Outsourcing

7 Benefits of Outsourcing to the Philippines

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7 Benefits of Outsourcing to the Philippines
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7 Benefits of Outsourcing to the Philippines

One of the most popular destinations for outsourcing in South-East Asia is the Philippines – an archipelago located between the South China Sea and the Pacific Ocean. Consisting of a string of 7,100 islands, the Philippines have become a dominating force in the outsourcing market, boasting an impressive roster of benefits that keeps business flowing and directly competes with larger countries such as India.

Outsourcing has many notable advantages for any company looking for more focused support and increased efficiency. In order to streamline essential business procedures and free up the core team to perform to their highest capabilities, companies have searched for other resources around the globe to help scale their business. Outsourcing globally also comes with many unexpected benefits such as diversifying the team, improving cultural competency, and collaborating with professionals who bring something entirely new to the table.

Outsourcing to the Philippines has proven to be a highly successful and profitable opportunity, especially if the company is within the customer service niche. Let’s take a look at the top benefits of outsourcing to the Philippines.

Why Outsource to the Philippines

Why Outsource to the Philippines

While the Philippines continues to be known for its excellent customer service in particular areas of business such as call centers, technical support, and administration, the Philippines also hosts services in a variety of other professions including:

  • IT services
  • Software Development
  • Web Design
  • UX/UI
  • Financial Services/Accounting/Payroll
  • Virtual Assistance
  • Medical Assistance
  • Call Centers
  • Engineering
  • Game Development
  • Animation

In short, the Philippines offers services in major parts of business operations that can bolster a company’s market competitiveness. And as a result, the country’s government understands just how valuable outsourcing is to its own economy. With increased support towards basic infrastructure, vaccinations rollout (and other preventative measures during the COVID-19 pandemic), and imperative social assistance, the economy is steadily growing, remains stable, and is set to improve within the next few years. According to the Asian Development Outlook 2021 (ADO), the Philippine economy was expected to grow by 4.5% in 2021 and 5.5% in 2022.

Business process outsourcing, or otherwise known as BPO, in the Philippines continues to expand and excel. According to Full Scale, the Philippines is home to three major cities considered the hubs for BPO where foreign companies are most likely to do business:

  • Manila – Manila is the capital of the Philippines and the second-most populous city in the country. It’s also home to the Philippines ’ first call center established over 30 years ago in 1992, which has contributed greatly to the vitality of the country’s economy and the source as to why BPO is considered a high revenue-generating priority.
  • Cebu City – Cebu City is considered the country’s oldest city and is the center of commerce, tourism, and trade. Cebu is rich in history, as it was the first Spanish settlement in the Philippines, which lasted 300 years before the Spanish left. Many shrines exist in prominent locations, attesting to the history that the city is famous for. ​​Cebu is also a popular tourist attraction with its picturesque beaches and culinary attractions.
  • Davao City – Davao city is considered a coastal commerce center located on the Philippine island of Mindanao. In terms of size and land area, Davao city is the largest in the Philippines and the third most populous. Its largest economic contributor is in its agricultural endeavors such as coffee and pineapple plantations. Davao is also the host of the Philippines’ largest rural bank, BDO Network Bank.

With these metropolitan cities steeped in abundant culture and storied history, it’s not hard to see why the Philippines is often considered one of the most attractive destinations for outsourcing needs.

In addition, the Philippines has impressively come in at number 6 in Tholon’s Services Globalization Index Top 50 Digital Nations and has held the title of the “Call Center Capital of the World ” since 2010. Not only are these locations beautiful, but resourceful as well, bursting with talent and opportunities for growth.

Now that we understand the reasons why companies are drawn to all the Philippines has to offer, let’s talk about the advantages of outsourcing to the Philippines.

Cost Savings

Benefits of Outsourcing to the Philippines #1: Cost-Savings

One of the biggest advantages of outsourcing to the Philippines is the reduced costs, especially on overhead. The hourly rate of many talented professionals is nearly half of what it costs to hire the same level of experience in the United States. For example, let’s take a look at the hourly rate for software development engineers with approximately 1-2 years of applicable experience. In the United States, this professional would start off anywhere between $50-$80 per hour depending on the level of experience the company is requiring. However, this isn’t the total cost of an employee. A company needs to review the cost of benefits (or fringe), expenses towards training, space, and equipment. If this position required an in-demand, highly competitive skill set, the hiring manager would also need to consult with Human Resources on the various pay package incentives. The cost of recruitment efforts can also add up the longer the position is posted and the posting sites the company chooses to use for advertisement, not to mention the cost of any applicable legal fees.

Now, let’s look at South East Asia for the same type of talent. The average starting hourly rate is $20-30 per hour for the same position with similar years of experience. That’s a staggering difference and mainly due to the lower cost of living in the Philippines.

Access To Talent

Benefits of Outsourcing to the Philippines #2: Access To Talent

Outsourcing to the Philippines holds a great advantage when an organization is looking for exceptional talent. Experience from the Philippine workforce range from entry-level postgraduates to more senior-level positions in a variety of professions. The Philippine education system closely mirrors the United States largely due to US colonialism. In fact, English is the country’s official second language, giving the country a huge advantage in the outsourcing market. The Philippine government has actively expanded access and participation in higher education in the hopes of producing the next generation of thought leaders and innovators.

Top graduates from different schools across the country join the workforce in earnest, looking to gain meaningful employment with companies that value their high level of skills and talents. Because of this, the Filipino workforce is readily available and willing to start at the earliest convenience that is agreeable for all parties involved.

Little To No Language Barrier

Benefits of Outsourcing to the Philippines #3: Little To No Language Barrier

English is the second official language of the Philippines, with Tagalog being the primary language spoken in the country. Even so, English is used in a variety of newsprint, media, and other publications that are an integral part of everyday life in the Philippines. Just watching the television, you can hear a seamless blend of both dialogues and witness some of the western influence.

One of the major disadvantages of outsourcing outside of the United States is the language barrier. Miscommunication is often a result of the two teams frequently not understanding each other, which can lead to misaligned expectations and poor deliverables. According to Cudoo, 92% of the Philippine population can speak English as a second language and the Philippines is considered the third-largest English-speaking country in the world.

When considering outsourcing to the Philippines, this is one advantage that a company shouldn’t ignore, potentially saving time and creating more opportunities for the business and the third party to partner up quickly and efficiently.

Young Demographic

Benefits of Outsourcing to the Philippines #4: Young Demographic

According to Worldometers, the average age in the Philippines is 25 years old. The Philippine workforce has a young demographic, full of hardworking and talented professionals ready to get started on their careers. And because this demographic is young, their exposure to technology and the understanding of how it works gives them a competitive edge in the business process outsourcing market. This leads to a greater, more innovative exchange of ideas.

High-Quality Service

Benefits of Outsourcing to the Philippines #5: High-Quality Service

Filipinos are known for being sincere, open, polite, and hardworking. This is especially important for customer service, tech support, or administration. Most importantly, they are professional and accommodating, hospitable and calm, taking great care in delivering timely, high-quality work, and always with a cool attitude – even in high-stress situations. With a supportive educational infrastructure and its access to higher learning platforms, the Philippines is highly competitive when it comes to their services.

Benefits of Outsourcing to the Philippines #6: Familiar Culture

Philippine culture is heavily influenced by western culture, mainly due to its colonization by the United States and Spain. However, the Philippine culture is vibrant and unique. Most importantly, when it comes to outsourcing, it’s a familiar one that organizations in the United States will recognize and understand. This can lead to simpler integration and efficient collaboration between the two countries.

Benefits of Outsourcing to the Philippines #7: Supportive Government

The government has thrown its full support towards the outsourcing industry as it’s a major contributing factor to the growth and stability of its economy. The Republic Act No. 7916 back in 1995, also known as the Special Economic Zone Act, makes the Philippines an attractive destination for outsourcing as it appeals to foreign investors with the various tax breaks and other crucial incentives within these special economic zones designated for BPO. With a supportive government also comes laws that protect data privacy, another considerable advantage to outsourcing abroad. The Data Privacy Act of 2012 is a law put in place to protect all forms of information (private, personal, or sensitive), which adds a much-needed layer of protection against security.

In Conclusion

There are many advantages of outsourcing to the Philippines, all of which have propelled the Philippines as one of the top outsourcing markets in the world. While organizations are actively looking for destinations to help support their basic business processes, the more it makes sense to look abroad to save on costs and collaborate with talent across the globe.

The Philippines in particular is especially attractive due to its closeness with Western culture, cost-savings, vast talent pool, and reliable track record of delivering high-quality work. As BPO is one of the pillars supporting the Philippine economy, the government is fully supportive of the Philippine outsourcing industry, which helps the facilitation of collaboration between two different countries.

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