Quick Guide to Outsourcing in the Philippines

In recent years, the Philippines has become one of the popular destinations for outsourced work from all over the world. But to get the right talents and good results, companies need to understand how the local industry works. Here is a quick guide on outsourcing in the Philippines and how to better take advantage of it.

A brief history of outsourcing in the Philippines

While there were already several companies diverting some of their customer support services in the country before, the local outsourcing industry started to gain pace in 1992. This was the year that Accenture opened its first Global Resource Center in Manila. The company eventually opened seven more facilities in the country and expanded its workforce to more than 15,000 employees.

Other firms soon followed suit and set up their contact centers in the country. Foremost of these is Sykes, which entered in 1997. It was the first multinational business process outsourcing company to establish its presence in the Philippines. On the local front, ePLDT Ventus was one of the first Filipino companies that entered the BPO industry, connecting with customers in the US, Europe, and Asia.

A major boost to the local BPO industry came in 1995 with the passing of the Special Economic Zone Act into law. This law helped make the country more friendly to investors by creating the various Philippine Economic Zone Authorities. These PEZAs provide a variety of incentives that allow BPO companies to earn better and provide more pay for their employees.

Quick BPO statistics

Today, the BPO industry contributes to around 15% of the country;’s gross domestic product. It is also projected to grow larger, with an expected 17% annual growth rate. This translates to creating over 13 million new jobs in the course of the next few years.

The growth of the Philippine BPO industry has also boosted its prominence in the global scene. Some of the recognition the country received in the past years are:

Ranked 5th in the Tholons Service Globalization Index (2019)
Ranked 10th in the A T. Kearney Global Services Location Index (2019)
Ranked 54th in the Global Innovations index (2019, jumped 19 places from the previous ranking)

All of these recognitions highlight the growing confidence of the global outsourcing industry in the country. For individuals companies, this is a good encouragement to push through with their plans on outsourcing in the country.

Why outsource to the Philippines

Aside from the favorable economic environment, there are several other reasons why outsourcing in the country is a good move for companies. These reasons give you an idea of the quality of talent you can get, as well as the benefits your company can gain in terms of production and profits.

Good communication skills

According to GlobalEnglish Corp., the Philippines constantly rank high in its annual Business English Index report. This is welcome news for those engaging in B2B customer support services, as Filipino agents can effectively communicate within the level expected by clients. Filipinos’ English proficiency also remains high when it comes to more general conversations. This makes them well-suited for handling generalized customer support.

Pinoys’ communication proficiency does not end with English They are willing to learn even non-English languages as part of their job training. This goes back to the country’s history of providing overseas contract workers. Because of this, the country has attracted more companies from Europe and Asia.

Flexibility

Coupled with their willingness to learn any language, Filipinos are also ready to learn other skills depending on the demands of their jobs. These let many outsourcing companies like Virtua Solutions take in more jobs, as their personnel is very flexible. Furthermore, these local companies provide continuous training for their employees, helping them better adapt to client needs.

Cost-effective

As the Philippines labor wages are lower than those in Western countries, companies outsourcing here generate more profits. On the other hand, the various employee incentives mandated by local laws ensure that workers are given their dues. By following these laws closely, companies can develop better relationships with local outsourcing firms and gain better talents from them.

Challenges to outsourcing in the Philippines.

While the Philippines is very conducive to outsourcing, it still has some issues that companies need to deal with. These issues can have a significant impact on how well a company can work with local outsourcing firms. As such, it needs to understand how they can work around them.

Technical difficulties

One of the biggest issues that companies outsourcing to the country has to contend with is the slower internet speeds. This can be particularly hard on contact centers that require fast speeds to handle large volumes of calls. The inconsistent speeds can lead to dropped calls and other communications issues. Other outsourcing fields can also be disrupted by such technology hurdles.

To resolve the issue, the government and various local telecommunications companies have made the effort to improve internet speeds. But these are still not fully realized for the whole country, with the improvements mostly seen in major areas like the NCR and Cebu. As such companies must carefully choose the location of their outsourcing office or the local company they are sending work to.

Branding challenges

While the Philippines is well known as a significant provider of voiced BPO services (call centers), many foreign companies are still not aware that it also caters to non-voiced services. This is mostly due to the lesser emphasis on such jobs in the Philippines’ promotion of its outsourcing industry.

This has also changed in recent years, through the efforts of the Business Process Outsourcing Association of the Philippines. It helped in the development of the Philippine IT-BPO Roadmap of 2016, which expanded the definition of outsourcing to include other services. Meanwhile, the Department of Trade and Industry and the Department of Finance have ensured that the incentives enjoyed by call centers are extended to these other types of outsourcing companies.

Familiarize yourself with the Philippine outsourcing industry

As outsourcing in the Philippines continues to grow, you will likely see significant changes in the various trends discussed here. Companies need to be ready in adapting to these changes. By doing so, they can be sure that they will be able to hire top Pinoy talents who will help them grow.