The Outsourcing Week in Review: Thursday, March 16, 2023

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Welcome to Inside Outsourcing: The Outsourcing Week in Review


The Philippines is the Mecca for global outsourcing. So we’re monitoring the market and keeping you up to date with the happenings.  Welcome to Inside Outsourcing: Philippine edition!

The global economic slowdown and cost-cutting measures of foreign companies could boost the Philippine Business Process Outsourcing (BPO) industry this year. According to the IT and Business Process Association of the Philippines (IBPAP), organizations will continue to outsource and use global business services to drive some cost optimization initiatives. This could bring the Philippines US$35.9 billion in revenues and 1.7 million full-time outsourcing employees by year-end.

Despite global fears of recession, the Philippine labor market remains strong, with the country’s employment rate increased to a recent high of 95.2% for January 2023. The latest data from the Philippine Statistics Authority (PSA) revealed that 4.09 million new employees were added in January, resulting in an overall count of 47.35 million. PSA Undersecretary Claire Dennis Mapa said the country’s job market is back to pre-pandemic levels. National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan added that the government needs to generate more high-quality jobs to retain the improving employment rate.

Outsourcing company Connected Women shared its secrets for creating an inclusive tech workplace during the Payoneer WOMENtrepreneurs Meetup.  Connected Women Co-founder & CEO Gina Romero said that at least five million women are out of the workforce due to family commitments. To help address the problem, the firm helps local women develop their online skills and trains them in data annotation to provide socially-responsible outsourcing to global AI companies.

In other news, commercial real estate firm KMC Savills said that Makati and Ortigas would see an oversupply of office spaces if BPOs continue moving to provinces. The firm added that more companies are looking for greener and newer buildings to move into. Still, KMC reported that Metro Manila’s office market, as a whole, is on its path of recovery as it ended 2022 with a net absorption of 270,900 square meters (sq.m.). Meanwhile, infrastructure company Aboitiz InfraCapital (AIC) is optimistic about their expansion bid in their LIMA estate in Batangas. The LIMA estate is expanding by 150 hectares for additional industrial buildings, with its 11-story Tower One catering to the outsourcing sector.

A US$5.5 million expansion project is also in the works for SixEleven’s Davao offices. According to the outsourcing firm’s CEO Michael Bian, the company plans to add 2,000 seats to its current occupancy of 3,500 to accommodate its growing clientele. SixEleven currently has 90 clients from various sectors across the United States (U.S.), the United Kingdom (UK), Australia, Singapore, and Dubai.

A study by the online recruitment platform JobStreet revealed that 46% of Filipinos prefer a hybrid work, while 28% favor remote work. In its Future of Recruitment Report, JobStreet said that Filipinos are more interested in not going back to the office at all than the global average. Regarding working time, the country is still going for the traditional 5-day workweek.

Property consultancy firm JLL Philippines said hybrid and flexible work arrangements could affect office leasing activity in the capital region. Lizanne Tan, JLL Philippines Head of Office Leasing Advisory, explained that more tenants would prefer markets with a strong talent pool and office locations where people can live, work, and socialize. In its latest report, JLL Philippines saw a 67% increase in gross leasing volumes in Metro Manila last year — with offshoring and outsourcing firms leading transaction volumes at 65.2%.

Interestingly, the reduced spending in the Philippine BPO industry caused a 49% drop in personal computer (PC) sales. Jeeno Velasco, Associate Market Analyst at intelligence firm International Data Corp. (IDC), said that economic issues — such as inflation, higher interest rates, and looming recession — “dampened” corporate spending in outsourcing firms. Households, the government, and the enterprise sector have also contributed to the decline of PC sales in the country.

Changes are coming in laws regarding workplace modernization. Senator Sherwin Gatchalian filed Senate Bill 945, or the Freelancers Protection Act, to advocate for even treatment, improved working conditions, and simplified tax registrations of freelance workers. According to Gatchalian, this bill can also open credit opportunities and training to the ‘new normal’ workforce. As of June 2021, around 1.5 million Filipinos are working in the “gig economy.” Similarly, Surigao Del Norte Representative Robert Ace Barbers filed House Bill No. 7396 to support the country’s development and regulation of artificial intelligence (AI). According to Barbers, the bill will foster an environment promoting AI’s ethical and responsible development while ensuring its alignment with the values and interests of the public. The bill also seeks to establish the Artificial Intelligence Development Authority (AIDA) to oversee AI technology research, development, and deployment in the Philippines.

House Committee on Ways and Means Chairman and Albay 2nd District Representative Joey Sarte Salceda also filed a new bill to help accelerate Internet speeds and lower nationwide subscription costs. In the bill’s explanatory note, Salceda called internet access the “new land reform of this country.” The representative also noted that faster and cheaper Internet would help BPOs and online freelancers in the country.

Meanwhile, the Department of Trade and Industry (DTI) aims to reinforce the local creative industry through its Malikhaing Pinoy program. DTI Secretary Alfredo Pascual explained that the program would help conduct studies and gather statistical data to highlight the sector’s contribution to employment, trade, and gross domestic product. It will also address the constraints and barriers to the growth of the creative industries. The DTI also announced the P20 million (US$365,000) Creative Venture Fund (CVF) to help startups in the sector. Pascual stated that the CVF aligns with the Republic Act (RA) 11904 (Philippine Creative Industries Development Act) and “shall be used to co-finance the business expansion of creative enterprises and individuals.” The DTI chief added that this program is based on the government’s view that access to capital is “crucial” in sustaining and expanding the operations of creative enterprises.

A bill proposing a Php750 (US$13.66) wage increase for all private-sector employees has also been filed in the House of Representatives by the Makabayan Bloc. In the explanatory note, the bill’s proponents stated that raising the salary rates across all industries in the private sector would address the gap between workers’ wages and the rising cost of living. Currently, the daily minimum wage rate per region ranges from Php306 to Php570 (US$5.57 to US$10.38).

Inflation is real.

Source: Giphy

Thursday, March 16, 2023


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Read more Inside Outsourcing Newsletters here:

  1. The Outsourcing Week in Review: March 14, 2023
  2. The Outsourcing Week in Review: March 21, 2023

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About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.