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The history of Philippine outsourcing is lengthy, dating all the way back to the industrial revolution. In the last 30 years, the industry has seen rapid growth, hailing the Philippines as the world’s outsourcing capital.
Though North America still holds the largest market share in outsourcing at 36% as of 2022, Asia Pacific is expected to grow at the fastest rate, with countries like the Philippines at the forefront.
Philippine outsourcing by itself has been steadily growing by 8-10% annually, and a projected market revenue of US$0.72bn in 2024. A key driver for its popularity is the significantly lower cost of labor compared to those of developed countries, allowing global brands to save up to 70% on their operations.
To date, the most popular service in Philippine outsourcing is customer service, with over 788 call centers across the country, followed by IT, design and marketing, and more specialized functions that are increasing in popularity in the last couple of years – healthcare, finance, and legal outsourcing.
Pros of Outsourcing to the Philippines
The top companies in the world are outsourcing to the Philippines. And understanding why they do requires a more detailed discussion of the Philippines’ business climate, economic conditions, as well as outsourcing infrastructure that welcome global companies to offshore their operations in the country.
Lower Cost of Labor
Any discussion about Philippine outsourcing wouldn’t be complete without mentioning the cost of outsourcing to the Philippines and how it can lead to significant cost savings global brands enjoy by offshoring their operations to the Philippines.
As a developing nation, the Philippines doesn’t only have a lower cost of labor and cost of living, the peso is also weaker than most currencies like the US dollar, Euro, and Australian dollar. This difference allows companies in developed nations to reduce costs by up to 70% while paying a competitive or even above average compensation to Philippine workers.
Large Pool Of Resources
The literacy rate in the Philippines was 99.27% in 2021, and the number continues to grow by 0.03% annually. Not to mention, there are 1.7 million workers in the Philippine BPO industry as of 2023.
With such a large pool of skilled labor, companies looking to outsource business processes are bound to find a good match, whether they’re looking for more commonly outsourced functions like customer service or IT, or a more niched service like engineering services or property management.
English Proficiency
The Philippines is the 3rd largest English-speaking country in the world. It also ranked 2nd in Asia and 20th globally for its English proficiency. This presents a huge advantage for English-speaking organizations to offshore their operations, not only to a developing country, but one that can easily communicate with them for smoother collaboration.
Favorable Business Environment
Despite the economic slow-down, the Philippine economy is expected to grow 4% annually. Not only that, the Philippines was also included in the Forbes Best Countries for Business list, surpassing other popular outsourcing destinations such as India and China. These are largely attributed to its monetary freedom, innovation, investor protection, market performance, as well as property rights and technology.
Government Support
The Philippine government recognizes the large contribution of the outsourcing sector to the country’s GDP, and has long been supportive of the industry. Some of its notable initiatives include creating special economic zones (PEZA) that offer tax incentives, simplifying business processes to attract foreign investors, and investing in infrastructure. All of these contribute to making the country a favorable outsourcing destination.
Cons of Outsourcing to the Philippines
While the Philippines is a top outsourcing destination for good reason, there are still drawbacks that one must consider prior to outsourcing. Below is a list that discusses the potential pitfalls of outsourcing to the Philippines.
Natural Disasters
As an archipelago in the tropics, located near the Pacific Ocean, the Philippines experiences regular typhoons, as well as occasional earthquakes and volcanic eruptions, which can disrupt operations and damage infrastructure.
With this kind of environment, Philippine outsourcing companies typically assign power stations and back-up internet connection to provide redundancy in power and internet connectivity.
Infrastructure Challenges
Despite the Philippine government’s efforts in improving the country’s infrastructure, there still leaves much to be desired especially in terms of reliable power supply, internet connectivity, and transportation. These pose a significant challenge in the efficiency of outsourced services.
A way companies are working around this is by equipping staff with power stations and back up internet connection, while adopting hybrid and remote work setups to the need for travel.
Time Zone Differences
While hiring offshore teams on the other side of the globe to work off-hours shifts is a great set up, the opposite is also true – having a significant time zone difference could hinder smooth collaboration, resulting in slow response times, poor coordination, and derailed operations.
Communicating well and setting expectations early are great ways to bridge the gap between your time zone and your offshore team’s. The goal is to work remotely while collaborating as if they were just next to you. And the way to do this is through collaborative tools, constant and open communication, and tracking of KPIs to ensure service quality.
Cultural Differences
While Filipinos speak excellent English, their culture is still different from other nations’. Albeit highly Westernized, Philippine culture has its own unique flavor that can be a communication barrier that could impact business processes and client relationships
There’s little one can do about the culture your offshore team grew up in, however, you can bridge the gap by learning about their culture and introducing them to yours. By having non-work engagements like town halls and game nights, your inhouse staff and offshore team can strengthen their relationships and learn more about each other despite their differences in culture.
Top Philippine Outsourcing Companies
A surefire way to ensure you achieve your business goals via outsourcing is to work with reputable companies with track records of providing amazing service. Below is a list of the best Philippine outsourcing companies in terms of reputation, service quality, and feedback from clients.
Accenture
Founded in 1898, Accenture is a consulting, digital, technology, and operations services outsourcing company. With service centers in the Philippines and India, they primarily cater to large enterprises across multiple industries.
Concentrix
Founded in 1983, Concentrix is a customer experience solutions and technology outsourcing firm that caters to businesses of all sizes. Their clients are mostly in the automotive, banking, financial services, healthcare, and technology industries.
Teleperformance
Founded in 1978, Teleperformance is a call center company that specializes in omnichannel customer experience management.
Alorica
Founded in 1999, Alorica is a contact center BPO that specializes in customer service, technical support, and sales. They offer services to companies of various sizes, particularly in the fields of healthcare, retail, financial services, and communications.
Sitel
Founded in 1985, Sitel is another call center outsourcing company that specializes in customer experience management, including customer care and technical support. Their clients are large enterprises in healthcare, retail, finance, and telecommunications sectors.
TaskUs
Founded in 2008, TaskUs is an outsourcing company offering customer support and back-office services, primarily to high-growth companies, particularly those in technology, e-Commerce, and social media sectors.
IBM Global Process Services
Founded in 1911, IBM Global Process Services is an outsourcing division of IBM that began operations in the early 2000s. This arm offered business process outsourcing services, including finance and accounting, procurement, and customer relationship management.
KDCI Outsourcing
Founded in 2011, KDCI Outsourcing is a service provider that specializes in creative design, digital marketing, back-office support, customer service, and IT. Their primary target market are medium enterprises across industries like retail, e-Commerce, real estate, and financial services.
Outsource to the Philippines
The Philippines is certainly a top outsourcing destination, however, finding the right outsourcing partner can be challenging, and one can easily fall victim to the disadvantages of outsourcing to the Philippines.
At KDCI Outsourcing, we have measures in place such as high-tech equipment, redundant power and internet connectivity, robust IT infrastructure, risk management plans, and cyber security protocols to help ensure uninterrupted operations and secure data transfers and storage.
We also have a great track record of not only finding you staff that fit your requirements, but building you results-oriented offshore teams in the Philippines that will seamlessly integrate with your inhouse operations, serving as the perfect extension of your organization.
Interested in outsourcing to the Philippines? Contact us to learn more!
