How the Philippines Took the Lead as a Global Outsourcing Hub: Going from Strength to Strength

Through the advancement of technology is rapidly changing, organizations and enterprises have been given nearly limitless opportunities and potential to gain a foothold into new markets in different parts of the world. One game changing opportunity stands out among all the technological innovations that have been made possible: Outsourcing.

Within the world of Outsourcing only one country holds the title of BPO Capital of the World. The Philippines. This well-educated, fluent English-speaking island nation has earned its place as the leading strategic advantage that C-suite executives are taking advantage of in today’s hyper-competitive business environment. The growth in the Philippine’s IT-BPO industry can be attributed to the country’s financial advantages, world-class technical education system and fluent English skills, among many other factors – driving the Philippines to rank among the world’s top outsourcing destinations.

A Global Center of Excellence

According to the IT and Business Process Association of the Philippines (IBPAP), the Information Technology-Business Process Outsourcing (IT-BPO) industry is a prime economic driver for the country and will soon overtake Overseas Filipino Workers (OFW) remittances as the largest source of income for the Philippine economy. Global in-house centers (GICs) continue to provide services to prominent Fortune 1,000 organizations around the world – making it one of the most important job-generating sectors alongside the IT-BPO industry.

One commendable observation by the World Trade Organization (WTO) in its 2019 Report is that the Philippine IT-BPO industry is an essential driving force for its economy’s transformation, growth, and development. Even the Department of Trade and Industry (DTI) recognizes the competence of the Philippine’s IT service sector including software development, call center technical support, account and other critical back office services, hailing this thriving sector of the Philippine economy as a ‘vital economic lifeline’.

What Makes the Philippines a Global Outsourcing Hotspot?

Here are 10 advantages that have made the Philippines a premiere Global outsourcing destination.

1. English Proficiency
   English is an official language in the Philippines and spoken among Filipinos from birth in the home, at work and all throughout their day to day life. Because English is taught and spoken as a common conversational language throughout the Philippines, the Philippine workforce is world-renowned for its excellent language skills. This is a driving factor for the Philippines easily outcompeting other outsourcing destinations, such as India, as the top provider for voice services center and highly skilled IT & Computer Engineering workforce.
2. High Literacy Rate
   The National Capital Region (NCR) of the Philippines enjoys a 97% literacy rate and more than 95% of Filipinos working in outsourcing companies and virtual teams have at least an undergraduate college degree. Graduates from business administration and finance, communication and education, mathematics, engineering, and computer science make for a highly varied and well-educated talent pool to fill in nearly any job role needed by an organization.
3. Compatibility with businesses of all types and sizes
   From startups and medium-scale companies to multimillion enterprises, the Philippines has become the in-demand option for businesses around the world when looking for outsourcing partners and virtual teams that can handle technically skilled tasks such as accountancy and payroll, IT and digital marketing, web development and SEO, among many other services.
4. Cost Efficiency
   Global businesses can experience operational cost savings between 60% and 80% by outsourcing their services to the Philippines. This is driven in large part by the fact that the cost of living in the Philippines is significantly lower than its counterparts in the West. Because of this, employee compensation and benefits are a fraction of what they cost for professionals in the US or Europe however the quality of work is on par or better.
5. Cultural Compatibility
   More than any other country in Asia, Western culture is deeply entrenched and successfully integrated into everyday life, which makes Filipinos highly adaptable to principles and ideologies that Western companies and businesses believe in. This makes it easy for Filipinos to converse and connect with clients and colleagues alike.
6. Strong Data Privacy Protection & Laws
   The Philippines is vigilant about strengthening data privacy regulations and implementation given the relentless cyber-attacks that Singapore went through in 2019 alone. The Philippine focus on data privacy and security has prevented them from joining list of the least cyber-secure countries in the world. A fate that has befallen many well-known outsourcing hubs such as India due to worrisome data breaches it suffered as recently as last year.

   The Philippine Data Privacy Act of 2012 ensures utmost protection and secure flow of personal information being processed by public and private entities.

   In fact, the Philippines is one of the only three ASEAN countries with existing data protection laws. Philippine Privacy Commissioner Raymund Eriquez Liboro gave assurance to global trade players with outsourcing partners in the country that they can ‘conduct business in a safe manner here’.

7. Government support
   Because of the huge contribution of the outsourcing industry to the country’s growing economy over the years, the government shows its support and appreciation to the IT-BPO sector not only to attract more global businesses to establish their offshore operations in the Philippines but also hone relevant education and skills needed by the Filipino workforce.

   From generous tax incentives and tax breaks to educational grants and simplified import/export procedures for local and foreign investors, these provisions indicates the government’s strong bias to this industry.

8. Proven Track Record
   For more than two and a half decades, since the BPO industry started in the Philippines in 1992, its total revenue has seen a ten-fold increase with $55 billion of projected income by 2020, and at least 850 registered companies providing many varied employment opportunities to more than a million Filipinos as of 2016.
9. Economic Stability
   Despite the impending implementation and subsequent impact of the Corporate Income Tax and Incentives Reform Act (CITIRA), Foreign Direct Investments (FDI) in the Information and Communication industry amounted to $3.6 billion worth of foreign-initiated projects for 2019 in 3Q alone. It marked a four-fold surge compared with the same quarter in 2018, according to the Philippines Statistics Authority (PSA).
10. Global Payment Technologies
    The Philippines is on the digital forefront as a means of improving customer satisfaction for its foreign merchant clients doing business in the country. The provision of an advanced technology payment platform as well as an expanded suite of related product offerings ensures that superior technological and operational efficiencies for any company involved in outsourcing in the Philippines.

Leaders of modern, forward-thinking enterprises always seek ways to minimize expenses, boost sales revenues, and expand their global footprint. Outsourcing business operations in the Philippines can deliver all of these and more. Check out our other outsourcing articles or reach out to us via (email) if you have more questions on how to navigate the thriving Philippine outsourcing landscape.