Outsourcing has become an essential business strategy for many companies. In today’s globalized world, businesses can access a diverse pool of talent from all over the world to achieve their goals. Outsourcing means transferring work or business processes to a third-party service provider, from accounting and IT services to customer service, marketing, and product development.
The Business Process Outsourcing (BPO) sector in the Philippines is a thriving and dynamic industry. With over two decades of presence in the country, it has become a major driver of economic development and growth. In fact, in 2022 alone, the sector generated an impressive $32.5 billion in revenues and provided employment opportunities for 1.57 million people. But before we explore the other compelling reasons to outsource to the Philippines, it’s important to understand the beginnings of BPO in this nation.
Brief History of BPOs in the Philippines
The journey of the BPO sector in the Philippines began in 1992 when Accenture Global Resource Center established the country’s first contact center. In 1995, Former President Fidel V. Ramos created the Philippine Economic Zone Authority (PEZA) to attract foreign investment by offering incentives like tax breaks and infrastructure support. Today, most BPO companies operate within PEZA zones, enjoying various economic benefits.
During the same period, Sykes Enterprises became the first of its kind in the country, solidifying the Philippines’ appeal as an outsourcing destination and paving the way for industry growth. Sykes continues to have a significant presence in the country, employing tens of thousands of people. In 1999, Jim Franke and Derek Holley founded eTelecare, the first call center in the country. This began a new era in the business process outsourcing (BPO) industry.
By 2000, the BPO industry had already made a significant contribution to the country’s GDP, accounting for 0.075% of the total. Recognizing the potential of the contact center industry, former Trade Secretary Mar Roxas established the Contact Center of the Philippines in 2001. The organization aimed to foster collaboration and innovation among industry members.
In 2003, Convergys Corp. established two call centers in the Philippines, a strategic move in line with their global expansion plans. This decision was made by the company’s then-president, Jack Freker, to increase revenue and tap into the country’s growing potential in the BPO sector. In 2010, the Philippines solidified its position as the global leader in BPO. With a staggering workforce of 525,000 individuals, it embraced this thriving industry and successfully generated an impressive $8.9 billion in revenue. In September 2021, industry analysts revealed that the Philippines contributed 12% of the global outsourcing market’s revenue.
The Advantages of Outsourcing to the Philippines
With more companies turning towards outsourcing as a cost-effective solution for their operations, it’s worth exploring why they continue to choose the Philippines when there are so many other options available. Here we look into five reasons why companies opt for offshore outsourcing arrangements involving Filipino professionals:
1. Skilled and Talented Workforce
The most significant advantage of outsourcing to the Philippines is the availability of a large pool of highly skilled and talented workforce. With a population of over 100 million people, the Philippines’ economy has grown significantly in recent years, with many of its citizens having received formal education and possessing a wide range of skills and expertise.
The country is abundant with professionals like Filipino virtual assistants who are highly educated and can cater to various industries, including business process outsourcing, manufacturing, technology, and healthcare. They are highly skilled in various administrative tasks such as email management, calendar management, and data entry. Businesses are also turning to the Philippines for social media marketing management services. Filipino social media experts are proficient in using various social media platforms such as Facebook, Twitter, and Instagram. Filipinos are known for their strong work ethic and reliability, making them an ideal choice for businesses that need reliable support for their day-to-day operations.
Additionally, the Philippine government prioritizes developing the country’s human capital, which includes education and training programs for employees, attracting top talents from abroad, and supporting innovative projects to drive the country’s progress. Many workers in the Philippines are proficient in English, which makes communication between businesses and their clients or customers more seamless.
2. Cost Savings
Aside from having a skilled workforce, outsourcing to the Philippines also offers significant cost savings for businesses. The cost of living in the Philippines is lower than in the United States or the United Kingdom, which means that worker salaries are lower too. This translates into significant savings when it comes to labor costs, as businesses can hire a skilled workforce at a fraction of the cost of hiring domestically.
A recent survey by Deloitte revealed that 57% of executives outsource to cut costs, primarily through staff augmentation. By partnering with a reliable outsourcing provider, companies can ensure business continuity and cost savings. Andy Schachtel, CEO and President of Sourcefit, highlights that staff augmentation is an effective way to achieve these benefits.
But cost-cutting is just one piece of the puzzle. Outsourcing also allows companies to expand into new markets without the prohibitive costs associated with physical presence. By leveraging the infrastructure, resources, and expertise of a local provider, businesses can avoid upfront investments in facilities, equipment, and personnel.
Moreover, unlike other countries, such as India or China, the Philippines’ wages and salary levels are competitive, making it an attractive option for businesses that want to outsource without sacrificing quality. The country’s favorable tax system and government incentives also offer additional cost savings for businesses looking to invest in the local Philippine market.
3. Cultural Compatibility
Another reason the Philippines is an appealing option for outsourcing is its cultural compatibility with Western countries, such as the United States and the United Kingdom. Over the years, the Philippines has developed close ties with the West, primarily due to its history as a colonized nation of Spain and the United States. Today, the country shares a similar cultural background with the United States, from the language and education systems to the work ethic and business practices.
The Philippines is home to many Western-based multinational corporations that have established their operations in the country, making it an ideal option for businesses that want to work with a culturally compatible workforce. With many Filipino workers having had exposure to Western cultures, businesses can easily integrate their operations with their Philippine counterparts without having to worry about cultural differences.
4. Technologically Advanced
One of the most surprising reasons why companies outsource to the Philippines is the country’s technological advancement. Former President Duterte recognized the potential benefits of improving ICT for the well-being of Filipinos and addressing business challenges. To support this vision, he signed the Ease of Doing Business and Efficient Government Service Delivery Act. He also allowed up to 100% foreign ownership of public services, including telecommunications.
The country has a large pool of IT and engineering graduates, and many universities offer specialized courses in IT and related fields. One of the most popular outsourcing services in the Philippines is website development services. Filipino web developers are skilled in using various programming languages and frameworks such as PHP and Laravel. They can build websites from scratch or modify existing ones to enhance functionality and improve user experience.
As search engine optimization (SEO) becomes increasingly important for businesses, many companies are turning to the Philippines for SEO lead generation services. The Philippines has a vast pool of talent, including SEO experts who know how to optimize websites and improve their online visibility.
Furthermore, the Philippines boasts one of the fastest internet speeds in Southeast Asia, ensuring seamless communication for companies engaging with their offshore teams and conducting business operations. In the January 2023 Ookla Speedtest Global Index, the Philippines ranked 82nd out of 142 countries in mobile internet speed, achieving 24.59 Mbps, and 41st out of 181 countries in fixed broadband internet speed, reaching 88.13 Mbps. Likewise, Starlink is also available in the country which adds up to the speed and connectivity advantage of staff from the Philippines compared to other countries in the globe. As a result, companies that outsource to the Philippines can expect high-quality, cutting-edge services that are on par with those offered in developed countries.
5. Strategic Location
The strategic location of the Philippines also makes it a compelling option for businesses that want to outsource. The country is situated in Southeast Asia, a region that is becoming increasingly significant when it comes to global trade and commerce. As a result, businesses that outsource to the Philippines can take advantage of the country’s location to expand their operations and reach new markets in the region.
Moreover, the Philippines has a robust infrastructure, including a modern telecommunications system and a well-developed transportation network that makes it easy for businesses to communicate with their outsourced teams and move their products or services around the country and beyond. The Philippines is also strategically located near other emerging markets such as China and India, making it a hub for businesses that want to enter these markets.
The Philippines has emerged as a leading outsourcing destination, offering a range of advantages that attract companies from around the world. From cost savings to high-quality talent, geographic location and time zone, strong government support, and cultural alignment with Western countries, the Philippines provides a compelling value proposition for businesses looking to improve efficiency and cut costs. As the outsourcing industry continues to grow, we can expect the Philippines to play an increasingly key role in the global market. Do not wait any longer outsource your staff in the Philippines and be another success story.