More small businesses seeking experts for non-core tasks

The outsourcing business is likely to record double-digit growth with small and medium-sized enterprises (SMEs) as a new market for the services, says a local specialist."Outsourcing service still has a long way to grow and develop since an increasing number of firms have started to realise its benefits," said Weerachai Ngamdeevilaisak, the director of the local service provider Professional Outsourcing Solutions.

The value of the global outsourcing market has grown sharply, from US$570 billion in 2002 to an estimated U$1.2 trillion last year, according to the Asia-Pacific Human Development Report 2006 issued by the United Nations Development Programme (UNDP).

India alone represents 40% of the global outsourcing market, and in its success in attracting lucrative information technology and call-centre work has been well documented. Other major Asian providers are China, the Philippines, Malaysia, Thailand and Vietnam. The report says Asia's advantage lies in its growing pool of highly skilled and lower-cost workers.

Domestically, SMEs are becoming increasingly aware of the benefits of outsourcing tasks in which they lack expertise or would face high costs if they did the work themselves. Their key areas of interest include financial and accounting services in order to avoid accounting errors and tax exposure.

"That's because SMEs today have begun to realise that abiding by the laws is in fact advantageous to their own businesses since they can lay better and more accurate business plans based on truthful accounting and financial statements," Mr Weerachai explained.

For Professional Outsourcing Solutions, SMEs now represent 20% of its business while multinational companies account for 51% and listed firms 13%.

Founded in 1986, Professional Outsourcing Solutions was once a part of the now-defunct Arthur Andersen group before it became an independent practice in 2002. Its main services are finance, accounting and payroll. It has 100 client accounts, among them large businesses including Krungthai Card, Siam City Cement and Citibank,.

The company's revenue has grown steadily, from 20 million baht in 2002 to 45 million last year. This year, it has a conservative projection of 50 million baht.

Mr Weerachai said the company had not been affected directly by ongoing political and security tensions. A bigger factor is increasing competition in the market from both existing players and newcomers, which has led to a price war.

"Such price wars won't do any good to the industry in the long run since it could reduce the quality standards of the services," he said.

To build a sustainable business for the long term, he said outsourcing providers need to find their niche and strengths.

"And our niche is to focus on quality of service. We've also offered value-added services that others can't, and have not jumped into the pool of the price war."

As a result, he said, the company has maintained a satisfactory service renewal rate of almost 100%. "Besides, we're always obtaining new customers through word-of-mouth."