over the last few years. As of 2024, the market value of global managed services was $348.12 billion USD. This value is expected to soar to $393.02 billion USD and $1037.46 billion USD in 2025 and 2033, respectively.
It’s the same case with outsourcing. According to Grand View Research, the global business process outsourcing (BPO) market’s 2024 value was around $302.62 billion USD. By 2030, this value is expected to skyrocket to $525.23 billion USD.
As various industries and business arrangements constantly evolve, many ask if a managed service is just a narrower concept of outsourcing or a new breed of business model.
In this article, we’re going to thoroughly explain how managed services vs outsourcing differ, their benefits, and which best suits your rapidly growing business needs.
Outsourcing is a business strategy that involves hiring an external service provider, specifically a business process outsourcing (BPO) company, to perform tasks, provide services, or manufacture products instead of doing them in-house. The objective of outsourcing is to save money, access specialized expertise or technology, or increase operational efficiency.
Some common examples of outsourcing include hiring a recruitment process outsourcing (RPO) firm to handle a company's payroll, partnering with a manufacturer in another country to produce goods, or working with a call center company to outsource customer service.
Traditional outsourcing offers several benefits for businesses, including:
Outsourcing can be a cost-effective way to get work done because it allows companies to take advantage of lower labor costs in other countries and access specialized expertise without having to hire full-time employees or maintain additional internal resources.
By outsourcing certain tasks or processes, a company can focus on its core competencies — which can often lead to better results and higher levels of operational efficiency.
Outsourcing allows companies to access specialized external expertise or technology that they may not have in-house. This can be particularly useful for companies that need to tap into specific knowledge or capabilities on a project-by-project basis.
Outsourcing can provide companies with increased flexibility and scalability because it allows them to easily ramp up or down their operations as needed. This can be particularly helpful for companies that experience fluctuating demand for their products or services.
By outsourcing certain tasks or processes, companies can often improve the quality of their products or services, which can lead to higher levels of customer satisfaction.
Managed services refer to a business model in which a company provides a defined set of services to its clients on a proactive, ongoing basis. While associated with IT, managed services can also include human resources, marketing, and procurement.
For example — if you’re availing of IT managed services — these may include everything from managing and maintaining a customer's IT infrastructure and applications, to providing expertise and technical support in areas such as cloud computing and cybersecurity.
The goal of managed services is to help businesses improve their operations and increase efficiency by providing expert support and guidance in a business function. This can help businesses save time, money, and resources while also enabling them to focus on their core competencies.
Partnering with a managed service provider offers significant advantages to businesses, including:
Managed service providers (MSPs) are experts in their field and can handle a wide range of tasks, allowing your in-house team to focus on more strategic, high-value projects.
By outsourcing certain business functions, you can save on labor and training costs, as well as avoid the need to invest in expensive equipment and software.
A managed service provider typically has the expertise and resources to implement and maintain strong security measures, helping to protect your organization from potential cyber threats.
Like the best outsourcing companies, managed service providers can help you develop a comprehensive disaster recovery plan and provide the necessary tools and support to ensure your business stays up and running in the event of an unforeseen disaster.
Managed services providers can help ensure that your organization is compliant with industry regulations, helping to reduce the risk of fines and other penalties.
Managed services vs outsourcing are often used interchangeably, but they actually refer to two different types of arrangements. Outsourcing involves transferring certain business functions or processes to an external provider, while managed services refer to the ongoing management and maintenance of those functions or processes by the provider.
In other words, outsourcing is a one-time arrangement in which an organization contracts with an external provider to handle a specific task or function, such as customer support or product information management.
If you want to scale your operations during peak business seasons, outsourcing to a service provider is the best move. You can also scale down with outsourcing after peak periods.
On the other hand, unlike traditional outsourcing, managed services are ongoing, long-term arrangements in which the provider takes on a more proactive role in managing and maintaining certain functions or processes for the company.
This may include tasks such as monitoring and maintaining the company's IT infrastructure, providing ongoing technical support and maintenance, and implementing security measures. The managed services provider acts as an extension of the company's own IT team, offering expertise and support to help the company operate more efficiently.
Both practices are different. Shared services focus on centralizing functions, like IT support, across all departments, whereas managed services center on delivering and maintaining diverse outsourced services for a business function.
Shared services also involve internal expertise. This means you can hire new employees or provide professional development opportunities to existing staff. On the other hand, managed services rely on an external provider with a competent workforce that’s already at the level of your desired expertise. Unlike shared services, you don’t have to train your external team.
Much like choosing between shared services vs outsourcing, your choice of practice is highly dependent on your business needs and goals.
However, you should choose managed services if you want:
Alternatively, you should opt for outsourcing if you want:
Managed services providers usually offer a flat monthly rate for their services. Hence, it’s easier to anticipate next month’s expenses and plan your budget accordingly.
Traditional outsourcing, however, offers more pricing structures, including time and materials, project-based, hourly-based, incentive-based, and the like. Service providers also create flexible and custom pricing solutions according to your requirements.
While it’s possible to anticipate outsourcing costs, be prepared to anticipate circumstances that may increase your expenses, such as software updates, legal and compliance fees, power outages, project delays, and quality issues.
Are you planning to outsource some of your non-core business functions to the best offshore outsourcing companies? If so, consider partnering with KDCI Outsourcing.
We are a leading outsourcing company that has collaborated with global companies for over 10 years, offering scalable staffing solutions in graphic design, content creation, real estate, and many more.
Experience our world-class outsourcing services and build the best offshore team in the Philippines.
Contact us to get a FREE consultation with one of our outsourcing experts!
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Over the years, customer service has grown to adapt to the needs of modern customers. These customers have raised the bar for customer care, demanding speed, quality, and efficiency. For instance, on social media platforms, most customers (76%) expect brands to reply within a day.
Thankfully, such standards and demands can now be met with the help of outsourced customer service solutions. These technologies help clients provide the best possible customer assistance through powerful features that streamline and enhance the quality of customer support.
With outsourcing customer service a norm for medium- and large-sized businesses, you can access these outsourced customer service solutions by working with the best customer service agencies.
Outsourcing customer service lets you enjoy the following benefits:
Outsourcing firms augment your customer support system with the right outsourced customer service solution. They also have employees who know how to use customer service technologies like the back of their hand.
When you outsource customer service, you’re not just gaining access to new technologies and tools; you’re also working with people who are trained to leverage them to your business’s advantage.
Cost savings remain an indisputable appeal of outsourced customer service. Outsourced customer service agents are the full package: expertise, excellent technology proficiency, and cost-effectiveness.
When building a dedicated offshore team, your outsourcing partner will onboard agents who are already proficient in a particular software. This means less money spent on training. With in-house agents, you’ll have to train them — which eats up time and money, especially if they have no experience using other customer service technologies during their tenure.
Outsourcing companies operate round-the-clock. Hence, there are bound to be employees who work morning, afternoon, and night shifts to provide 24/7 coverage for clients worldwide. By outsourcing customer service, you can hire customer service agents who will cover your desired hours of operation.
Below are the different types of outsourced customer service solutions clients like you can take advantage of in 2026 and beyond:
CRM is one of the most popular customer service solutions. According to Freshdesk, as of 2024, most businesses (73%) shared that they have already started using CRM solutions.
This comprehensive software solution is designed for monitoring customer interactions and activity, centralizing data for easy access and viewing by all departments and teams.
By consolidating information in one place, customer service agents (and other professionals from different departments) can extract trends and understand customer behavior across the customer journey.
This helps agents create tailored campaigns and experiences that meet customers’ needs, resulting in a happier, more dedicated customer base.
When you make calls over the internet, that is already VoIP at work. And essentially, that’s what a VoIP software does. But there is more to it than that.
Nowadays, VoIP platforms come packaged with innovative features, including voice analytics, call forwarding, call recording, and three-way calling. Because VoIP software can cut down roaming charges, it is seen as a cheaper alternative to traditional phone call support.
Ticketing systems have become a vital tool for businesses. These solutions centralize, organize, route, and resolve tickets efficiently. They also function as a collaborative ground for agents, enabling seamless knowledge sharing.
But how does ticketing software work exactly?
Thanks to AI and automation, ticketing systems can streamline ticket prioritization and assignment — making the day-to-day workflow more efficient for agents.
Knowledge bases are a form of customer service — albeit more self-service than other outsourced customer service solutions.
These self-help hubs contain a wealth of information about your business, products, and processes. For instance, if a customer wants to know your supported payment methods, they can access your FAQ page and get the information they need at their fingertips.
While knowledge bases may be associated with written guides, they can also include infographics and video tutorials.
With AI in the picture, article generation becomes faster and easier for human agents. Apart from content creation, AI can also provide content recommendations based on the frequency of issues encountered by customers.
Live chat software solutions provide real-time support to customers on the web or on their smartphones. They can include chatbots that handle routine queries, leaving human agents for more complex issues. Through live chat, customers can enjoy faster support, engage with your brand, and turn them into paying customers.
Live chat software can also deliver data-driven analytics and insights, shedding light on sales conversions, agent performance, issue resolution, wait times, chat volume, and many more.
Outsourcing companies specialize in various outsourced customer service solutions to meet business requirements and needs. Here are a couple of examples of customer assistance software:
Zendesk is an advanced outsourced customer service software solution designed for delivering cutting-edge customer assistance across a wide range of support channels. AI-powered, scalable, and user-friendly, this platform elevates your large business’s productivity and customer experience without overcoming a steep learning curve.
HubSpot CRM is another popular software used by thousands of companies worldwide, including DoorDash, Reddit, Tripadvisor, and Zapier. This platform, though, is not only for customer service agents but also for marketers and sales professionals dedicated to enhancing the customer journey.
Integrated with AI solutions, HubSpot CRM promises smarter and more seamless delivery of customer support.
Salesforce is an AI-powered, cloud-based CRM with a decades-long track record of enhancing business-customer relations. Salesforce’s expertise in AI makes it an innovative outsourced customer service solution that empowers businesses for success in 21st-century customer support.
Zoho CRM is a leading customer service software solution packed with features that convert leads into loyal customers through engaging and seamless customer support. This platform is ideal for businesses looking to boost sales without sacrificing the quality of customer service.
Developed by Freshworks, Inc., Freshdesk is a software solution designed to modernize outdated customer service systems. Boasting AI capabilities, the platform enhances agent efficiency and the customer experience through actionable insights.
Meanwhile, the Freddy AI Copilot reduces manual input by creating clear summaries of conversations and helping agents craft appropriate responses based on a message’s context.
Built for live chat support, LiveChat is an AI-powered customer support solution that’s as user-friendly as it is effective in delivering fast, high-quality customer assistance. Trusted by thousands of brands and businesses, this software helps businesses achieve their sales goals and deliver a remarkable customer experience.
Microsoft’s Dynamics 365 is a powerful agentic CRM and ERP platform for professionals in customer service, marketing, finance, supply chain, and many more. With it, you can customize workflow with Adobe Acrobat, Cisco Call, Microsoft Copilot, and many other applications to fill productivity gaps and enhance the agent experience.
Nowadays, every business function — including customer service — is vital to success. If your business is struggling to meet customer expectations and deliver a stellar customer experience, let KDCI Outsourcing help you handle your customer support.
We employ and onboard customer service professionals experienced in using leading outsourced customer service solutions, such as Zendesk and Microsoft Dynamics 365. We also offer customer service roles in the finance, gaming, healthcare, hospitality, and e-commerce industries.
Upgrade your customer support system with outsourced customer service solutions. Shoot us a message to learn more about our customer service outsourcing services — or even the technologies we specialize in.
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The 21st century has seen a rapid boom in the Information Technology (IT) industry and the outsourcing of IT services.
IT Outsourcing (ITO) is one of the most cost-effective and efficient ways for businesses to leverage technology without having to build and maintain their own teams and infrastructure. In today’s competitive market where technology is practically everywhere, ITO could be the difference between a growing business and one that is hampered by overwhelming operational costs (or worse, gets lost in a sea of competitors).
If your current IT function is more of a business cost than a streamlined process that supports your other business functions, then it might be time to consider outsourcing your IT to a third party service provider.
Let’s find out if IT outsourcing is the right solution for your business.
In this blog post, we will discuss what ITO is, how it works, and the benefits of using this service. We will also provide tips and best practices to consider when choosing an ITO provider. By the end of this post, you will have a better understanding of ITO and be able to make an informed decision about whether it is the right solution for your business.
IT outsourcing involves transferring the ownership and control of specific IT functions from an organization to an external service provider. More specifically, there is offshore IT outsourcing where the functions are outsourced to countries outside the US, such as the Philippines, India, and Vietnam.
The main objectives of IT outsourcing are to reduce costs, increase efficiency, and access specialized skills and technology. IT outsourcing can also allow an organization to focus on its core business activities and delegate non-core tasks to experts in the field.
In essence, the outsourcing provider takes responsibility for the management and delivery of the IT services, and the client organization is responsible for defining the requirements and monitoring the performance of the provider. The relationship between the client and the outsourcing provider is typically governed by a contract that outlines the services to be provided, service level agreements, and the terms and conditions of the outsourcing arrangement.
Similar to Business Process Outsourcing or BPO, ITO works by a company transferring some or all of its technology tasks to a third-party service provider, who then manages and delivers these services on behalf of the company. For example, a clothing manufacturer may outsource its website development and maintenance to a specialized IT company. Another example is a bank outsourcing its data storage and security to a cloud service provider.
Outsourcing information technology is becoming increasingly popular among companies in the modern business world due to its many benefits:
Outsourcing IT functions to a third-party provider can lead to reduced labor and operational costs, lower overhead expenses and savings on software and hardware.
Outsourcing enables companies to access specialized skills and technical expertise and skills they may not have in-house.
IT outsourcing can result in improved processes, streamlined workflows and increased automation, leading to greater efficiency and productivity.
By outsourcing non-core IT functions, companies can redirect their internal resources and focus on their core business activities. For instance, with reliable IT in place, you can focus on your customer service and improve the customer experience — which, in turn, leads to overall better business results.
When you outsource information technology, it can help reduce risk by transferring responsibilities and potential liabilities to the outsourcing provider.
IT outsourcing can provide flexible resources and capacity to meet changing business needs, helping companies to scale their operations as required.
IT outsourcing can give companies access to the latest technology and expertise, helping them to stay ahead of the curve.
By outsourcing IT functions, companies can become more agile and responsive to market changes, helping to increase their competitiveness and stay ahead of the competition.
Outsourcing IT services and processes can be beneficial for many businesses, but there are certain risks that must be taken into consideration. Here are the most common risks associated with outsourcing IT services:
When sensitive data is outsourced to a third-party vendor, there is always a risk of it being lost, stolen or exposed to unauthorized access. This is especially concerning in industries that handle sensitive information such as financial services, healthcare, and government organizations. IT outsourcing companies must take precautions to ensure the security of their data, such as implementing encryption, multi-factor authentication, and regular security audits.
When outsourcing IT services, it’s essential to avoid relying too heavily on a third-party vendor. This can result in a loss of control over the outsourced operations and cause difficulties in managing the relationship with the vendor. A strong, well-defined contract and continuous communication with the vendor can help mitigate these risks.
Inflexible contracts and service level agreements can make it challenging to respond to changing business requirements. It's essential to have a flexible outsourcing agreement that allows for changes in scope and other modifications as needed.
The quality of service provided by a vendor can suffer if they don't have sufficient expertise or resources. IT outsourcing companies must thoroughly evaluate potential vendors to ensure they have the necessary skills and resources to meet their needs.
Differences in working styles and cultures between the outsourcing company and vendor can lead to misunderstandings and difficulties. IT outsourcing companies should carefully consider the cultural fit of a potential vendor and take steps to ensure that communication is open and clear. On top of culture, language is a key consideration, too. It’s important to find an ITO provider from a country where the English proficiency of IT experts is high to reduce risks of miscommunication.
Costs can escalate if scope creep occurs or if unexpected problems arise during the outsourcing engagement. It's essential to have a well-defined scope of work and regularly review the project budget to ensure that costs remain within the agreed-upon limits.
Disputes may arise over ownership of the software, processes, or other intellectual property developed during the outsourcing engagement. IT outsourcing companies should have a clear understanding of intellectual property rights and include provisions in their outsourcing agreement to protect their interests.
IT outsourcing allows businesses to tap into the knowledge and expertise of external IT providers. For example, IT outsourcing companies in the Philippines specialize in technology and bring a wealth of experience and resources to the table, which can help organizations improve their technology infrastructure in several ways. One way is through upgrading hardware and software. IT outsourcing providers have access to the latest and most advanced technology solutions, which they can provide to their clients. This can be especially helpful for small or medium-sized businesses that may not have the budget to purchase the latest technology on their own. With IT outsourcing, they can access the technology they need at a more affordable cost.
Another way IT outsourcing can improve technology infrastructure is by streamlining processes. IT outsourcing providers are well-versed in identifying areas of inefficiency and can work with organizations to implement better processes. This can include automating repetitive tasks, optimizing workflows, and improving data management. The result is a more efficient technology infrastructure that can support the business more effectively. Enhancing security is another critical aspect of IT outsourcing. IT providers have the resources and expertise to offer robust security solutions, including firewalls, antivirus software, and intrusion detection systems. They can also manage potential security threats and provide ongoing security monitoring to ensure that the technology infrastructure remains secure. This helps organizations protect their sensitive data and avoid potential cyber attacks.
Follow these step-by-step procedures to choosing the best ITO service provider for your business needs:
Before you start your search for an IT outsourcing provider, you need to know exactly what you're looking for. This will help you to determine what specific services and skills you need from the provider, as well as what your budget is.
Look for providers that have a proven track record in the specific IT services you need. Research their background, experience, and reputation to determine if they would be a good fit for your company.
Look at the provider's portfolio to see the types of projects they have worked on and the outcomes they have achieved. Ask for references from previous clients to learn about their experience with the provider when it comes to IT, software development, and other BPO services.
Make sure the provider has the technical expertise and capabilities to meet your IT needs. Ask them to demonstrate their skills, and if necessary, have them perform a technical evaluation.
You want to make sure the provider has well-established project management processes in place to ensure that your project is completed on time, within budget, and to your satisfaction.
Good communication is key to the success of any outsourcing project. Make sure the provider has clear, transparent communication processes in place, and that you have regular opportunities to check in on the progress of your project.
Data security and privacy are crucial for any company. Make sure the provider has strong security measures in place to protect your data, and that they have clear policies for data privacy and protection.
Pricing and cost structures can vary greatly between IT outsourcing providers. Make sure you understand the provider's pricing and cost structures, and that they fit within your budget.
You want to make sure that the provider is available to answer any questions you have and resolve any issues that may arise. Look for providers that have a proven track record of providing excellent customer support.
The provider you choose should be a good cultural fit with your company. This will help ensure a smooth and successful working relationship. Look for providers that share your values and approach to business.
Outsourcing technical support can be a smart decision for businesses looking to provide top-notch customer support without having to hire, train and manage in-house teams.
KDCI offers a range of technical support services for Ecommerce businesses, providing a team of highly skilled and dedicated technical support specialists who are ready to provide quick and efficient solutions to customer queries. Our technical support specialists are carefully selected based on their communication skills, problem-solving abilities, and customer-centric approach, ensuring that your customers receive the best possible support.
By outsourcing your technical support needs to KDCI, you can focus on growing your business while making sure that your customers’ concerns are addressed in a timely and professional manner.
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Today’s customers have needs that are quite different from that of customers a few years back. Tomorrow’s customers may have needs that are quite different from that of today’s — that could be true as well. Such is the nature of the customer experience landscape: it’s ever-changing.
This is why customer service is a rather complex space that businesses dedicate a lot of effort and strategy into.
From omnichannel expectations (say, live chats, phone support, email inquiries, and more) to AI-driven customer solutions and highly-personalized service delivery, businesses all over the world are expected to serve customers faster and smarter.
For medium to large companies in the US, this is both an opportunity and a challenge. It’s a chance to elevate overall business results with top-tier, 24/7 customer support. However, building an in-house team that can deliver that level of customer service is rarely efficient nor sustainable.
When done right, customer service outsourcing effectively extends the capabilities of the business, building a global customer support department that maintains your brand standards, boosts customer loyalty, and empowers your organization to scale WITHOUT losing control.
In this article, we’ll focus on the biggest reservations that businesses have about outsourcing: the risk of losing quality or control. We’ll explore how to outsource customer service strategically to maintain quality and turn customer service outsourcing into a reliable growth driver for your business.
Let’s get started.
Generally speaking, the decision to outsource contact center operations is rarely made lightly. After all, it’s a huge move that could impact business operations as a whole. This is especially true for customer service as it involves delegating the management of the most important aspect of the business — the customers. Many business leaders hesitate for one simple reason: the fear of losing touch.
Some of the things that they worry about when it comes to outsourcing are that:
These concerns are all valid, especially for businesses that are just starting to scale. However, these usually stem from outdated perceptions of customer service outsourcing. Far from the traditional, transactional contact center outsourcing models of the past, the modern BPO landscape operates on a more strategic, personalized level. The top customer service outsourcing providers operate as extensions of the internal team, offering:
When working with customer service outsourcing providers today, businesses can tap into personalized solutions that will benefit both the organizations and your valued customers.
It’s only natural for businesses to feel protective about the brand, so maintaining control is a rather understandable need. However, control in customer service outsourcing must not be associated with micromanaging every single customer interaction to ensure customer satisfaction.
It means maintaining influence and insight over how your customers experience your brand. It’s about ensuring your standards, tone, and metrics guide every customer interaction — even when it’s delivered by a partner team halfway across the world.
True control comes from clarity: clearly defined expectations, shared data visibility, and regular performance alignment. When those are in place, outsourcing becomes a natural extension of your business rather than a detached operation.
Fear of losing control aside, let’s talk about why customer service outsourcing is a strategic move that will empower your business to stay ahead of the competition.
Outsourcing customer service remains one of the most practical strategies for businesses looking to expand their reach while maintaining efficiency. Beyond cost savings, outsourcing offers flexibility, access to specialized talent, and faster time-to-market for scaling both customer and technical support.
With the right provider, you can launch 24/7 operations without massive overhead costs or the long lead times required for in-house hiring and training.
Leading BPO firms now act as customer experience partners, combining data analytics, process optimization, and omnichannel expertise to help clients elevate their brand. This evolution means companies no longer have to choose between affordability and excellence.
They can have both — as long as they partner strategically. The most successful outsourcing models combine:
When these elements work together, businesses gain scalability without losing quality or control.
Now, we move on to the actual steps you can take when outsourcing customer service to ensure oversight. The following framework reflects what top-performing businesses do to build successful, high-visibility customer service outsourcing programs.
Before anything else, determine what aspects of customer service represent your brand at its core. Is it the tone of voice? Empathy? Resolution speed? Policy flexibility?
Write these down as non-negotiables or the principles your outsourcing partner must uphold. Just think of it as setting the “north star” that every agent, manager, and process must follow. Having clear service standards from the start makes onboarding more effective and keeps expectations aligned.
Different outsourcing setups provide different levels of control and customization. Here are the most common engagement models in customer support solutions that you can choose from:
For businesses where quality and brand representation are paramount, a dedicated team model often provides the best equilibrium between scalability and control. For those who have existing customer service teams, shared and hybrid teams are ideal ways to augment existing functions. Ultimately, the engagement model should depend on what the business needs.
If you can’t measure it, you can’t manage it. So, at the start of the partnership, define performance indicators that reflect your true definition of customer success instead of relying on standard metrics. Some key KPIs for quality control include, but are not limited to:
More importantly, ensure both your internal team and your provider track these metrics consistently and transparently. When both sides measure success the same way, control and accountability follow naturally.
Communication, as always, is key.
Make communication part of the operational framework, not an afterthought. Daily syncs, shared dashboards, and project management tools like Asana, Slack, or HubSpot Service Hub can help you stay updated in real time.
Equally important are calibration sessions and periodic meetings where your internal leaders and the outsourced management team review recorded interactions, QA results, and customer feedback together. This collaborative rhythm ensures you stay informed and empowered, without micromanaging day-to-day operations.
A customer service team is only as good as its ability to speak your brand language.
Start strong with brand immersion. Share brand guidelines, tone references, past call samples, and success stories. Invest in a co-created training program that covers both what to say and how to say it.
Encourage cultural integration through mentorship, shadowing, and shared team activities. When agents understand the why behind your brand values, they can embody it in every customer interaction.
Customer expectations evolve constantly — and your outsourced operation should, too.
The best outsourcing partnerships are not static; they’re iterative. Together with your provider, develop a continuous improvement loop that involves:
This ongoing cycle keeps your customer experience dynamic, data-driven, and always improving.
Even though the benefits of customer service outsourcing are quite a lot, there are still inevitable cons or risks that come with it. Even with good intentions, outsourcing can fall short when the foundation isn’t built right.
Outsourcing is often driven by the promise of cost efficiency, but when price becomes the only metric, quality almost always pays the price. Choosing the cheapest provider might reduce your upfront expenses, but it can quickly lead to higher long-term costs due to agent turnover, retraining, and customer churn.
Low-cost vendors often compromise on hiring standards, training depth, or technology investment, resulting in poor resolution rates and inconsistent service quality. Every miscommunication or mishandled interaction erodes customer trust, and rebuilding that trust costs far more than you saved.
How can businesses avoid this mistake? Treat outsourcing cost as one factor among many. Evaluate the provider’s total value including talent quality, management involvement, analytics transparency, and scalability. A slightly higher monthly rate with a more capable partner often translates to stronger performance and a measurable ROI in customer lifetime value.
One of the most overlooked stages of working with customer service companies is the onboarding and knowledge transfer phase. And yet, it’s the foundation of every successful engagement. When the process is rushed or incomplete, agents are left without the context, product knowledge, or brand tone needed to represent your company accurately.
The result? Inconsistent answers, long resolution times, and frustrated customers. Even worse, these errors can cascade into poor reviews and damaged brand reputation.
The solution? Invest time early in building a comprehensive onboarding framework. Provide brand immersion sessions, detailed playbooks, FAQs, and scenario-based training. Co-create documentation with your provider, and ensure both sides maintain a shared, living knowledge base. Regular refreshers and calibration sessions will keep service consistent as your business evolves.
Customer service is as much about connections driven by culture as it is about resolution. When your outsourced team doesn’t understand your brand culture — your voice, values, or what customers expect emotionally — the quality of empathy and engagement drops.
This often happens when businesses treat the outsourcing partner as an external vendor rather than a true extension of their team. Agents may follow the script but fail to capture the warmth, tone, or initiative that your brand promises.
This risk can be mitigated by closing the cultural gap through ongoing integration. Conduct cross-team meetings, brand training, and open feedback loops. Encourage your internal leaders to engage directly with the outsourced team: celebrate wins together, share customer stories, and make them feel part of the mission. When your partner’s agents believe in your brand, they serve with genuine ownership.
Now that we’ve covered the most common pitfalls in outsourcing, the next step is knowing how to choose better.
The truth is, successful outsourced customer service operations don’t happen by chance. It’s built on due diligence, transparency, and shared accountability. The right partner isn’t just a vendor who takes tasks off your plate — they’re an extension of your brand, aligned with your mission, values, and customer expectations. But finding that partner takes more than reviewing price lists or service catalogs. It requires looking beyond surface-level promises and evaluating how each provider actually operates.
Here’s how to spot the warning signs early and what questions to ask to ensure your next outsourcing partnership drives both quality and control:
Spotting red flags early is one part of the equation. The next is asking the right questions and these will help you uncover whether they can truly uphold your brand’s standards and deliver consistent, high-quality support.
In the end, outsourcing customer service isn’t about letting go of control but extending your capability.
With the right processes, technology, and collaboration, your outsourcing partner becomes a true partner and advocate of your brand, driving consistency and excellence across every channel. If your goal is to scale without sacrificing quality, it starts with finding a partner who treats your customers as their own.
Staying in control of your customer service is easier with a provider that you can trust.
At KDCI Outsourcing, we empower global brands with customer service teams that deliver exceptional experiences at every touchpoint. From voice and chat support to omnichannel customer support solutions, we tailor strategies that help you strengthen customer loyalty, boost satisfaction scores, and reduce operational costs.
With decades of experience building high-performing customer service teams in the Philippines, KDCI is a reliable partner that combines human expertise, culture, and technology to help your business grow faster and serve customers better.
If you’re ready to elevate your customer experience and scale your support operations with confidence, partner with KDCI Outsourcing today. Contact us to learn more.
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Medium and large enterprises are now looking to turn fixed costs into variable costs by establishing shared services and outsourcing to a service provider. According to the Shared Services & Outsourcing Network (SSON), companies said their top rationales for leveraging shared services are to enhance operational efficiency and minimize expenses (90%), improve the quality of services and delivery (73%), and achieve measurable results (63%).
Learn more about shared services vs. outsourcing (and managed services vs. outsourcing) to see how combining (or taking advantage of either) these two practices can help maximize your business growth and enhance your operational efficiency.
Shared services refer to an operational model that allows companies to establish a centralized point of service shared across multiple departments. The goal of shared services is to standardize the workflow across various departments.
For example, instead of assigning one IT technician to each department, a company centralizes all IT functions under one IT shared service team that supports multiple departments. By doing this, it streamlines processes, increases productivity, and reduces costs.
Imagine there's a bug in your company website. Rather than relying on internal IT technicians with limited knowledge of the company website to come together and resolve the problem, it’s easier to alert a back-office IT team with a fixed standard operating procedure that cuts across all departments to fix the bug.
Not only will the single IT team be more efficient at resolving the issue, but the company will also save on costs by only staffing one team instead of providing IT staff for multiple departments.
And because there is only one IT team, they are easily tapped in cases of tech problems and can share best practices amongst themselves, improving both productivity and technical expertise.
There are multiple services that can be shared among the various business units of a company. Here are examples of shared services that companies can standardize and optimize within their organizations:
Financial activities used by numerous divisions, departments, or branches of the same corporation are consolidated and standardized under one roof as "financial shared services." It helps businesses enhance productivity, provide timely closure of books of accounts, and make system integration simple.
Shared financial services are typically used to manage low-value transactional services, such as handling accounts payable, accounts receivable, general ledger, and other data entry-intensive duties — allowing for better cost optimization, standardization, ease of governance, and better control over compliance.
All activities affecting an employee's complete employment history, from initial recruitment to final payment at separation and submission of retirement documents, are processed under HR shared services.
Many businesses, particularly major international corporations, use a centralized payroll system to handle their payroll operations. Under this shared HR/Payroll strategy, employers and senior executives have more control over the costs and expenses of their companies. Also, they get better access to organized and secured data used across the organization in a single platform.
Every department has different needs for contemporary digital platforms, and as the organization expands, it becomes more challenging to provide seamless technology services to every department. To fully harness the potential of technology-driven innovation, businesses maintain shared IT services that support multiple departments.
The most common forms of IT shared services are voice network services like call centers and help desks. Businesses develop IT shared services for their company and classify them under more general, scalable business units like IT operations or security and compliance. It allows for a centralized troubleshooting and information system that helps fix typical issues, recommends features and tools, and best practices to all departments.
When businesses expand beyond their local area, they may require additional warehouses to provide better coverage for their growing customer base. Rather than committing to acquire a new warehouse, inventory management shared services allow businesses to have centralized warehousing.
By combining operations, businesses share the burden of shipping and can purchase larger quantities at lower rates from local suppliers. This allows businesses to reduce inbound transport costs.
To increase operational efficiency and save costs, acquisition and procurement executives in various organizations are increasingly considering a shared services operating model. To supply back-office services to a broad group of customers across geographies, back-office business operations will be consolidated into a single structure. This is a model that is ideal for acquisition and procurement operations.
In fact, procurement shared services have played a critical role in supporting the stability of the supply chain amidst the peak of the pandemic. For example, they helped establish a 3D Print Farm and airfreighted PPE from China to provide more than a million items as mutual aid to more than 40 healthcare organizations.
When a company hires a service provider to handle business processes on its behalf, this practice is known as outsourcing. A business process outsourcing (BPO) company is an example of a service provider that helps other companies with their non-core tasks by offering specialized services.
Companies outsource for a variety of reasons. They outsource specialized talent that isn't already in their organization, or they outsource to improve productivity for time-consuming tasks like customer support and data management. Outsourcing can also help businesses minimize labor costs.
For instance, your business may conclude that outsourcing customer service in the Philippines is more effective than recruiting full-time staff. Your chosen BPO provider will serve as an extension of your business, offering various services, including but not limited to back-office assistance.
Alibaba, which Jack Ma founded in 1999, is one of the companies that have offshored their business operations abroad. Jack Ma and his team began outsourcing their web development requirements to the US when there was a shortage of web developers in China. Consequently, they were able to build a long-lasting eCommerce infrastructure and became an established online marketplace.
Most businesses turn to these three outsourcing models: location-based, relationship-based, and pricing-based. It pays to understand their key differences to find the most suitable for your business.
As its name suggests, it focuses on how far away or where your service provider is, as defined by their location. There are five types of location-based outsourcing models that can be distinguished based on this standard:
Onsite outsourcing entails having outsourced staff work alongside your internal employees in your office. This facilitates the speedy integration of temporary recruits into your existing staff and enables easier communication with your management team.
This refers to contracting with a company outside of one's region, especially one close by or on the same continent. For instance, US businesses that outsource to Mexico or Canada engage in nearshoring.
This method of outsourcing involves moving some components of a business to another country. Offshoring outsourcing occurs when a US-based company, for instance, chooses to establish its remote team in the Philippines to reduce operating expenses.
Contrary to offshoring, this type of outsourcing enables companies to move their operations to a lower-cost area within their country. For instance, a US tech business could "onshore" its customer service to a call center in California.
This outsourcing approach involves contracting services to multiple vendors. The goal is to maximize the company's efficiency by ensuring that different business processes are sourced to the finest outsourcing service providers.
Hybrid outsourcing involves both onshore and offshore outsourcing models. Here, a company has an onshore team dedicated to internal operations and core business needs, as well as an offshore team for non-core functions that require specialized expertise.
This model promotes collaboration and ensures business continuity — especially if the company has offshore teams in multiple countries.
This outsourcing model concentrates on how a company and its third-party outsourcing vendor handle control and accountability during their agreement. There are three types of relationship-based outsourcing models that businesses can consider:
In this model, a company hires or contracts a set number of staff from a service provider for a fixed duration. The service provider supplies the company with staff as needed or at an agreed-upon fee for the project duration.
With this approach, the client and service provider agree to divide responsibilities by clearly delineating tasks. For example, the client assigns work to their outsourced team and the service provider has a project manager to oversee the team’s progress.
For this setup, companies entrust a third party with the completion of an entire project. After the company provides specific requirements to the service provider, the service provider assembles a team and oversees project completion before handing it over to the company.
Pricing is vital in outsourcing since it defines the value you can expect from your vendor. However, the pricing structure of outsourced services evolves over time. Below are different pricing models in outsourcing that you should be familiar with:
This is a method of outsourcing a project to a third party for a fixed price. The price can vary depending on duration and complexity, but should be fixed prior to the start of service. Such an arrangement is perfect for small to medium projects since it allows for the detailed definition of project requirements, specifications, and timetables before the project even begins.
This approach bills companies for the money and time spent on the project. This is ideal for projects where more flexibility is needed, and the scope has not yet been fully defined. For lengthy projects with shifting requirements, this works well.
Under this model, employers can hire staff for a predetermined period. Then, following the project's demands, they can hire extra personnel as needed. This arrangement is best suited for businesses that require additional labor for a project but do not want to hire full-time workers to save on costs.
This model combines fixed pricing and time and material models. Any business can use it if they need to finish a project by a specific date, but don't have any particular project requirements.
Under this approach, companies pay for the resources they use. The pricing strategy is more equitable. Instead of just paying for platform access or future service consumption, companies pay for actual usage.
In this arrangement, companies provide the service provider a portion of their earnings after the parties work together to achieve mutually beneficial business objectives like raising the company's bottom line.
Prior to entering a profit-sharing agreement, companies and service providers define the terms and conditions for profit sharing, such as the value increase in sales and the percentage of earnings to be granted should said results be accomplished.
In this arrangement, companies give service providers a bonus for exceeding the service level agreements stated in the contract. This method places greater importance on staff performance rather than on achieving organizational goals. For instance, if a team of agents maintains a high level of customer satisfaction, a client might award them with bonuses.
With this pricing structure, the company and the service provider collaborate and co-fund a project. The client and service provider share the existing and potential threats of the project. In return, the client also shared a percentage of the benefits with the service provider for a predetermined duration.
Below is a detailed comparison of shared services and outsourcing to help you decide which strategy will work best for your business.
Outsourcing has been a standard procedure for many businesses seeking cost savings. By outsourcing, you can take advantage of a service provider's technology, systems, and working space.
For example, instead of hiring a graphic designer locally, you may opt to outsource your graphic design needs and receive it at a fast turnaround time. With a fixed price for each project, you can access their industry-leading tools, QA processes, and multifunctional expertise.
Meanwhile, having shared services requires a long-term investment. Since you're building an in-house team, you must invest in their growth and retain great employees. You need to provide them with training, equipment, and a competitive benefits package that will help you retain your employees.
Outsourcing could be the best cost-cutting measure for you if you have short-term projects and need a specialization outside of your organization. You can save up to 70% on your labor costs by outsourcing to the Philippines and other low-cost countries.
However, go for shared services if you're building your internal talent pipeline. This will help you develop a workforce that is steadfast to your company's mission and values.
Positive work culture is what drives engagement, job satisfaction, and good results from a team. If you want to maintain a holistic work culture, then it’s important to hire employees and maintain a shared service system.
In shared services, you hire and train your own employees. Hence, you control the values of the company and its work environment. With a consistent work culture, it is easier to attract and retain talent.
Conversely, the work culture in outsourcing is more diverse. Employees adapt their company or team’s work culture. And when you choose to move a part of your operations outside of your own company, you open yourself to multiple work cultures beyond your control.
As a result, cultural gaps, language barriers, and differing time zones may affect project delivery. One way to mitigate this problem is to outsource to a country with a strong cultural compatibility with yours and that can work adjacent to your schedule.
Business peak seasons bring a surge in customer demand. When inquiries and sales are skyrocketing, the need to hire additional staff also rises. Hence, scalability is a key consideration for most businesses.
In terms of scalability, outsourcing works well for scaling up and down. If you wish to scale up your business operations, outsourcing will provide you with backup staff. If you wish to scale down your operations, your vendor can reduce your staff for you to save on labor costs.
Shared services are not as scalable as outsourcing. To scale up, a company must look for suitable talent when there's a new role to fill. The process of sourcing talent is laborious and costly. Meanwhile, reducing staff positions requires downsizing — which can lower employee morale.
Bigger revenue results from high-quality work. While both shared services and outsourcing can guarantee high-quality output, the difference between the two lies in how much control you wish to have over your quality standards.
Because shared services allow you to train employees in-house, you have full control of your quality standards and your QA processes. Though shared services require more time and investment, they allow you to develop standards and procedures tailored to your business needs.
Also, because quality standards may require compliance with certain requirements, shared services may offer better responsiveness as everyone is under the same company, and therefore, is likely to have more seamless communication.
On the other hand, outsourcing offers more limited control when it comes to quality assurance. When you outsource and ask a service provider to take over some of your business processes, you reduce your internal work, but you also give up control.
In outsourcing, the service provider uses the best technologies and best practices to deliver on their promise of quality service. This likely involves management and processes that differ from your internal standards.
To help bridge this gap in quality standards, you should work with outsourcing companies that can adapt to your company culture, understand your business needs, and communicate well with you. This is critical in developing a streamlined process that can fully integrate into your business.
Businesses are required to invest in their in-house team long-term by providing them with training and a competitive benefits package. Businesses can save on their operational costs by having their service provider cover their recruitment, training, facilities, and equipment.
Businesses have full control of the values and culture of their internal teams. Businesses are open to multiple work cultures and may encounter cultural gaps and language barriers.
Businesses have little to no scalability, as in-house staff required to scale their operations may be limited. Businesses can request additional staff from a service provider during peak seasons and can scale down during normal operations.
Businesses have full control of their quality assurance and can tailor their processes according to their internal standards. Businesses can reduce internal work and give up control over their quality assurance to a trusted service provider.
Both shared services and outsourcing aim to reduce costs, streamline processes, and optimize productivity in organizations. However, the two strategies vary when it comes to how well they save on costs, boost work culture, improve work quality, and scale companies.
In essence, shared services act as internal support that keeps your business processes and systems intact and accessible to all key stakeholders. On the other hand, outsourcing serves as external support that improves these existing processes and procedures within an organization.
Businesses that have remained agile amidst market changes have combined these two approaches. While keeping their shared services center organized, they sought help externally to add expertise and improve efficiency. As a result, they were able to maximize their ROI and accelerate their digital transformation.
Many industries and functions — such as data analytics, finance, HR, IT, marketing, and procurement — benefit from both practices.
It depends on your business strategy and goals. Shared services are recommended if you have unique business functions that require internal expertise and oversight. This model also assumes that your business has the resources for employee development and retention.
On the other hand, if you want cost reduction, external expertise, and a large market share, choose outsourcing. In terms of data security, many of the best outsourcing companies have world-class IT facilities and infrastructure, hence all your data will be in safe hands.
Yes, you can combine both approaches. Remember, you don’t have to choose one model and disregard the other forever. At the end of the day, it’s all about your business needs, so there’s no “right” or “wrong” strategy here.
Adapting shared services and outsourcing benefits companies that want standardized processes and oversight of high-value internal functions while also having access to external expertise for administrative tasks. This approach creates a balance of agility, business continuity, and cost savings.
Build the perfect extension of your in-house team and outsource to the Philippines! The Philippines is one of the world’s top outsourcing destinations because of Filipinos’ superior English proficiency, world-renowned hospitality, and strong affinity to Western culture.
At KDCI Outsourcing, we've helped hundreds of medium-sized businesses and large enterprises become successful in their respective industries through our reliable and trustworthy outsourcing solutions.
As a leader in the outsourcing industry, we offer scalable offshore staffing services in various fields, ranging from finance, marketing, customer support, back-office, and web development.
Learn more about offshore outsourcing and build your offshore team with KDCI. Contact us today!
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We had a lot of difficulty finding qualified talent in the United States. Honestly, I don't think we had thought about outsourcing at all as a potential option, but we were very open to it once we heard about it. We love our KDCI team. They're just like a regular part of our team, it's just that they're thousands of miles away.
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