Why companies choose to outsource to the Philippines

Aug 28, 2014SHORE Blog

The Philippines currently rules the roost in the business process outsourcing (BPO) industry’s voice sector, and is next to India in knowledge process outsourcing (KPO). By 2016, Philippines’ BPO revenues are projected to exceed US$27 billion taking over 10% of the overall global offshore BPO market. There are many good reasons for the Philippines’ dominance in the outsourcing industry. Some examples are illustrated below:

Low labor and operating costs lead to greater profits. The standard of living in the Philippines is low, hence, labor costs are low. Telco, utilities, office space, supplies, and third-party provider costs are also lower than in other regions. This translates to higher profits for companies and enables new growth opportunities.

Highly skilled and hardworking workforce resulting in better quality of work. The Philippines has an above average literacy rate of 92% and a large population of educated, talented, and service-oriented people. As the third largest English-speaking country in the world, the country has the highest business fluency in the global BPO industry. Filipinos’ facility with English is accompanied by a “neutral” accent that is an advantage in voice outsourcing services. The Philippines produces over 400,000 university/college graduates every year in commerce, sciences, technology, art and medical courses.

Compatibility with both the Western and the Eastern cultures contributes to ease in doing business. The Philippines was a colony of Spain for over 300 years, and the U.S. for almost 50 years, and both countries’’ influences permeate local culture. The legal system is U.S.-based and English is a medium of instruction. Filipino workers’’ multiculturalism makes it easy for them to adjust to foreign languages, lifestyles, professional skills and work ethic.

Strong government support for the BPO industry resulting in improved business conditions. The Philippine government actively supports the BPO industry as one of the two highest dollar earners contributing to the country’s GDP. The government established special economic zones and grants incentives such as a four to eight-year income tax holidays to outsourcing businesses. Foreign companies enjoy scaled down corporate income taxes and duty-free importation of materials.

The Philippines consistently performs better than other offshore destinations due to the quality of its work force, fused with continuous improvement and best practices unique in the BPO business.