The Philippines is known for many great things. Food, hospitality, and the incredible resilience of its people. But did you know that it is also home to the top BPO companies in the world? You read that right. Known as one of the top outsourcing destinations, the Philippines has come a long way in terms of infrastructure and jobs related to business process outsourcing.
As an outsourcing service provider based in the Philippines, we have witnessed several developments in the BPO industry in the country. The outsourcing marketplace has become more competitive, and every BPO firm has learned how to adapt to modern outsourcing trends to keep up with the changing customer and business needs.
If you’re looking to outsource your business operations to the Philippines, this article will help you decide whether the country is the ideal outsourcing hub for you. We will tackle the pros and cons of outsourcing to the Philippines, and we will provide you with an honest view of the Philippines’ outsourcing industry. Read more.
What is outsourcing?
Outsourcing is defined as the practice of hiring a third-party service provider to perform common business tasks. An outsourcing provider is responsible for the recruitment, hiring, and training of team members to ensure that all tasks are performed smoothly. Basically, outsourcing means entrusting your business functions to another company that specializes in various front office and back office tasks.
The most popular form of outsourcing is called offshoring. Offshore outsourcing means entrusting your business operations to a service provider based overseas. For example, if you choose to outsource your data entry services to the Philippines, that’s offshoring.
How to outsource to the Philippines?
Outsourcing involves time, money, and trust. So, coming up with an outsourcing decision can be tough. Sure, the Philippines offers plenty of benefits to businesses that choose to outsource to the country. But risks are inevitable. For a successful outsourcing journey, here are some tips that you should take note:
Observe how your in-house team is performing.
Before you start outsourcing your business functions, an in-depth observation and analysis of your in-house team’s performance could help. Outsourcing and offshoring work best for businesses that really need them. To carefully assess the status of your in-house team, look at these aspects:
- Your business goals
Since you’ve started your business, how many of those goals have you accomplished? Were you able to achieve them based on your timeframe? What about profitability? Knowing how your business is performing is one way to assess if you need to outsource your services or not.
- Employee welfare
Taking care of employees is among the top secrets of successful companies. If there are few employees who perform multiple tasks at once, you might be understaffed.
Understaffing has plenty of negative effects on businesses like burnout, which results in high turnover rates. If you need a bigger, stronger workforce, outsourcing might be the best decision for you.
- Functions that need improvement
Once you have figured out the present strengths and weaknesses of your team, it’s time for you to identify which tasks to outsource. By doing so, you can find the best service provider that specializes in a particular task and get the best value for money with it.
Study the status of the outsourcing market in the Philippines.
Before hopping into the world of outsourcing, checking the current status of its market is also crucial. To decide whether hiring an offshore team in the Philippines is good for your business, here are some factors that you need to consider:
- BPO market growth
In the Philippines, the BPO is among the fastest-growing industries. The right outsourcing partner should be capable of adapting to the changing trends in the BPO market. These trends include staff upskilling, multichannel solutions, technology-aided operations, and flexible working arrangements.
To stay on top of the outsourcing arena, choosing a BPO firm that keeps pace with these trends is crucial.
- Level of BPO expansion
The Philippines boasts an impressive record of multiple BPO expansions not just in the metropolitan areas but also in provinces. With this, more and more businesses are having convenient access to skilled and experienced professionals in various fields.
Examining how BPO companies expand their operations in the Philippines is one good way to assess if your business could benefit from outsourcing your functions to the Philippines.
- Regulatory compliance
To ensure a smooth and productive outsourcing relationship with a Philippines-based BPO company, studying specific laws and regulations is a must. Every outsourcing vendor should prioritize 100% compliance to avoid penalties and any mishaps that could negatively affect clients and employees.
Look for reliable outsourcing providers in the Philippines.
Choosing an outsourcing partner in the Philippines is not an easy task. With hundreds and thousands of BPO companies in the country, the Philippines provides some of the strongest labor forces in the global outsourcing realm.
Depending on your needs and budget, choosing one of the leading outsourcing companies in the country can help you succeed in your outsourcing project. Read this article for important factors to consider before outsourcing.
Discuss and negotiate terms before creating SLA.
Mutually fair terms and conditions build solid and lasting outsourcing relationships. After picking a reliable service provider, it’s time for you to create your SLA. Service Level Agreement is a legal document that binds the vendor (service provider) and the client (business) in an outsourcing partnership. To draft an excellent SLA, here are some details that you should not miss:
- Business / project goals
- Type of outsourcing engagement
- Key metrics to measure quality and performance
- Scope of work
- Costs
- Accountability and terms in case of contract breach
Set up your external team and get ready to kick-start your PH outsourcing journey!
All good! Now, it’s time for you to set up your team and start outsourcing your business processes to the Philippines. Here are some of the steps that you could follow as you kick-start your outsourcing project. Note that these steps depend on the agreement as well as the inclusion of the outsourcing contract you’ve signed with your vendor:
- Provide essential BPO instructions to your outsourcing partner.
- Establish and discuss standard operating procedures (SOPs).
- Build your external teams.
- Set up the necessary infrastructure and technologies.
- Start the operations.
- Monitor teams and maintain periodic assessments and evaluations of performance.
What makes the Philippines an ideal outsourcing destination?
The Philippines is among the top outsourcing destinations globally. The success of BPO in the Philippines has greatly contributed to the global outsourcing market, thanks to Filipino BPO workers’ skills and expertise in many fields. With this, the country has become a major outsourcing hub for global companies because of its strong and competitive workforce, affordable outsourcing rates, and notable support from the government.
Continue reading to learn why the Philippines is a top outsourcing destination.
Finding the pros: Benefits of outsourcing to the Philippines explained.
1. Cost savings made possible with affordable outsourcing rates.
One of the best benefits that make outsourcing to the Philippines an excellent business decision is cost savings. Study shows that outsourcing can reduce up to 70% of operational costs for businesses. Compared to other countries, the Philippines is known for its affordable outsourcing rates, particularly for call center outsourcing services.
The average hourly rate of outsourcing services in the Philippines is between $12 and $14, which is twice cheaper than the average hourly rate of BPO companies based in the U.S. If you’re planning to outsource customer service and reduce costs at the same time, the Philippines is an excellent BPO hub.
2. Access to a diverse and competent talent pool
BPO workers in the Philippines are among the industry’s most sought-after talents. Once you decide to have your external staff in the Philippines, you will have convenient access to skilled and experienced professionals who specialize in IT, customer support, data entry, graphic design, content writing, and more.
The outsourcing workforce in the Philippines boasts incredible knowledge and expertise of different fields, making them some of the most versatile and reliable offshore staff in the global outsourcing setting.
3. Impressive language proficiency
Apart from exceptional knowledge and skills, one thing that sets Filipino BPO workers apart from other countries is their proficiency in various languages. To be specific, the Philippines boasts an impressively high English proficiency, which makes communication with companies outsourcing to the Philippines easier.
In fact, the Philippines ranked high in terms of English proficiency of its citizens. A 2023 survey ranked the Philippines 20th globally and second in Asia in terms of English proficiency. This proves that outsourcing to the Philippines means that you don’t have to worry about communication between your in-house and external team, because Filipino BPO workers will always deliver.
4. Commendable work ethics and professionalism
Recognized worldwide for unbelievable resilience during natural calamities and political turmoil, Filipinos know the importance of ethics in every situation. It has become one of the top outsourcing destinations due to international companies’ penchant for Filipino traits. This extends to the corporate setting, where BPO workers are known to exhibit professionalism and adaptability when working at different shifts.
Some of the most desirable traits of Filipinos also include courtesy, hospitality, and a deep sense of camaraderie. Teamwork surely makes the dream work. And with a Filipino team being in charge of your important business functions, you have nothing to worry about.
5. Easier cultural compatibility
After centuries of colonization by foreign countries, the Philippines still holds the influence of its colonizers as an extension of its native culture. This means that Filipinos are capable of interacting with clients and customers from different countries and with different cultures.
Cultural compatibility is an integral element in the outsourcing landscape because it prevents miscommunication and misinterpretation. Likewise, cultural compatibility in outsourcing allows companies to widen their target markets and extend their services to different countries.
6. Long-term government support
The national government has always been known for supporting outsourcing and encouraging companies to recruit Filipino professionals for outsourcing projects. The Philippines is a strategic destination for BPO investments, which was made even more convenient with the Special Economic Zone Act (PEZA), an act that promotes the establishment of economic zones in the country to attract more foreign investments.
In addition to this, the government aims to improve the outsourcing experience of global companies in the Philippines and provide more BPO jobs through the development of full-fledged Digital Cities in 2025. This move is expected to increase the demand for BPO labor in the Philippines, extending modernized services to companies around the world.
7. Steady market growth
The BPO industry in the Philippines shows no signs of slowing down. Each year, hundreds and thousands of jobs are offered to different professionals with different skill sets. When you outsource your business operations to the Philippines, you are not only benefiting from its world-class services. You are also contributing to the country’s rapidly growing BPO market, with figures that we will discuss later in this article.
8. 24/7 BPO operations
Many companies prefer to outsource their customer support functions to the Philippines due to the availability of companies that offer round-the-clock services. This means that you can have access to a fully functional and responsive customer support team 24/7.
Filipino BPO workers are used to working under different shifts and schedules. And with the rise of more flexible working arrangements, this has become a lot easier for BPO vendors and their clients.
Of course, the cons need to be studied as well: What will hinder you from choosing the Philippines?
No country is perfect, of course. While the Philippines is certainly an excellent choice for global companies, it also has a few drawbacks. Here are some of the possible cons that you need to know about outsourcing to the Philippines:
1. Difficulty in managing external staff
One of the main problems that you might encounter when you outsource your business to the Philippines is managing your external staff. With your service provider based overseas, your interactions will be limited to virtual meetings. When not facilitated well, this could cause miscommunication and mistranslation that could affect your relationship with your outsourced team.
The expected time zone difference also makes it more difficult for your in-house professionals to properly train and monitor your outsourced team. For this potential drawback, you might want to consider implementing various shifts and schedules for your in-house team. It’s also advisable to conduct regular meetings and assessments for quality assurance and control purposes.
2. Strict labor laws and regulations
Different nations have different laws and regulations. In the Philippines, the government and other concerned agencies don’t play when it comes to regulatory compliance. To protect the welfare of Filipino BPO firms and their employees, strict labor laws and regulations should be followed. These laws and regulations include paying minimum wages, 13th month pay, overtime pay, and other contractor benefits.
This potential drawback, on the other hand, is a lot easier to deal with. Contacting a reliable legal expert and openly coordinating with your service provider will guide you to important laws and regulations that you should obey.
3. Longer travel durations for quality assurance visits and important meetings
Successful businesses often require site visits to ensure that the operations are going smoothly. Companies based overseas experience quality assurance problems when their outsourcing partners are located in a different country. This is also applicable to important meetings and events. Traveling to the Philippines can be inconvenient and incredibly costly for you.
Planning ahead resolves this potential problem. Setting definite schedules for site visits is always a great way to prepare. You can also save more in ticket prices and other travel expenses once you implement a well-structured corporate travel system. Make sure that you have alternative plans in case you are faced with interruptions before your planned trips.
4. Outdated technologies and infrastructure
While the Philippines has surely come a long way in terms of infrastructural developments, it still lags behind its Asian contemporaries in terms of technology. Technological advancements play an integral role in BPO success, as they affect service quality and customer experiences. Issues such as slow internet connection, frequent call interruptions, and outdated equipment are some of the common drawbacks that you might experience.
Is it still worth taking the risk? Of course! You can provide guidance for your service provider to present on-time assessments of tech and equipment quality and performance. Depending on your SLA, you can also suggest the required software and tools to help optimize your external operations. A meeting with your service provider and consultation with an IT expert can help you find effective solutions to this.
5. Unexpected business disruptions
Another thing that could make you think twice before deciding to outsource to the Philippines is the unexpected business disruptions. These disruptions are often caused by natural calamities such as typhoons and earthquakes. During natural calamities, phone and internet signals are usually affected. Power interruptions in some areas could occur as well. You should also take note of the important holidays in the country, as these dates might also call for breaks.
The possible solution to these disruptions is a solid plan. This plan includes working arrangements during calamities, alternative tech and equipment setup, and extra payments for holiday work. You can include most of these plans and terms in your SLA.
A look at the current status of the Philippine outsourcing industry.
These impressive statistics in outsourcing prove that BPO firms and outsourcing professionals can expect a bright future ahead in the Philippine BPO industry:
- The IT and Business Process Association of the Philippines (IBPAP) reported that the PH BPO market’s revenue grew by 10.3% to $32.5 billion in 2022. In the following year, the market reached $35.4 billion in revenue, and experts predict its 2024 value to reach $37.87 billion.
- A consistent growth in the employment rate is also projected by IBPAP. In 2023, the number of Full-Time Employees (FTEs) reached approximately 1.57 million.
- An outsourcing report in 2022 ranked the Philippines 5th in the most number of outsourcing inquiries received (3.81% of the total queries). This means that the country is among the front-runners in terms of attracting foreign businesses aiming to outsource their operations.
- In 2024, experts predict that the Philippines will owe 8% of its economic output to the outsourcing sector.
- The PH BPO industry plans to add 1 million more jobs by 2028.
The top 5 outsourcing companies in the Philippines that you could consider:
1. Digital Minds BPO Service Inc.
One of the leading outsourcing providers specializing in customer service, telemarketing, and data entry. Digital Minds BPO is quickly making waves in the PH outsourcing realm with its reliable outsourcing solutions and incredibly affordable rates compared to other BPO companies.
2. Accenture Inc.
Home to the most advanced technologies and seasoned professionals, Accenture has always been a solid choice for an outsourcing company. This Irish-American company specializes in content moderation and call center services. In fact, the Zuckerberg-owned social media giant Facebook is one of its big clients for content moderation.
3. Teleperformance Philippines Inc.
Aiming for the use of AI to improve your services? Teleperformance is one of the global leaders in BPO known to utilize and integrate AI to optimize business functions. This French Omnichannel empire’s expertise is focused on improving customer experience and back-office services.
4. Alorica
A diverse team is a powerful team. And this certified minority business enterprise (MBE) proves that this idea extends to outsourcing. Based in California, Alorica is one of the leading outsourcing providers in the world, offering a wide range of services like customer care, technical support, sales and marketing, and insurance claims processing.
5. Sutherland Global Services Philippines Inc.
Boasting an impressive record of past and current clients, from AT&T and Microsoft, to Symantec and Vodafone, this Indian-owned company is a popular choice for business owners worldwide. Sutherland is renowned for providing advanced solutions in call center and financial services.
Choosing an outsourcing partner that matches your goals and values is crucial when you outsource in the Philippines.
Make outsourcing to the Philippines right by choosing a reliable BPO service provider like Digital Minds BPO. Start your outsourcing journey with the help of our globally competitive teams, which provide impeccable business solutions at affordable rates.
Whether you’re looking to boost your sales, keep your branding clean, or improve your customer support, we have the right people and the right technologies to help. Contact us today, and let’s start building your dreams!
Frequently Asked Questions about the Philippines BPO Industry:
1. How big is the outsourcing industry in the Philippines?
In terms of revenue, the outsourcing industry in the Philippines is still expected to grow tremendously. Based on data, the Philippine BPO market reached a whopping $35.4 billion in 2023.
2. What percentage of the BPO industry is in the Philippines?
It is estimated that the Philippines holds 10 – 15% of the global BPO market.
3. What rank is the Philippines in the global outsourcing market?
The Philippines ranked 2nd in the list of the top outsourcing destinations in the world, next to India.
4. Why is call center outsourcing booming in the Philippines?
Experts found that the Filipinos’ high English proficiency levels and affordable outsourcing solutions are the primary factors that influence companies to outsource their call centers in the Philippines.
5. What is the most outsourced service in the Philippines?
Call center and Information Technology are two of the most outsourced services in the Philippines.