Until now, outsourcing to the Philippines has remained a wise business venture for overseas brands — especially those from Western countries. As one of the outsourcing industry’s powerhouses, there’s data to back this assertion.
In 2020, the revenue of the country’s outsourcing industry was valued at $26.7 billion, a slight increase from 2019’s $26.3 billion, skyrocketing to $29.49 billion in 2021 and $32.5 billion the following year. Presently, the 2024 revenue of the Philippine BPO industry is at $38 billion, according to the IT and Business Process Association of the Philippines (IBPAP). This is up from 2023’s $35.5 billion, exhibiting an astounding growth rate of 7% versus the 3.5% global average.
With an estimated 6% economic growth rate for 2025, we can expect a brighter future for the country’s business process outsourcing industry. Whether you’re shifting business operations to offshoring, or currently outsourcing to the Philippines, having a clearer picture of the industry can do wonders for your business.
Top 4 Most Outsourced Services
In this day and age, more and more industries are leveraging global outsourcing to access world-class talent and maintain operational efficiency at a lower cost. Let’s find out which industries outsource the most, based on Deloitte’s “2021 Global Shared Services and Outsourcing Survey.”
1. Information Technology (IT)
As the digital landscape evolves and cybersecurity threats loom, IT positions itself as the most outsourced service at 54%. After all, IT teams are an indispensable asset of any business. But due to the hefty cost of in-house hiring, companies resort to information technology outsourcing (ITO), delegating IT functions such as information security, network administration and support, systems administration, and software development to a business process outsourcing company to slash overhead expenses.
More than cost cutting, companies also gain the advantage of accessing top Filipino IT talent. In outsourcing firms, IT professionals boast not only specialized skills and experience but also the innate drive to keep abreast with the latest technologies. By introducing clients to new tech, their businesses remain future-proof and competitive. In terms of cybersecurity, your business is in safe hands. While training in-house IT teams is often the first course of action, it is not the most sustainable due to the cost of training — which, inevitably, contributes to higher company expenses.
With an outsourced team of IT professionals, they are already trained in the intricacies of cybersecurity, allowing them to safeguard your IT infrastructure with advanced cybersecurity solutions.
2. Finance
At 44%, finance is the second most outsourced function. Offshore outsourcing companies support diverse financial services, including budgeting, financial management, and bookkeeping. Workload reduction and operational efficiency are the rationale for outsourcing. When businesses partner with an outsourcing company in the Philippines, a part of their in-house team’s workload is transferred to the outsourced team.
This is a good thing, though. Finance professionals deal with numbers and data, so there’s almost no room for mistakes or lapses in focus. By outsourcing financial services, your in-house finance team can power through a more feasible workload, decreasing their likelihood of making costly errors and experiencing burnout. With an extra pair of hands helping your local staff, your business can expect faster turnaround times, increased productivity, and maximum operational efficiency.
3. Payroll
Payroll is more intricate than meets the eye. There are numbers involved, and one must remember that payroll is also about maintaining integrity and building trust — especially with employees. Because payroll is complex and rigorous, it has become the third most outsourced service (32%). An offshore team of payroll specialists calculates salaries, creates reports and employee payslips, handles the provision of benefits, and complies with taxation laws and regulations.
By outsourcing payroll to the Philippines, your business can avoid paying hefty fines and frustrating your employees with delayed payslips or incorrect payroll data. BPO workers are also tech-savvy. They can leverage advanced payroll tools to automate time-consuming payroll processes — such as tax withholding, payroll reporting, and payroll record creation — ensuring accurate calculations and tax compliance.
As sensitive employee and payment details are stored in a payroll program with strong encryption, the data are protected from unauthorized disclosure and access. This, in turn, strengthens trust and boosts employee morale.
4. Customer Service
Although plenty of services and industries are taking the spotlight in the outsourcing landscape, customer support still stands as one of the services most outsourced overseas (22%). Moreover, digital customer support trends like omnichannel support and AI have revolutionized customer service into a strategic endeavor, encouraging businesses to step up their customer experience game.
Despite its popularity, misconceptions about outsourcing customer service pervade today. One such misconception is the poor quality of customer service. Reality check: Customer service outsourcing improves quality, provided the client works with a reliable BPO partner.
Customer service outsourcing in the Philippines is unmatched. Apart from providing 24/7 support, Filipino agents can help brands streamline customer service support and enhance customer care quality by implementing video support and other tools to diversify or improve existing customer care channels, ensure faster query resolution, and boost customer retention.
Customer support outsourcing in the Philippines also doesn’t require additional infrastructure investment, as Philippine outsourcing companies already have all the necessary technologies and equipment to provide world-class customer support.
The Strengths of the Philippine BPO Industry
The Asia Pacific region is the hotbed of global offshore outsourcing, with a 2022 market size of $66.27 billion. From 2023 until 2030, outsourcing in the Asia Pacific is estimated to reach a 10.7% compound annual growth rate (CAGR).
Despite the promising trajectory of Asia Pacific’s outsourcing industry, businesses can’t just outsource to any country without accounting for cost-effectiveness, English proficiency level, cultural compatibility, and other factors. Although countries like India, Mexico, and Poland are key players in the BPO industry, the Philippines takes the cake for the best country for outsourcing.
1. Filipinos Are Fluent In English
According to the 2024 EF English Proficiency Index, the Philippines exhibited “High Proficiency” in English, ranking second to Singapore in Asia and scoring 570. Additionally, in a survey by the Social Weather Station in 2023, 47% out of 1,200 Filipinos expressed their competence in English.
Filipinos’ English fluency can be traced to its colonial history, to which the Americans introduced the language to the Philippine education system. The dominance of English seeped into present-day Philippines, where English has become a social status for Filipinos.
Because Filipinos are exposed to Anglophone media as early as childhood, they become more competent in speaking, writing, and understanding the language. In the workplace — specifically in BPOs where employees collaborate with foreign clients — English communication skills are a requirement. Combine this with the neutral English accent and high education level of Filipinos, it’s no surprise the Philippines is a prized outsourcing partner.
2. The Philippines Has Lower Cost of Labor
One way to maximize cost-effectiveness is by looking at a country’s wages. For overseas companies, the Philippines is eyed for its cheaper labor costs. In the National Capital Region (NCR), for example, the daily minimum wage of Filipino professionals in non-agricultural sectors, including the BPO industry, is ₱645 ($11.27). This translates to an hourly rate of around ₱80 or less than a dollar.
Now, let’s look at the monthly income of Filipino BPO workers. On average, they earn around ₱15,407 ($269.39) to ₱35,000 ($612.06), though the numbers may vary depending on seniority and role.
Contrast this to the monthly salaries of BPO workers in the US, which range between $5,417 and $14,583 — or Singapore, which sits between S$4,293 ($3,222.37) and S$5,436 ($4,080.32), it’s clear why the Philippines is an attractive outsourcing destination. Not only can clients reduce their overhead expenses by 70% to 90%, but they can also scale their workforce according to business needs with little financial risk.
3. Filipinos Can Effectively Work With Western Clients
Cultural compatibility is another requirement when choosing and evaluating potential outsourcing partners. With the country’s innate accommodating nature and affinity for Western culture, Filipino professionals in the BPO industry can adapt to their clients’ business customs and practices and get along with in-house teams, fostering a positive culture of professionalism and teamwork.
Employment and the Future of Work In the Philippine Outsourcing Industry
From Frank Holz establishing the Accenture Global Resource Center in 1992 to earning the title “BPO capital of the world” in 2010, the Philippines has a rich outsourcing history that solidifies its reputation as a preferred outsourcing partner by foreign businesses.
Presently, the Philippine BPO industry remains as ambitious as ever, creating 1.82 million job opportunities in 2024 and setting its sights on being the “top digital experience hub” in the world, with the goal of achieving the latter status within 2028, according to Business World.
That said, let’s delve deeper into the Philippine BPO industry.
1. A Viable Career Path
Did you know there are 1.82 million Filipinos working in business process outsourcing companies? The diversity of jobs offered by a Philippine BPO company gives Filipino professionals ample job application opportunities that match their skills, ensuring steady career progression in their respective fields.
The government also passed the Republic Act No. 11927. Under Article VI, Section 10 of said law, it enshrines the duty of the Inter-Agency Council for Development and Competitiveness of Philippine Digital Workforce to create training programs with the help of stakeholders like private companies and IT-BPOs.
Among the skills listed in the law are virtual assistance, graphic design, animation, online teaching, and search engine optimization (SEO). Though not an exhaustive list, these are the same skills clients look for when outsourcing. Thanks to the Republic Act No. 11927, the Filipino workforce can stay competitive, making the BPO industry a more viable career option and the Philippines a premier leader in outsourcing.
2. The Boom and Threat of AI Integration
AI integration in the Philippine outsourcing industry is a double-edged sword. While it’s true that BPO companies have started integrating AI and automation solutions, there’s the looming threat of these technologies in outsourcing companies. Business World reported that the integration of AI caused some members of IBPAP (8%) to downsize their workforce. Moreover, as per Oxford Insights’ “Government AI Readiness Index 2024” report, the Philippines has a readiness score of 58.51.
The solution? Upskilling. Upskilling Filipino BPO workers is futureproofing them for success in an AI-driven world. With AI and automation poised to take over manual, repetitive tasks, equipping Filipino professionals with technical and specialized digital skills helps them expand their capabilities and provide innovative, state-of-the-art outsourcing services, all while maintaining company loyalty.
Of course, in today’s world, hard skills are not enough. 21st-century skills such as critical thinking and technological literacy give Filipino workers an unparalleled edge in the Philippine BPO industry, improving their future career prospects. However, we must remember that AI and automation should work hand-in-hand with human employees, not replace them. From writing reports to composing personalized customer responses, many tasks still benefit from the analytical thinking, creativity, and empathy that humans provide.
To fully take advantage of AI and automation solutions, BPO workers must continually adapt to the fast-paced climate of the BPO industry — even if it means venturing out of their comfort zone.
Outsource to the Philippines Today
If we were to describe outsourcing in the Philippines, it’s the full package: excellent English communication skills, cost-effective labor, skilled workforce, cultural compatibility, and round-the-clock productivity. That’s why companies — out of all rival outsourcing countries — choose to work with Philippine outsourcing service providers.
The prominence of outsourcing firms opens doors for jobs, which fosters the growth and development of the Philippine economy. However, AI is a hot topic in the outsourcing service industry. Advanced technologies should be treated as partners, a complement to human labor, to be exact. The inevitability of AI adoption is here to stay, and BPO companies and employees must step up or get left out.
At KDCI Outsourcing, we help you build an outsourcing team that leverages new technologies and possesses the qualities and skills you value the most. Whether you’re looking to outsource finance or virtual assistance, our services are tailored to your needs so we can elevate your business to the pinnacle of success.
Get ready to experience an outsourcing service like no other. Contact us now!
