5 Reasons Why the Philippines is the Top Outsourcing Destination in 2016

Posted by Outsourcing Insider on Dec 27, 2015 4:00:23 PM

Outsourcing offers a multitude of benefits, cost efficiency being the top reason cited by most companies. As the BPO industry matures through the years, the question of quality service comes to the fore, because in some cases, upfront cost savings could mean subpar results and mediocre performance.

A balance needs to be struck for outsourcing to be considered a worthy investment, and it’s a widely acknowledged fact that this where the Philippines shines the most. Those who outsource to the Philippines have found that they get the best of both worlds by investing in the country: cost savings and impeccable service.

Call centres have been in the country since 1997, but it wasn’t until more than a decade later where the Philippines gained recognition as the BPO destination of choice. In 2010, the country unseated India as the leader in the BPO industry worldwide. The Philippine’s BPO domination in the world stage show no signs of abating. Here are five reasons that contribute to the country’s continued success.

1. Government support

Policy makers in the past and present recognise the BPO industry’s significant contribution to the country’s growth, and have implemented several laws to support it. President Fidel Ramos started ball rolling by its initiatives to deregulate telecoms and improvements power supply infrastructure.

After that, President Gloria Macapagal Arroyo introduced tax exemptions to help further drive operations costs down. When Mar Roxas was DTI Secretary, he lobbied to revise Republic Act 7916 to register buildings as ecozones, providing BPO companies with tax exemptions (such as having to pay only 5% of gross taxes) which has helped enhance operational and business efficiencies even more.

These cases go to show that the government has been and continues to encourage the BPO to grow and flourish in the country in the coming years.

2. Highly skilled workforce

Much has been said about the Philippine’s high literacy rate, which has provided inroads toward developing a highly skilled workforce in the BPO industry. Having a neutral accent that is easily understood by most customers barely scratches the surface when it comes to these skills. Specialised expertise can be found within other in-demand industries such as IT programmers and software development, medical transcription, HR, customer service, finance, content marketing writing, and even graphic design and animation.

Universities and schools encourage skills development by partnering with BPO companies to develop courses that target future call centre and BPO employees. The Technical Education and Skills Development Authority (TESDA)  even has a voucher system to train future call center agents on how to handle calls properly and provide quality service.

3. Major driver of economic growth

Economists and industry experts project BPO revenue growth to grow by about $20 to $25 billion in 2016, which rivals the remittances brought in by OFW’s, who are hailed as the country’s modern day heroes. Over one million Filipinos work in the BPO sector, where World Bank estimates that this will most likely generate up $55 billion in revenues by 2020, or 11% of GDP. Considering that the call centre industry only accounted for 0.075% of the country’s GDP, this growth has been nothing short of impressive. This is one of the major reasons why credit ratings agencies have maintained a positive outlook for the Philippines in the coming years.

4. Large talent pool

The Philippines has a population of about 100 million citizens, majority of which are young and able to contribute to the growing workforce. The country produces about 450,000 college graduates every year, which has the third largest talent pool among major BPO hubs in the world like India and China. In 2014, one million Filipinos worked in the BPO industry, which make up only 1% of the total population. This is projected to increase exponentially in 2016, where 1.3 to 1.5 million jobs are expected to be generated, contributing to 17% in annual growth.

5. Cost savings and quality service

Labor costs significantly less expensive in the Philippines, where the salaries of call center agents are typically about 20% of what someone who works in the US or other workers in developed countries would take home. The tax breaks implemented by the government and less expensive  infrastructure further contribute to more savings for those who choose to outsource parts of their business in the Philippines.

The Philippines as an outsourcing destination has a lot of things going in its favour, including cost efficiency, impeccable levels of customer service, and a deep pool of talent that can easily be trained. Coupled with a supportive political and business climate, these factors create the perfect environment for the to continue its domination as the BPO of choice in 2016.

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