Outsourcing to the Philippines
The Philippine outsourcing sector is regarded as one of the fastest growing industries in the world. With global demand for outsourcing services expected to hit 220 billion dollars by 2020, there are a number of compelling reasons why companies have been shifting their processes to the Philippines rather than keeping them onshore or at other outsourcing destinations such as India.
Compatible Cultures
Whether your outsourcing project involves customer service, sales, or even application development, effective communication and mutual understanding between your outsourced staff and your customers or local employees will be critical factors in your success. In addition to superior language skills, your outsourced staff must possess natural sensitivity to your local culture. This is an area where the Philippines really outshines other outsourcing destinations.
English pervades every aspect of Philippine society, from television and movies to education and government. Philippine children grow up watching Western TV shows, listening to Western music and following Western pop culture. In fact, instruction in most schools is carried out primarily in English. The dominant religion in the country is Roman Catholic, which further strengthens ties and affinity for the West. The result is that not only do Filipinos speak English with a pleasing, neutral accent, but they also possess a deep and natural understanding of Western Culture.
The combination of these attributes with Filipinos’ warm and accommodating nature makes it easy to create an offshore Philippine team that mirrors the culture and values of your on-shore operation and enables them to function as a seamless and transparent component of your overall business.
Low Costs
Obviously the engine that propels the outsourcing industry in any developing country is its lower cost of doing business. The Philippines excels in this area, especially with regard to labor costs. The minimum daily wage in the Philippines is approximately $8 per day and the starting salary for college graduates from good schools begins at around $300 per month.
Salaries in the southern part of the country tend to be slightly lower than in Manila but Manila offers the largest pool of skilled workers, as well as the best English speakers.
Other products and services that benefit from low labor costs, such as office rental, professional services, office supplies, food and lodging are also extremely reasonable in the Philippines. Taxes and health care costs are also much cheaper than in developed countries. Cost savings are not as great for products that must be sourced from abroad, such as computers; and for telecommunication services such as Internet access.
Overall, however, a company can expect to save over 50% on staffing costs by outsourcing in the Philippines.
Highly-Educated, Highly-Skilled Staff
Approximately 3 million new graduates of the Philippines’ world-class higher education system enter the job market each year.
In addition, Manila boasts a robust professional certification and continuing education system, providing developers and other skilled workers with additional qualifications such as Microsoft and Cisco certifications, as well as sales and customer service training. It is possible to find staff with virtually any specialization in the Philippines.
In addition, many of the world’s leading high-tech companies such as IBM, Dell, Samsung, and Texas Instruments have made large investments in their operations in the Philippines, so many job candidates have extensive experience at multinational corporations producing work to the highest international standards.
Until the emergence of the BPO industry in the Philippines, the local economy could not support the millions of skilled and highly talented local workers who enter the workforce each year, forcing the new workers to join millions of other Filipinos currently working abroad in menial jobs that make no use of their skills and keep them far away from family and friends. The result is a pent-up demand for skilled positions that creates a positive environment for BPO’s looking to hire skilled workers. This is in stark contrast with other offshoring centers such as India where finding and keeping employees is a serious challenge.
Economic Growth and Stability
The Economist’s most recent country briefing on The Philippines described a number of positive developments in the Phillipines that signal continued economic growth and stability for the country:
Economic growth is expected to remain robust in 2017 at 6.2%, supported by strong investment and domestic consumption. The government of Rodrigo Duterte has reaffirmed its support for the BPO industry in the form of tax incentives and investment in critical areas such as telecommunications infrastructure. Analysts expect this commitment to remain in place for the foreseeable future.
Despite sustained economic expansion however, strong population growth will continue to keep per-capita income in the Philippines below the level of many of its neighbors. Therefore wage inflation will be moderately suppressed for the foreseeable future. The Philippine peso is also expected to remain somewhat weak, counteracting inflationary pressures for BPO clients.
These trends will certainly fortify the Philippines’ position as a premier outsourcing center.