The first business process outsourcing (BPO) contact center in the Philippines was built in 1992. Noticing a promising opportunity, the Philippine government established a special economic zone to support outsourcing and encourage more foreign companies to set up customer support centers in the country.
Since then, more outsourcing companies have built business operations in the Philippines. Today, the BPO industry collectively employs over 1.4m people.
What makes the Philippines a top BPO destination?
Outsourcing to the Philippines in the new normal
The Philippines has grown to be one of the top outsourcing locations in the world. Even with the rise of new markets, the country remains a go-to destination for short-term and long-term projects.
The industry’s growth is prevalent in the country, with around 1.4 million workers and US$29.1 billion-dollar revenue as of 2022, according to IBPAP.
Aside from contact center services, the Philippines is a notable market for creative and professional services such as accounting, animation, and digital marketing.
With the growing number of small businesses realizing the benefits of outsourcing their operations, the Philippines expects to cater to more clients and provide better services in the long run.
Why outsource to the Philippines?
The success of the outsourcing industry in the Philippines can be attributed to the many advantages the country offers investors. Learn more about the factors why you should outsource to the Philippines.
1. Cost efficiency
By outsourcing to the Philippines, businesses can save 60% to 80% of operational costs. This is because of the low cost of living in the country.
The salary of fresh graduates in the Philippines is a small fraction of their counterparts in the West. The daily wage of Filipino professionals can amount to only the hourly salary of an employee in Europe or the US.
2. Cultural compatibility
Formerly colonized by the Spanish, Americans, and Japanese, the Philippines continues to show remnants of its past through its traits and values. Western culture is still entrenched in people’s everyday lives, and Filipinos remain highly adaptable to foreign cultures.
Moreover, hospitality is an integral part of Filipino culture and tradition. These factors make Filipinos easy to socialize and work with.
3. English proficiency
Around seventy percent of Filipinos are fluent in English. Most local children learn the language even before they start going to school. Their English proficiency is further reinforced once they start getting a formal education.
English is the medium of instruction used in schools in the Philippines and is the primary language for local commerce. EF ranked the Philippines 22nd for English proficiency worldwide and second in Asia, next to Singapore.
4. Highly skilled workforce
The Philippines has a large young population that is growing faster than the country’s dependent children and retired workforce.
Beyond just resulting in an abundant supply of manpower, the statistics also amount to a highly educated workforce boasting a literacy rate of 97%, according to the most recent census.
Every year, local universities and colleges produce an additional 500,000+ to the pool of skilled and qualified workers. As per experts, the Philippines will continue to benefit from this young and talented workforce in the coming years.
5. Flexible workforce
Another reason to outsource to the Philippines involves its flexible workforce. Building an offshore team in the Philippines allows you to scale quickly and efficiently without any capital investment or infrastructure requirements.
You can expand a team quickly and cost-efficiently. Equally, you can shrink your team again, if you have seasonal work, or your business takes a turn for the worse.
Generally, you can arrange agreements with outsourcing suppliers for low commitments and very flexible terms.
6. Reduced legal liabilities and management issues
Employing staff in any country comes with a lot of regulation, compliance, administration, tax, and cost implications. Some countries and sectors are more burdensome than others.
Hiring offshore staff in the Philippines means that you can protect yourself from the exposure and recourse of employing people in-house or directly. This simplifies your administrative processes and limits any cost and liability exposure – which is fantastic.
The Philippines actually has a very established labor law, and they are generally pro-labor. It can be a complex system if you have to have direct involvement with it. However, when you work with an outsourcing supplier, they will manage all of the day-to-day and compliance aspects of your team’s HR.
7. Data security and privacy
With the industry existing for over 30 years, the Philippines has built an incredibly sophisticated call center industry and a strong regulatory environment in support of the sector.
The Philippines outsourcing sector has been processing highly sensitive client data for over two decades now. BPOs have processed everything from US health insurance, medical records, and personal financial data for some of the world’s biggest public and private companies.
The Philippines can provide any kind of compliant environment and work system, and the country has adopted one of the most stringent data privacy acts.
8. 24/7 staffing – timezone neutral
The Philippine workforce is highly geared towards 24/7 coverage. So regardless of your company’s time zone or the time zone of your clients – the Philippines can offer business solutions anytime and anywhere.
The single biggest client-country of the Philippines is the USA, and they have a 12-hour time difference. So, there is still about 60% of the outsourcing workforce in the Philippines that work the night shift, to cover the US hours.
This is very normalized in the Philippines. Equally, rotating shifts and weekend cover are also very standard and accepted conditions within the outsourcing industry.
These traits are particularly applicable for customer service and online sales functions, where it is a common requirement to have 24/7 support coverage.
9. Economic growth
According to the IT and Business Process Association of the Philippines (IBPAP), the BPO industry of the Philippines saw revenue increase 10.3% to $32.5 billion, and staff count rise 8.4% to 1.57 million.
Filipinos are now enjoying stronger purchasing power because of the country’s robust economy. Foreign investors stand to benefit from a business environment that is conducive to growth and scalability.
10. Track record of the BPO industry
Now spanning a history of over 25 years, the business process outsourcing industry in the Philippines saw its beginnings in the year 1992. The industry has since earned a ten-fold increase in its total revenue.
The country’s BPO sector has a global market share of 10%, which is a three-fold increase since 2004. This global market share is estimated to be at 15% by 2022.
Sykes Asia, Convergys, People Support, and Accenture were the first multinational companies to establish operations in the Philippines. These businesses have since extended their operations to include cities outside Metro Manila, such as Davao, Bacolod, Cebu, and more.
This is a reflection of the country’s track record of providing attractive business process deals.
11. Government support
The Philippine government provides the industry with strong support by way of regulations and incentives that encourage companies to choose the Philippines for their offshore operations. This led to the establishment of the Philippine Economic Zone Authority (PEZA).
Aside from support, PEZA also provide fiscal and non-fiscal benefits, such as the four-year and eight-year income tax holiday.
The government further stressed its commitment to supporting the BPO industry through the Philippine IT-BPM Roadmap 2028, eyeing to reach 2.5 million workforce and $59 billion in revenues by 2028.
12. Fringe benefits
Outsourcing allows you to adopt a “follow the sun” workflow strategy. This means you have staff working round the clock.
While your onshore employees are sleeping, your offshore operation from halfway across the world has people getting things done. This speeds up your delivery cycle for faster production and reduced process development duration.
Offshore outsourcing proves to be a smart strategic move for companies, both big and small. Choosing the Philippines as your outsourcing destination lets you maximize the benefits.
Whether you need to outsource creative services, website development, IT support, or contact center solutions, you stand to benefit from the talented workforce and government-sponsored advantages in the Philippines. Go ahead and explore your options!
How to outsource to the Philippines
Outsourcing to the Philippines can be a great way to save costs and leverage the skills of a talented workforce. Here are some steps businesses can follow to outsource to the Philippines:
- Determine the scope of work. First, businesses should determine what functions they want to outsource. This can include customer service, IT support, business process outsourcing, and others.
- Look for outsourcing partners in the Philippines. Businesses can look for outsourcing partners through online job portals, professional networks, and outsourcing service providers.
- Evaluate potential outsourcing partners. Businesses should evaluate potential outsourcing partners to ensure they have the necessary skills, experience, and infrastructure to perform the required tasks. Consider language proficiency, technical expertise, infrastructure, and level of customer support.
- Develop a contract. Once a business has chosen an outsourcing partner, they should develop a contract that details the scope of work, deliverables, payment terms, and other relevant information. The contract should also include provisions for data confidentiality and security.
- Set up communication channels. Effective communication is critical when outsourcing to the Philippines. Businesses should establish communication channels that work for both parties, including email, chat, video conferencing, and project management tools.
- Manage the outsourcing relationship. To ensure a successful outsourcing relationship, businesses should manage the relationship actively, monitoring progress, and providing feedback to the outsourcing partner regularly.
Following these steps can help businesses successfully outsource to the Philippines and realize the full benefits of outsourcing.
Philippines: The ideal outsourcing destination
Talk to the outsourcing experts about getting started with outsourcing – get a free quote and consultation today. Experience first-hand what milestones you can achieve with an outsourcing partner ready to give you the world-class business solutions that you need.