Outsourcing has been around for a long time but was only introduced as a full-blown business strategy in the 1990s. Utilized by organizations more and more to stay relevant in the tech-savvy world, this innovative approach made a global impact progressively and across every field.
In 2019, the global outsourcing market size was 92.5 Billion USD, according to Statista.
Business Process Outsourcing slowly became a necessity for corporations to create effective outcomes stemmed from an offshore skilled workforce while offering high-standard delivery. The Philippines is the top choice for an outsourcing destination, with the most commonly outsourced processes here being Contact Center Services and IT-BPM support. Gaming and Animation are also gradually emerging industries. ( magellan-solutions.com, matchboard.com.au ).
Pandemic Outsourcing in the Philippines:
Outsourcing as an industry can withstand and adapt to changing requirements in time and surroundings; such as lockdowns, technological tools, WFH set-ups, remote management, and cost-cutting. It is because of this innate feature that Business Process Outsourcing has succeeded despite the COVID-induced economic cripple worldwide, especially in locations like the Philippines.
According to an outsourcing survey report by Outsourceaccelerator.com, the Philippines outsourcing industry in the 12 months post-COVID saw a 30% increase in employees, notwithstanding the difficulties created by the pandemic.
The same research also identifies three factors that contributed to the sudden outsourcing boom in the Philippines, which pushed the growth of ten years into one:
Acceptance of remote work worldwide led to choosing lower-cost options outside the US
Tools and technology supporting WFH are being accepted more and more by people every day
Companies are re-evaluating cost-savings with a focus on offshore teams.
Given below is a comparison of company responses during the survey and the measured statistics for the past 12 months, among the respondents:
| Performance of Outsourcing Companies from March 2020 to Feb 2021 | |||
|---|---|---|---|
| Metric: | High growth: | Average: | Drop: |
| Increase in Employees | 76% | 16% | 8% |
| Revenue growth | 84% | 8% | 8% |
| Increase in Profitability | 72% | 20% | 8% |
| Business stability | 80% | 8% | 12% |
| Positive outlook for next 5 years | 92% | 4% | 4% |
Source: Outsourceaccelerator
Identifying small to medium enterprises to be the boon of the industry in the future, the report also highlights how the market is already saturated with large businesses. Exploring SMBs as potential clientele is the way forward, as they now have access to technology that was previously considered a privilege for large enterprises only. The PH BPO industry is poised to succeed in an exponential manner in times ahead, provided the right prospects are targeted for expedient growth overall. (Outsourceaccelerator)
Small to Medium size businesses should consider Outsourcing to the Philippines in 2021, as the cost of cloud-based software has greatly reduced, making it widely accessible to different size businesses. Additionally, labor pressure has been raised in light of the US minimum wage increases, which makes it extremely difficult to find skilled employees. Characteristic to outsourcing, mid-size businesses can get a highly-qualified yet low-cost workforce, due to lower cost of living in offshore destinations. This allows them to work with experts skilled for a particular field or designation as well. Outsourcing also enables business expansion for SMEs with accurate and efficient operations and better results than in-house teams.
What Filipino Outsourcing can bring to the Table?
Outsourcing rose to the occasion as not only a sustaining but flourishing industry offering Business Continuity solutions to otherwise halted operations during the pandemic. With governmental backing, investment in the industry’s development, and a hardworking populace; the Philippines is truly known as the “BPO capital of the World”. There are a few valid reasons why it is the best location to outsource in 2021 (microsourcing.com), as explained below:
1-Cost-Effectiveness vs. the US
According to a Deloitte survey, reducing costs became one of the four top priorities in outsourced business management in 2020, to compete with the pandemic recession and keep systems running. Outsourcing to the Philippines plays a vital role in reducing overall operational costs by providing an offshore, low-cost workforce, leveraging labor arbitrage; while giving solutions at par to in-house resources.
The cost of living is relatively low in the Philippines as compared to the US, which leads to a better economy, greater job satisfaction, better life-quality, and lower wage-per-hour rates. According to an article published at manilastandard.net, the IT and Business Process Association of the Philippines (IBPAP) has projected that the BPO sector of the Philippines is set to generate a revenue of 29 Billion USD by 2022, with a CAGR of 3.2 to 5.5 percent.
2-High-Quality Workforce
The Filipino workforce directly enrolls trainable, skilled, and specialized graduates that are capable to adapt to any challenges brought up by the Outsourcing industry. Hailing from different fields, the current literacy rate as of 2020 is 91.6% (CHED). According to the same, over 325,000 college students graduated in higher education in 2018-2019.
Universities emphasize specific courses to hone particular skill sets while adapting to the changing market demands. So, the Filipino workforce is ever-ready to take on high-level outsourced functions. With the government’s focus on upskilling the workforce constantly, the oncoming batches will be future-ready, particularly through ICT development programs.
3-English Fluency
English is also one of the official languages, while the natives have neutral accents, being taught English through high school. This also makes for excellent customer service and voice-oriented roles in the BPO industry. Here Contact Center services are a Filipino specialty, with many applying English-only policies during working hours to constantly reinforce English communication.
4-Strict Security and Privacy
Security risks are always around the corner when working with IT, cloud, or digitally accessible services. The IT-BPM industry of the Philippines places great emphasis on Data privacy and security, apparent by the harsh penalties in place for those who may break the 2012 Data Privacy Act (IBPAP). Being one of the major contributors to the Filipino economy, these astringent measures put the service line up to international standards.
5-Govt. Supported Industry
The Philippines government actively promotes the industry, knowing how much it contributes to the overall GDP. The PEZA zones created under the Special Economic Zones Act provide added incentives for the separate development of areas specifically for BPO, KPO, warehousing, tourism, medicine, logistics facilities and more. With additional tax dispensations; formal invitations to investors, and creating ways to boost the existing capabilities of all personnel; these zones are built to promote economic growth. Many other organizations also contribute to promoting the BPM sector; like IBPAP, which is solely dedicated to bolstering outsourcing in the Philippines. They also promote digital city plans in 2025 for transforming many areas into IT hubs. Keeping in mind the current Covid instructions from governmental bodies, they also frequently host virtual events to advocate advancement in the industry.
6-High Cultural Affinity
Previously colonized by the US for 48 years; Filipinos share more than religious, cultural, linguistic, food, education, lifestyle, and work similarities with the American population. Christianity is the pre-dominant religion here, the legal and accounting system are alike to the US norm, and Filipino students are taught American English. Being the third largest English-speaking country in the world, Filipinos are deeply aligned with American media, sports, movies, jargon, customs, and pop culture.
Extremely friendly and accommodating; Filipinos by nature empathize with others and easily adapt to changing environments. This is evident by the number of Overseas Filipino Workers in the US, which was around 4.1 million only in 2018 (usa.inquirer.net) which is steadily increasing in number.
7-Proven Performance
Beginning from 1992, then being pushed forward by the Philippines Economic Zone Authority (PEZA); the BPO sector of the Philippines contributed 7.3% to the economy in 2015 (outsourceaccelerator). Growing further since then, the bpo sector employed over 1.2 million Filipinos in 2020 (matchboard.com). Philippines outsourcing industry is well on its way to prepping ever more talented youth in the future and occupying about 15% of the global outsourcing market by 2022 (magellan-solutions.com)
8-Work Integrity
Known for being extremely dedicated, hospitable, and hardworking; Filipinos are also calm by nature and friendly. Innate to their norms are familial values, respect, commitment, and warmth towards others. They easily acculturate and mold themselves according to the client, which makes them perfectly suited for customer-centric roles.
9-Flexibility and Scalability
With a diverse talent pool at your immediate disposal, outsourcing in the Philippines can help effectively upscale and downscale, as and when needed. Irrespective of the number of seats or expertise level; the wide range of bpo companies here can provide you with ample options to choose from. Considering the advancements in IT Tech and their incorporation into the everyday business norm; connectivity is not an issue either. Particularly for WFH environments in Enhanced Community Quarantines (ECQ), additional facilities to support the working populace have been mandated by the government itself. (KPMG)
10-Time Zones
Spanning almost a 13-hour time difference on average, outsourcing to the Philippines allows a US company to provide 24 hours service to their customers, without the additional night-shift costs. Offshore roles also allow for flexible hours, which is part and parcel to the Filipino community; adjusting to their employer’s requirements and geographic locations. This ensures your HR operates round-the-clock while matching up to your corporate culture.
11-Augmented Processes
Creating Centers of Excellence (COE) is becoming the trend in Outsourcing; the purpose being able to enhance customer experiences. This also allows to improve processes within a particular skill set or industry, to apply its best practices, and additional expertise of a dedicated team. According to an industry survey by SSON, 68% of shared services providers operate out of a COE, globally, which is even higher in Asian companies. Serving as the necessary value-add that Filipino outsourcing provides to organizations, dedicated centers also allow for better performance analytics.
12-Reduced Legalities and Management
When outsourcing with a bpo partner in the Philippines, they take on your HR management and legal dealings, reducing the liability on you. With strong Filipino labor laws in place, contractual codes ensure an amicable relationship on all fronts for the time agreed upon, relieving you of burdensome dealings of administration, compliance management, tax, and litigations. The outsourcing company employed, deals with all compliances, leaving you to focus on business expansion.
Considering the massive impact COVID-19 has had on work life, it’s no wonder that more and more organizations are investing in cloud infrastructure and security to ensure Business Continuity; in case of another global crisis. According to fortunly.com, $75.2 Billion was spent globally on security outsourcing last year.
The Philippines is one of the top destinations to Outsource (microsourcing.com) in 2021; while ensuring high-end security measures in place for data protection. Fueling the primary business focus of lifting and shifting for creating Centers of Excellence with reduced overall costs, outsourcing in the Filipino industry is only set to grow. The Filipino expertise is spreading from Contact Center and IT services to specialized Accounting, HR, Healthcare, Security, and more gradually.
About Premier
Providing a perfect blend of technology and manpower for customized solutions, we lift and shift operations to more viable locations through offshoring. Generating higher revenues for our clients, with better results, and greater cost savings, we build long-term relations with mutual growth. Our expertise includes Back-office operations, IT Solutions, Contact Center Services, and more across multiple industries. One of our operating locations is in the Philippines, along with other global establishments. To know more about our services, visit our website
