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While many companies offshore back-office and call center operations to expedite growth and minimize costs, a successful outsourcing strategy requires considering more factors than just the price and availability of talent. You must pick a destination with the right combination of price, service quality, and access to talent to achieve good results.
One popular offshoring provider is the Philippines, especially for customer service and back-end functions.
This article explores why more organizations outsource call center services and other business functions to the Philippines.
10 Reasons Companies Outsource Call Center Services and Other Business Functions to the Philippines
The business process outsourcing (BPO) sector is one of the fastest-growing and most flexible industries in the Philippines.
The nation has been providing outsourced services for more than two decades. In fact, BPO and call center companies are the largest contributors to the country’s economy, generating almost $33 billion in revenue and employing about 1.6 million full-time employees in 2022.
Many see offshore outsourcing as a win-win situation. The industry allows foreign businesses to find dedicated staff and provides competitive wages to Filipino workers.
Explore below the reasons outsourcing call center services and back-office tasks to the Philippines makes sense.
1. High Productivity Level
The Philippine outsourcing industry is exemplary for its level of productivity. One perk of hiring offshore professionals is that they can leverage time zone differences to operate on a schedule that client companies cannot. Using time zone differences to your advantage lets you acquire Filipino agents for the night shift without additional costs or differential fees.
The country also has different expectations for working during holidays. Certain business functions, such as technical support and customer service, remain operational during holidays even if other business aspects are unavailable. Filipinos do not mind working during those times because they receive higher pay or bonuses.
2. Streamlined Business Operations
Back-office outsourcing, or transferring administrative tasks to Filipino BPO companies, helps you streamline business operations. Outsourcing such work improves your organization’s overall efficiency. In-house staff can concentrate on core business functions instead of dividing their attention between menial aspects of operations.
Moreover, document accountability and accessibility improve due to employees’ reduced workload. Hiring third-party workers helps you save on valuable resources such as support staff, office space, and capital expenditures. You can then reinvest the money saved to improve other parts of your business.
3. Trainable Workers
Training new hires about your brand, products, and services takes time and effort. A service provider will handle all recruitment and training processes if you outsource call center processes and other BPO functions to the Philippines. You must vet the staff they present to you to determine whether they are a good fit.
Filipinos have a natural aptitude for almost any work you give them, which amplifies their value as workers. You only need to provide the training module and courses; the collaborator oversees onboarding on your behalf. After training, staff can be deployed immediately to serve as an extension of your in-house team.
4. High English Proficiency
Most people in the corporate world use English to interact with end users, business partners, and colleagues. English overtook Mandarin Chinese as the vernacular with the largest number of speakers in 2017.
A big reason foreign clients want to outsource to the Philippines is Filipinos’ excellent use of the English language. In 2022, the Philippines ranked 22nd worldwide on the EF English Proficiency Index. The country scored 578 and is only second to Singapore in Asia.
Unlike their counterparts in other BPO destinations, Filipinos also have a neutral accent, making them ideal for call center services and tech support functions. Hence, end users often cannot discern whether the agent they are talking to is a native English speaker. This English fluency is due to Western culture’s influence on the nation.
5. Right Balance of Affordability and Quality
Companies in the U.S. used to focus only on saving money when they outsourced business functions. As they worked with different providers and workers through the years, they realized that price was essential but should not be the only focus. They started considering value for money, which led them to the Philippines.
While call center outsourcing in the Philippines is relatively affordable, it is not the cheapest in the BPO market. Other locations might offer lower pricing but do not deliver the same quality as Filipino workers.
Take India, the biggest BPO destination in the world, for example. The excellent IT knowledge and skills of Indians make them ideal for technical support outsourcing. But they frequently use idioms, and their accents are thick despite knowing proper English grammar. This can be off-putting and hard to understand for many Westerners, especially through the phone.
6. Strong Government Support
The outsourcing sector is the biggest economic and growth contributor in the Philippines. Hence, the local government will continue to support the industry, knowing that offshore outsourcing will continue to grow. Full government support incentivizes local talent to work with BPO and call center companies in the Philippines.
In 2016, the Department of Information and Communications Technology stated it would continue fostering a strong relationship with BPO companies. It also welcomed the IT-BPM Roadmap 2022 and assured complete cooperation with BPO providers to fully implement the plan and open doors to new opportunities.
Lawmakers also proposed a law guaranteeing protection and security of tenure for BPO workers in the country. BPO providers also comply with government mandates and give sufficient compensation and benefits to employees, such as social security payments, taxes, housing options, and health benefits.
7. Strict Data Privacy and Security Measures
Since offshore workers are miles away from your operations, outsourcing could pose security risks. Sensitive information and data have more chances of being leaked. Information security would be harder to enforce. Company data could easily fall into the wrong hands due to the distance between the in-house team and the outsourcing company.
Fortunately, the Philippine outsourcing industry has an excellent track record for securing sensitive information. Data privacy is one of the primary differentiators in business acquisition in the country, especially after the enactment of the Data Privacy Act of 2012.
BPO clients judge the value of a service provider based on its security and privacy protocols. You can rest assured that your data is safe and secure when outsourcing tech solutions to the Philippines. Filipino service providers understand that data security is crucial. It is no longer just about English proficiency; vendors must be trustworthy to be an expert in the field.
8. Numerous Cultural Similarities With the West
One of the advantages of outsourcing in the Philippines is its cultural harmony with Western countries, especially the United States. Many Filipinos are familiar with what is globally trendy, whether it be movies, TV series, music, or fashion trends. More importantly, BPO and call center professionals in the Philippines can easily communicate with foreign companies and customers.
You can also find many professional parallels between the U.S. and the Philippines. Some examples are noticeable in the similarities between their legal systems and accounting processes. The two countries also have a special relationship that has historically been strong.
9. Professional Work Ethics
Another vital quality of Filipinos is their innate hospitality and friendliness. Filipino call center agents maintain tact and patience despite fielding thousands of customer tickets. Their ability to make customers comfortable when resolving issues is one of the reasons businesses keep their call center operations in the Philippines.
On top of their outstanding English skills and willingness to work in different time zones, Filipino workers have one of the highest literacy rates in the world. The country has a literacy score of 99.27%. This number pertains to the selection of workers available for employment and training.
10. Trust of Industry Giants
Foreign clients have worked with Filipino service providers since the first call center opened in the Philippines in 1992. The industry has been around for three decades, proving how valuable Filipino workers are in the global BPO market. Initially, Manila had been the primary destination, but BPO companies soon built bases in other provinces.
Large corporations worldwide, such as AT&T, Verizon, Yello, Talkpush, Simmons, and CM Management, outsource to the country, whether contact centers, help desks, or data entry services. This high level of trust in notable brands leads to more small and midsize enterprises (SMEs) being drawn to Philippine outsourcing.
Cost of Outsourcing to the Philippines
The country’s cost of living is 30% lower than most Western countries. Labor in the country is significantly more affordable than in the U.S. and the UK. Hence, foreign companies consider the Philippines when outsourcing business operations.
Other expenses such as taxes, office rental, recruitment, training, and legal services are no longer a client company’s responsibility. The service provider is in charge of hiring, training, and giving agents the necessary equipment. Due to this arrangement, businesses can save up to 70% on labor costs and other operating expenses.
An average American call center agent earns $11.97 to $23.13 per hour plus benefits such as commissions and bonuses. You pay $35,702 for one call center agent per year. Additionally, depending on your company size, you need four or more agents, a customer service manager, trainers, and quality assurance specialists to complete your team.
A call center agent in the Philippines makes $328.58 to $656.18 annually. You also save money because you do not need to invest in office supplies and software.
The exchange rate between American dollars and Philippine pesos is crucial to the labor cost disparity. The numbers above might vary based on your chosen service provider, but you can save significantly by outsourcing to the Philippines.
Current State of BPO and Call Center Industry in the Philippines
Call centers were the starting point of outsourcing in the Philippines, providing customer management and email support. It then expanded to client relations, contact center as a service (CCaaS), tech support, e-commerce-to-buyer support, business-to-business (B2B) support, and financial services.
The industry is continuously expanding. In 2021, the Philippine BPO industry contributed 10.6% to the nation’s gross domestic product (GDP). It will continue to grow with no signs of stopping. As of June 2022, the sector provided work opportunities to 1.44 million Filipinos.
A 2020 report from the Philippine Economic Zone Authority (PEZA) showed that the country is home to 780 service providers. The total revenue of the IT-BPM industry reached $29 billion in 2022.
The BPO industry has been helpful to the economic status of many Filipinos and the country overall. It provides Filipino families with necessities and has helped solve unemployment issues.
Six Services You Can Outsource to the Philippines
BPO is a subcategory of outsourcing wherein companies engage third-party service providers to manage certain functions. Most outsourced services include non-core processes such as accounting, finance, human resource (HR) management, call center operations, and tech support.
The Philippines is known as the “call center capital of the world.” However, call centers are not the only focus of Philippine outsourcing; they offer other solutions.
Here are other services that you can outsource to the country:
1. Finance and Accounting
The labor shortage affects finance and accounting. Graduates in relevant fields decreased by 2.8% at the bachelor’s level and 8.4% at the master’s level from 2019 to 2020. Moreover, only a few graduates pursue licensure as certified public accountants (CPAs) and work in the industry.
Accountants are crucial to any business because they track and manage its finances. Outsourcing to the Philippines is an excellent solution to help enterprises overcome the labor shortage.
The Philippines has many premier universities that produce skilled and knowledgeable CPAs annually. Examples of accounting tasks that you can outsource are:
- Bookkeeping
- Accounts receivable and accounts payable management
- Financial planning and analysis
- Tax filing and reporting
- Financial statements writing
- Forensic accounting
- Cost accounting
- Controller services
2. Human Resources
Filling vacant positions is challenging even for the department whose primary responsibility is finding talent. Some companies find it difficult to hire recruiters. Furthermore, only a few HR professionals meet their hiring goals due to the tight labor market.
Outsourcing to the Philippines is a strategic move for companies struggling to hire HR professionals. It enables organizations to create a well-oiled workforce most affordably and efficiently possible, thanks to the experience of offshore recruitment experts.
The duties of the HR team include:
- Searching for and screening job candidates
- Hiring and training talent
- Managing employee documents
- Computing wages and withholding income tax
3. Data Management and Science
Many realize the advantages of using data to drive decision-making and planning processes. However, they cannot leverage data because they lack experienced analysts and scientists. The demand for data scientists is growing, but the supply is yet to keep up.
Companies seeking proficient, dedicated data analysts should opt for Philippine outsourcing. Although the country is known for its call center service, it is slowly gaining popularity for knowledge process outsourcing (KPO) solutions such as data science. Filipinos undergo rigorous training in extracting actionable insights from raw data and creating reports.
4. Information Technology (IT)
Another industry facing a talent shortage is IT. A Gartner report states that the shortage of IT specialists is one of the key barriers to adopting emerging digital tools.
Since the need for digitization has increased in the past few years, tech companies are now facing a sudden rise in consumer demand. But the number of IT professionals is insufficient to fulfill this unforeseen growth.
Outsourcing to Filipino providers is ideal for tech companies planning to grow their capabilities and keep up with the expanding consumer base. Philippine outsourcing enables companies to leverage skilled experts without breaking the bank.
5. Writing and Content Creation
SEO and content marketing are crucial to reaching customers wherever they are and standing out against rivals in today’s saturated market. Since search engines such as Google constantly update their algorithms to prioritize valuable, high-quality articles over ordinary content, having excellent content writers who create original and compelling pieces is vital.
If you struggle to find talented writers for your marketing projects, look no further than the Philippine labor market. With the right BPO collaborator, you can use the power of words to easily develop a strong digital presence for your business and capture audience attention.
6. Encoding
Encoding activities involve handling data capture, documentation, filing, and compiling. They also include processing forms, creating databases, and updating online catalogs. Encoding varies from basic data entry to online conversion, transcription, and formatting.
One example of basic data entry is when an expert reads a document and inputs it into processing software. Conversely, online data entry enters information into an online portal or system.
These services portray the benefit of outsourcing to the Philippines. As businesses outsource these tasks to an offshore provider, they free up resources to spend on more essential matters.
The Bottom Line
For many reasons, outsourcing call center and back-office functions to the Philippines is good for one’s business. Decision-makers might worry about data security, language and cultural barriers, time zone differences, and poor quality. But Filipino BPO workers have proven to be resourceful, dedicated, hardworking, flexible, and certified specialists.
As a trusted BPO company in the Philippines, Unity Communications represents the country’s many favorable qualities. Let’s connect to discuss how we can help you propel your business toward success!
