Written by Dion Jay Tality
Looking to reduce your operating expenses? Wanting to focus on your core operations? Need access to an expert workforce and advanced technology? BPO, or business process outsourcing, in the Philippines, is the answer.
The Philippines is the world’s BPO capital, known for its skilled talent, lower labor costs, and favorable business environment. Working with an offshoring provider in the Philippines offers a handful of benefits.
This page covers the country’s BPO industry. Read on to learn more about:
- Its history, current market, and future trends;
- The types of services offered; and
- The steps to properly outsource to the county.
An Overview of Business Process Outsourcing in the Philippines
Business process outsourcing in the Philippines has become a practical solution for improving operations and reducing costs. Since its inception, the country has become a leading outsourcing destination due to the following advantages:
- Cost-competitive pricing
- Diverse pool of skilled talent
- High English language proficiency
- Strong cultural affinity with Western countries
- Solid government support
- Favorable laws and regulations
- Ideal business environment
To make informed outsourcing decisions in the country, learn more about its past, present, and future below.
A Glimpse of Philippine Outsourcing History
The business process outsourcing industry in the Philippines began in 1992. Accenture had the first outsourcing contract in the country. However, it was Sykes who first set up the first multinational BPO company in 1997. Afterward, eTelecare Global Solutions established the first call center in the country in 1999.
The Special Economic Zone Act of 1995 paved the way for the Philippine outsourcing industry’s growth. This act aims to create ecozones and information technology and communication (ICT) hubs to welcome foreign investments, create jobs, and boost the economy. This move opened the door for many companies to outsource to the country.
Over the years, the Philippine outsourcing industry has grown and established a good reputation. The country earned the title of the world’s BPO capital in 2010. It ranked second in the Tholons Top 50 Digital Nations list, with Manila also placing second in the Top 100 Super Cities list in 2018.
In 2021, the country’s information technology and business process management (IT-BPM) industry ranked first in voice-related services, comprising 13% of the global outsourcing market share.
But what about this year? Learn more about the current Philippine outsourcing market in the next section.
The State of the Current Philippine Outsourcing Market
The business process outsourcing industry in the Philippines has come a long way. Colliers stated that this sector could grab a bigger share of the global BPO market. According to the Philippine Economic Zone Authority (PEZA), the country has over 788 BPO companies operating nationwide.
The IT and Business Process Association of the Philippines (IBPAP) reported that the Philippine IT-BPM industry had a 10% increase last year, earning $32.5 billion in revenue. It also mentioned an 8.4% increase in full-time employees (FTEs), totaling 1.57 million FTEs.
IBPAP recognized the industry’s contributions by highlighting its recent milestones:
- The BPO industry is the biggest employment provider, generating 1.44 million direct jobs and 3.61 million indirect jobs in 2021.
- The BPO industry is also the largest contributor to the economy, comprising 7.5% of the country’s gross domestic product (GDP).
The Philippine outsourcing industry shows no signs of slowing down. Discover its growth potential in the next section.
The Future of the Philippine Outsourcing Industry’s Growth Potential
Business process outsourcing in the Philippines has the potential to grow and expand. To achieve the industry’s growth potential, BPO companies in the country must focus on the following initiatives:
- Digital Transformation. Adopt the latest digital tools and technologies, such as automation, artificial intelligence (AI), and cloud computing.
- Better Talent Upskilling. Implement the Philippine IT-BPM Roadmap 2028 program, particularly its talent development programs, through curriculum modifications, internships, and talent hub creation.
- Streamlined Business Operations. Keep up with vertical evolution, stay up-to-date with changing regulations, and optimize processes to remain competitive.
- Fortified IT-BPM ecosystem. Align with the Philippine government’s initiatives, such as establishing BPO centers in the Next Digital Cities 2025.
But what do these programs mean for businesses?
Companies outsourcing or looking to outsource to the country must capitalize on the initiatives above. They must align their goals, practices, and strategies with what the Philippine outsourcing sector offers. Then and only then can they make the most of the industry’s growth.
Types of BPO Services Offered in the Philippines
Business process outsourcing benefits companies of all sizes in the Philippines. The country is a one-stop shop for all your business needs, whether front- or back-office outsourcing. Many BPO services are available nationwide to help streamline your processes, cut costs, and increase productivity.
Let us look at the common types of BPO services offered in the Philippines.
Contact Centers: Improving Customer Experience
The Philippines is not the world’s call center capital for no reason. It is home to hundreds of call centers that have transitioned into contact centers. They leverage contact center as a service (CCaaS) solutions to offer multiple support channels for communication.
Here are the common business functions they usually handle:
- Customer Service. Businesses outsource customer service to the Philippines due to its highly skilled, English-proficient, and customer-centric workforce. Teams of trained agents assist customers via multiple channels, such as phone calls, email support, and live chat. They answer questions, process requests, and handle complaints.
- Sales or Telemarketing. Companies outsource to BPO firms in the Philippines to increase their sales. They tap expert salespeople to promote their businesses and sell their products or services. Sales agents perform telemarketing or email outreach to reach potential and regular customers.
IT or Telecom: Providing Tech Solutions
Aside from business process outsourcing, information technology-enabled services (ITES) are common in the Philippines. The country ranks next to India when it comes to IT and telecom services.
Here are common IT or tech functions outsourced to the country:
- Technical Support. Companies entrust their tech support to BPO firms in the Philippines. They hire IT professionals and tech experts to assist their end users. These professionals perform troubleshooting, maintenance, and repair of software and hardware.
- Help Desks. Businesses outsource their help desk services to BPO providers in the Philippines. They seek to establish a single point of contact (SPOC) for end-user concerns. Their BPO teams handle a combination of customer and technical support.
E-commerce: Optimizing Non-core Operations
The e-commerce industry has grown exponentially, further accelerated by the pandemic. Many online businesses employ outsourcing for their growing customer base and expanding digital needs. The Philippines has become a go-to place for e-commerce outsourcing.
Below are common e-commerce tasks outsourced to the country:
- Data Entry. Businesses outsource data entry services to ensure data accuracy and service efficiency. Meanwhile, they can focus on their core competencies. BPO companies in the country provide data entry specialists to manage and secure business data and customer information.
- Order Fulfillment. Companies outsource the order fulfillment process, from order placement to product shipping. BPO teams in the Philippines handle customer support, inventory management, and product returns and refunds.
Healthcare: Streamlining Non-clinical Functions
Healthcare outsourcing has become popular, especially amid the pandemic. Healthcare providers outsource their non-clinical functions to focus on medical care. The Philippine healthcare business process outsourcing tops the list since the country has many health professionals.
Below are healthcare BPO functions handled by service providers in the country.
- Medical Coding and Billing. Clinics and hospitals outsource medical billing to generate superbills for patients and insurers. They work with healthcare BPO providers in the country. Teams of specialized agents have the training to code medical services and produce bills.
- Claims Processing. Insurance companies also outsource healthcare activities to the Philippines to improve process efficiency and data accuracy. Hired BPO teams process claims by reviewing and resolving claims to determine the approval or denial of benefit coverage.
Administrative Functions: Focusing on Core Competencies
Startups and small companies outsource their administrative functions so that they can focus on making money and growing their businesses. Even big companies reduce operating expenses by outsourcing their administrative departments, such as payroll, human resources (HR), and IT support. The Philippines is one of the top outsourcing destinations for administrative work.
Here are some administrative functions commonly outsourced to the country:
- Finance and Accounting Services. Companies outsource finance and accounting services to the Philippines since the country regularly produces professionals with financial backgrounds. These professionals handle administrative tasks, such as accounting, bookkeeping, and tax reporting.
- Human Resources (HR). It has become a trend for businesses to outsource their HR operations to access the workforce and technology. The Philippines is a top resource for HR outsourcing since the country employs professionals and software to streamline employee management functions.
Key Steps in Outsourcing Business Processes to the Philippines
Now you know what business functions to outsource to the Philippines. It is time to start looking for a BPO service provider and launching your outsourced operations in the country.
Whether it be customer service or technical support outsourcing, we guide you on how to proceed. Here are crucial steps to take for your business process outsourcing engagement in the Philippines:
1. Study the Philippine Outsourcing Industry
As with any business pursuit, you must study what you are getting into. Research and analyze the Philippine outsourcing market to better understand its current and future state. That helps you decide whether outsourcing to the country is worth your investment. Check the following:
- Market Growth. Analyze the growth trends and projections of the outsourcing market in the Philippines. Consider all the valuable information discussed above to make an informed outsourcing decision.
- Laws and Policies. Understanding the legal and regulatory framework for outsourcing in the Philippines is crucial. Check the Special Economic Zone Act, Foreign Investments Act, Data Privacy Act of 2012, and Department Circular No. 1, Series of 2008.
- Industry Trends. Stay up-to-date with the latest developments in the outsourcing industry in the Philippines. Some industry trends to keep up with include digital transformation, digital talent upskilling, flexible work arrangements, and vertical business evolution.
2. Evaluate Your Current Business Operations
After studying the Philippine outsourcing industry, it is time to examine your current business operations. That allows you to identify operational problems, determine business needs, and decide which functions to outsource.
- Identify Operational Problems. Assess your departments and processes to see inefficiencies, challenges, and bottlenecks. Are you facing high customer complaints, low sales revenue, or delayed request processing?
- Determine Business Needs. Evaluate your operations and get to the bottom of the problems. In the examples above, you must optimize customer service to boost engagement. You should also hire experts to increase your sales and automate your processes.
- Decide on Functions To Outsource. After identifying your operational problems and business needs, you can decide which tasks to outsource. Based on the examples, consider business process outsourcing in the Philippines for customer service, sales, and order fulfillment.
3. Search, Screen, and Select a Philippine Outsourcing Provider
Looking for a qualified BPO company in the Philippines is crucial because the provider you hire determines your outsourcing success. The selection process involves three steps:
- Searching. Start by searching online for potential offshore providers in the Philippines. You can also get recommendations from other businesses and attend industry events. Then, you can create a list of prospects offering the outsourcing services you need.
- Screening. Screen your prospects based on your business’s needs and requirements. Check their websites, send requests for proposals (RFPs), and conduct interviews. Evaluate prospects based on business reputation, BPO track record, workforce and technology, and outsourcing costs.
- Selecting. Finally, choose a BPO company in the Philippines. The rule of thumb is to pick an outsourcing provider suitable for your industry or niche, business size, business needs, and outsourcing budget.
4. Create a Service-level Agreement
After picking a BPO partner, negotiate terms to create a service-level agreement (SLA). An SLA is a legally binding contract that seeks to protect both parties: the client and its hired provider. It defines the business partnership and sets the parameters for both parties. Make sure to include the following in your SLA:
- Business Goals. Define your SMART goals. Ensure these operational objectives for outsourcing are specific, measurable, achievable, realistic, and time-bound. Include key performance indicators (KPIs) to measure service efficiency, quality, and customer satisfaction.
- Scope of Work. Set the scope of work for the outsourcing project. Outline the specific tasks the provider will perform, the deliverables they will provide, and the timelines for completion. Define the actual duties and responsibilities.
- Other Terms. Include other terms and conditions that govern the outsourcing engagement, such as the payment model, confidentiality agreements, intellectual property rights, and dispute resolution procedures.
You can ensure a successful business process outsourcing partnership in the Philippines with an SLA. You can achieve your business goals by outsourcing tech solutions or customer service.
5. Launch Your Outsourcing Operation
Finally, you have reached the final step—kicking off your outsourcing operation. Here are crucial steps to take when you start outsourcing:
- Establishing. Before the launch, assist your hired provider in setting up its infrastructure, technology, and resources. Make sure to integrate their systems with those of your business. Likewise, help them train workers and create workflows.
- Launching. The most anticipated part of outsourcing is seeing your BPO operation up, running, and fully operational. But here is an important reminder: perform a pilot run before starting your outsourcing operation to test all aspects and address issues.
- Monitoring. Know that your engagement does not end with the actual launch. Make sure to communicate and collaborate with your BPO partner regularly. Measure its performance and track your outsourcing progress. You need to be a part of the operation every step of the way!
The Bottom Line
Business process outsourcing in the Philippines is a practical solution for scaling and growing your business. If you want to increase your efficiency, improve quality, boost your productivity, and save money, the country’s BPO industry is the way to go.
Consider outsourcing some of the business processes above, whether customer service, IT support, or HR. Study the history, current market, and future trends of the Philippine BPO industry. More importantly, look for the right BPO partner to take your business’s growth and success to the next level.
Need help scaling your operations? Unity Communications has various outsourcing services to offer. We serve companies of all sizes across different industries, from e-commerce to healthcare. With our skilled workforce and modern technology, we can help streamline your processes and grow your business. Contact us today!