Taking Philippine’s Outsourcing to the World: Executive Summary
- Outsourcing can be better promoted, in a commercially profitable and sustainable way, that can have a huge positive impact on Philippine employment, economic affluence and the wider economy.
- The Philippines (alongside India) is THE world leader in outsourcing, has been doing it longer than any other country and has more expertise than anyone else, has an almost native-tongue adoption of English, and is closely culturally aligned to the west.
- There are now hundreds of high quality BPO service providers within the Philippines – all eager to cater to the SME market, and are desperate to grow.
- There are over 35 million SMEs in the western world, employing 102m people, and producing revenues of over 12 trillion USD.
- The Philippines BPO sector needs to move away from its historic telesales and customer support services; up the food chain to IT, professional services, IP, and innovation etc.
- Outsourcing should be regarded as the Philippines finest export. It is also a uniquely distributed export – one that’s protected from all the usual transport, and duty/tariff considerations.
- The Philippines should be acknowledged and renowned as the ‘Swiss Banking of Outsourcing’.
- An International Business Communication Forum should be created to establish efficient and effective means of taking Philippines’ outsourcing to the world, and building a strong economic future for the Philippines.
The following paper was originally an internal document for Outsource Accelerator, to give it strategic clarity for its own ambitions and functions. I have now decided to publish this because a lot of the document refers more generally to the promotion and proliferation of Philippines’ outsourcing sector. This paper does reveal some potentially sensitive strategic ambitions of Outsource Accelerator. However, i have decided to publish it in despite of this, because i feel that the promotion of Philippines’ outsourcing should be the priority here. As just one of many players within the outsourcing arena, i think we will all benefit, including the country’s general economic standing, from an enhanced and more successful outsourcing industry.
Because of the informal nature of this originally internally facing document, the opinions offered here are my own, and it’s not 100% fact checked. This paper was originally written June, 2018, and so many of the strategic constituents may have evolved or changed.
Derek Gallimore, Outsource Accelerator
I. Executive summary
Outsourcing is a unique high-value and highly-exportable skillset of the Philippines which contributes a huge amount to the economy and society.
Outsourcing can be better promoted, in a commercially profitable and sustainable way, that can have a huge positive impact on Philippine employment, economic affluence, the wider economy; and generate significant positive foreign renown.
This paper proposes for the government to create an International Business Communication Forum to support the promotion of Philippine’s outsourcing to the world, and building of domestic infrastructure and programs to support Outsourcing proliferation; and support for six key initiatives – as outlined below.
Outsourcing – a commercial force for good
Business Process Outsourcing (BPO) is a huge contributor to the Philippine economy, with c.10% of GDP, double- digit year-on-year growth and employment of over one million people. The primary contribution is accompanied by countless other positive secondary and tertiary associations.
Outsourcing provides a range of medium-to-high skilled jobs within companies which offer good career ladders and continued professional development. The sector creates a middle class in which the workforce has safe work environments, good medical cover, strong labor laws and happy workplaces. It allows for skilled labor to stay in the Philippines (as opposed to OFWs), with their family, and earn a world-competing salary from their home country. This is a virtuous circle which further strengthens the Philippines and broadens the education levels and skill-base.
However, despite the outsourcing sector contributing c.10% to GDP; it only employs c.1m people – under 1% fo the population. Computer-based and white-collar roles produce high income, but typically require low levels of employment (compared to heavy industry or farming etc.), so there is a need for proactive development of mass- outsourcing activities, so that outsourcing’s employment prospect can trickle down to the masses.
Promotion of a unique asset
Philippine BPO needs promoting – in the same way that the county’s tourism is being promoted. The Philippines needs to invest in, and work to build foreigner’s awareness, familiarity, comfort and confidence in the concept of outsourcing – and with Philippines as their preferred destination.
The Philippines promotes its tourism – as it should. But every country is doing this and every country has beautiful points beaches, scenery, culture etc. – so it is difficult to compete.
However, The Philippines (alongside India) is THE world leader in outsourcing, has been doing it longer than any other country and has more expertise than anyone else, has an almost native-tongue adoption of English, and is closely culturally aligned. This is a unique skill and sector of the Philippines, and thus a rare and unique opportunity for the country, and one that should best capitalized, and promoted accordingly.
Educate about the benefits
The benefits of outsourcing for all ‘Western’ business owners are huge – though most business owners are in fact oblivious. There are millions of successful, profitable SMEs (small-to-medium enterprises) in the Western, high- cost English-speaking world that are commercially astute, but haven’t even considered outsourcing. Many aren’t even aware that outsourcing is ‘out there’, or it just simply isn’t on their ‘radar’.
Previously, outsourcing services were only accessible to multinational conglomerates. But over recent years, service access and provision has been democratized for startups – facilitated by technology and bandwidth advancements and a maturing BPO sector – allowing easy access for SMEs and even.
There are now hundreds of high quality BPO service providers within the Philippines – all eager to cater to the SME market, and are desperate to grow. So, the BPO capacity, means and supply is present, and we now only need to get the word out there, and tell the world about this incredible opportunity.
Supported by an imperative drive for efficiency
It’s imperative for businesses in the West to seek out the most efficient means of carrying out their business.
If they don’t, then competition will provide better cheaper output, and the company will fail. Warren buffet states that any commercial entity, by definition, is obliged to seek highest efficiencies possible – seeking “the most output from the least inputs”. He’s also a vocal supporter of Adam Smith – the original economist – who wrote in c.1750 that “progress is most easily achieved by enabling workers to specialize and work primarily in industries that they are most suited for, instead of being limited to locally available opportunities”. As such, the logical conclusion is that all business owners should outsource, or at least properly consider it.
Technology advancement facilitates easy-outsourcing, and its eventual proliferation and broad adoption is frankly, inevitable. People are hesitant and resisting outsourcing, as the Luddite’s resisted mechanical textile mills in 1811 – but eventually, and of course, efficiency and progress is inevitable. This evolution is playing into the hands of the Philippines and the outsourcing sector.
Long sales cycle with many hurdles
The sales cycle of outsourcing is a B2B (business to business) exercise – however, this is no reason for the promotion and messaging around outsourcing to be cerebral and boring. The sales cycle is long and delicate, because once a decision is made, it is a long, sticky and expensive commitment for the client.
Despite this complexity, the sector is generally approaching its sales and marketing without any great sophistication.
The owners and decision makers of SMEs are people too, so they should be ‘pitched’ as a person, and connected with on a personal and emotional level. For successful promotion of outsourcing, we need to bridge the knowledge gap, present the “why”, and allay their concerns for uncertainty, cultural differences and geographical distance.
Providing potential clients with a set of information- and education-based stepping-stones will accelerate the sales cycle, ease the process, and increase conversions.
III. Sector considerations
Some considerations when promoting the BPO sector:
BPO sector is evolving
The BPO sector initially served huge multinational conglomerates. The growth in this sector has matured, and growth has stagnated. The growth (thanks to technological advancements, cheaper telephone and internet, and an enhanced BPO offering), is now within the SME market.
There are over 35 million SMEs in the western world, employing 102m people, and producing revenues of over 12 trillion USD. If 25% of SMEs employed just one Filipino worker in their team, it would provide 25 million well paid, highly skilled jobs. If 1% of SMEs employed three Filipino staff, it would provide over 1 million jobs. The potential is huge.
Requirement for escalating skill-sets
There is a need for outsourcing to keep up with the times – which it is. But, it needs to be proactively developed, and then promoted as a higher skill offering. The Philippines BPO sector needs to move away from its historic tele- sales and customer support services; up the food chain to IT, professional services, IP, and innovation etc.
The West will see more value in this; the Philippines can continue to upskill and stay relevant; and it will protect the industry from aggressive erosion from Artificial Intelligence (AI) etc. It is essential that the West sees outsourcing as a value-add offering, not just a back-up or back-office solution.
Opportunity for enhanced Philippines employment market
- A burgeoning outsourcing sector would generate untold benefits for the Philippines outsourcing market. Outsourcing will provide
- millions more well-paid skilled jobs
- more white-collar jobs, good income, safe conditions, and a career ladder
- continuing education for the communities and country
- opportunity to push well-paid jobs out into the provinces (most outsourcing can be location-independent
- can move Philippines into a high-skilled professional services nation
- keep the country’s high-skilled employees at home, within their communities (reversing OFW trends)
The Philippines’ finest export
Outsourcing should be regarded as the Philippines finest export. It is also a uniquely distributed export – one that’s protected from all the usual transport, and duty/tariff considerations.
Unlike physical product exports, due to the nature of the service (and internet delivery) of this product, it is very hard for the world to pose trade restrictions, taxation, and regulations on the ‘importing’ of outsourcing services.
Outsourcing is basically a proxy for sending migrational workers overseas, to work for a foreign wage – without the need to physically send them there, and in the meantime sidestepping any migrational border politics.
Imagine if 30 million Filipinos were eventually hired by Western countries – in effect “working in the West” and earning Western salaries – but sitting in their provincial homes, and paying taxes to Philippines. Equally, this selling of service based products is rarely clipped for taxes or import duties etc.
The immediate potential for this is huge, and should be taken advantage of.
Existing bodies – not suited for modern requirements
Outsourcing is so critical to the Philippines, and is a unique specialty of the nation. As a result, the sector needs a modern ‘platform’ that specifically promotes this sector to the world.
There are existing BPO industry associations such as iBPAP, ITC, CCAP and HIMOAP. However, these are all internally facing industry associations and aren’t effectively outwardly promoting outsourcing to the world. IBPAP is possibly now a little old, and irrelevant. It appears to be overly concerned with ‘internal regulation’, enterprise level assistance and market analysis.
The future platform requires a client (not supplier) focus, and a modern interface in which service providers can be aggregated, reviewed and distributed. The primary target audience would be the SME market, as this is where the growth is.
A gap in the market for an outsourcing platform
The world has moved on. Now, sectors and industries are aggregated, promoted and distributed through online
portals, marketplaces and hubs. There is a need and/or opening, for the Philippines’s $30bn outsourcing industry, to have an aggregated marketplace. There is a gap in the market for a trusted outsourcing resource, connector and even review site – think TripAdvisor, meets Agoda.com for outsourcing.
A win-win message
To reduce friction when promoting outsourcing internationally, it is essential that there is a convincing
accompanying message that outsourcing is a “win-win for all involved”. People in the West have a fear of losing their own jobs to outsourcing. Donald Trump is politically exploiting this emotive topic. There needs to be a strong message, in response, that outsourcing is a win-win for all stakeholders – this is a message which can be commercially and academically proven.
Outsource Accelerator has commissioned an academic white paper on this topic now, but there is already a lot of academic research supporting the benefits of both manufacturing and service sector outsourcing.
Market and promote this unique offering
Philippines outsourcing should be promoted! It is a unique offering in which the Philippines is a world expert, with over 25 years’ experience. The Philippines should be acknowledged and renowned as the ‘Swiss Banking of Outsourcing’. See below.
There is currently some negative PR and uncertainty with certain aspects of the Philippine nation. The foreign corporate world gets easily spooked, which has resulted in a recent guarded confidence. A positive corporate (BPO) message about the Philippines – as outlined in this document – would successfully counter these concerns, without (needing to) attend to them directly. This “outsourcing advantage” message needs to closely accompany the win-win message.
III. Proposed initiatives
The overseas yarget audience
The size of the sector, the potential of the sector, the positive employment and economic benefits of the sector justify a concerted effort from the Philippines (both public and private) to reach out to the foreign communities, where the business owners are sitting. The proposed target audience is:
- Geography: The high-cost English-speaking countries (UK, Ireland, US, Canada, Australia, New Zealand, Scandinavia).
- Business sector: SMEs with 2-200 employees.
- Sales cycle position: Top end of the outsourcing engagement ‘sales funnel’ where people have little or no awareness or interest in outsourcing – yet.
The local target audience
There is also an opportunity to garner popular support for outsourcing from the Philippine population.
Outsourcing should be heralded as a fantastic opportunity for the country, and BPO workers should be hailed as ‘economic heroes’.
There should be an effort to aggregate the outsourcing communities. The government can be closely associated with this, and any growth of the outsourcing sector, and enhancement of the economy, can be attributed to proactive government support and action.
Private project – Government support
It is great – and essential – to have government support, but the best approach for most sustainable and
commercially effective platforms, is to have a private – and profitable – company to manage the platform on which the Philippine outsourcing sector will be aggregated, promoted and distributed.
This document proposes two primary, and four secondary initiatives, as tabled below:
- Information hub – and media company
- Building provincial employment: 100×100 CPO
- Promotion & marketing of the sector
- Supported outreach business roadshows
- BPO Champions – building a community
- BPO broker alliance
IV. Primary initiatives
There are two primary initiatives
1. BPO aggregation platform
As identified, there is firm justification for a promotional body for outsourcing; but the world also needs a functional ‘platform’ which makes familiarization and engagement with outsourcing easy.
In the same respect that Agoda makes booking hotels easy; TripAdvisor makes restaurant research easy, and Uber makes taxi bookings easy – outsourcing needs a consumer-friendly information and engagement hub.
The foundational strategy for the promotion and proliferation of the outsourcing sector is the development of a web based information hub for the sector. This hub is designed to become the singular point of authority for the outsourcing sector. It is designed to target and be most relevant to prospective SME clients.
There are two phases to the building of this outsourcing hub:
Initially the hub is built to provide vast amount of invaluable information. The hub will become the central resource for people considering outsourcing to the Philippines.
The site is monetized (and self-sustainable) via paid consultation products. These products provide prospective clients with invaluable independent guidance which helps them along their outsourcing journey.