The Philippines has been the prime outsourcing destination for close to 30 years. The first Business Process Outsourcing contact center was established in 1992. Realizing its potential to provide jobs for Filipinos, the Philippine government started putting up special economic zones to support the outsourcing companies and created legislation to entice foreign businesses to set up their customer support and contact centers. As a result, it provided jobs for 1.3 million Filipinos and contributed 11% of the country’s total GDP. The BPO industry has been a prime mover and a huge sector for the Philippines’ emerging economy. There are approximately 700 outsourcing companies currently operating all over the Philippines, with large concentrations in the metro areas where special economic zones usually are located.
Here are the reasons why the Philippines has become the premiere outsourcing destination:
Companies are able to save 60% – 80% of their operational and payroll costs by outsourcing some of their work to the Philippines. The labor costs for skilled Filipinos are just a fraction of the cost of their counterparts in the USA and in Europe.
- Language Neutrality
English has always been the primary medium of instruction used in Philippine schools. All government transactions are also conducted in English and the majority of the Filipinos, roughly around 70-80%, have a good grasp of the language. The American influence is also very strong, and most Filipinos are very well versed and heavily inclined to have an innate understanding of the language.
- Access to Qualified, Young and Vibrant Workers
The Philippines produces roughly around 450,000 graduates yearly. The Philippine education system is actually geared to produce graduates that are in demand for working in BPOs as well as for overseas employment. With the average age being 23 years old, this group grew up in the fast-paced, technology-based world and has an innate grasp of technology and how to use it to make advances in their professional careers as well as on how to augment promotion of local businesses.
- Easing up Legal liabilities and Management Issues
Having frivolous and senseless lawsuits filed against business owners by their in-house staff is actually inevitable. All business owners know this. Outsourcing will eventually absolve business from this burden. Outsourcing companies in the Philippines have a very strong HR and managerial teams that are very well-equipped and can handle these frivolous issues well, never allowing them to affect your business as an outsourcing partner.
- Government Support
The Philippine government, seeing the potential of BPOs to provide jobs and help boost the economy, has set up legislation and measures to further help ease the set-up of BPO companies for locals as well as foreign investors. The Philippine education system also augmented their efforts by offering grants and aid to Filipinos who want to pursue careers in the BPO industry. Aside from these, the government also placed exclusive economic areas all over the country, intended solely to make it easier for investors to set up shop. Tax breaks were also given to entice them to invest locally. The Philippine government also strengthened their data privacy and security laws to make an airtight seal and protect data of everyone who decided to outsource their work in the Philippines.
- Cultural Influence and Similarities to the West and America
The Philippines probably is the only ASEAN country that has a very strong and robust Western/American influence mixed with native characteristics of its people. Western and American influences are well received locally from pop culture, sports, food, etc. These things all contributed to why outsourcing in the Philippines has been robust and well received by its people.