A New Guide to Offshoring and Outsourcing to the Philippines

Discover cost-effective offshoring and outsourcing solutions in the Philippines for streamlined non-core operations. Unlock the potential of BPO strategies and find the right offshoring providers to optimize your business processes.
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Do you need a cost-effective way to streamline your daily non-core operations? If so, you probably already know that business process outsourcing (BPO) is the key to achieving that goal. 

But did you know that some of the best offshoring and outsourcing solutions are available in the Philippines? 

Read on to understand these business strategies and the approaches you can take when looking for offshoring providers in the Philippines.

What Are Offshoring and Outsourcing?

Offshoring could mean either relocating or establishing a business unit in a country overseas or hiring a service provider in an offshore country such as the Philippines, India, and China. This guide focuses on the latter: offshore outsourcing to a Philippines service provider to handle your tedious tasks.

On the other hand, outsourcing is the general term for contracting a third party to handle any of your front- and back-office functions. As long as you work with an external team and pay them a fixed hourly or monthly rate, you outsource regardless of the service provider’s location.

See the table below for clearer distinctions.

 OffshoringOutsourcing
Definition
  • Assign non-core functions to overseas service providers
  • Delegate specific business functions to U.S. and non-U.S. service providers
Location
  • Overseas
  • e.g., Asia Pacific (such as the Philippines)
  • Onshore (e.g., Virginia)
  • Nearshore (e.g., Canada)
  • Offshore (e.g., India)
Purpose
  • Maximize lower labor and operating costs in foreign countries
  • Double or triple cost savings
  • Take advantage of global talent, high-quality services, and up-to-date technologies
  • Boost daily operations
  • Permanently or temporarily hire non-U.S. service providers
  • Access specialized skills, excellent services, and advanced solutions 
  • Reduce costs
  • Increase daily operational efficiency
  • Permanently or temporarily hire U.S. and non-U.S. providers
Scope
  • Customer service
  • IT support
  • Financial services
  • Healthcare support
  • Human resource (HR) services
  • Manufacturing and production
  • Data entry services
  • Customer service
  • IT support
  • Financial services
  • Healthcare support
  • Human resource (HR) services
  • Manufacturing and production
  • Data entry and management

How To Start Your Philippine BPO Journey

The Philippines is recognized as one of the most reliable BPO destinations worldwide. Besides significant cost savings, businesses benefit from the country’s skilled, English-speaking professionals. Filipino providers further boost their services using up-to-date technologies.

The industry thus achieved 10.6% growth in 2021, according to the IT and Business Process Association of the Philippines (IBPAP). The sector also earned approximately $29.5 billion in revenue for that year.

To experience such advantages, explore the following steps for kicking off your offshore outsourcing journey in the Philippines.

1. Perform SWOT and SMART Strategies

Start your front- and back-office outsourcing venture in the Philippines by listing your needs, challenges, and goals. This step helps clarify whether you should avail of offshoring and outsourcing services in the Philippines. 

Conduct a SWOT analysis to evaluate issues facing your team and determine your enterprise needs. Enumerate your strengths, weaknesses, opportunities, and threats by answering these recommended questions:

  • What does our business do best?
  • What resources remain available?
  • What advantages does our team have?
  • In what areas do we need to improve?
  • What skills and resources are we lacking?
  • Why do customers complain about our products and services?
  • How can we turn our strengths and weaknesses into opportunities?
  • How will BPO help improve our daily operations?
  • How will offshoring to the Philippines contribute to our growth?
  • What are the possible risks when outsourcing to the country?
  • What obstacles do we face when contracting a Filipino service provider?
  • Are there any national and industrial policies that might affect us?

Once you specify your needs and challenges, carefully set your BPO objectives. Determining clear targets helps monitor your potential provider’s performance and output. Use the SMART guide when breaking down your goals:

  • Specific: Your objectives must be specific to motivate your team to achieve them. 
  • Measurable: Your targets must give you an overview of your accomplishments.
  • Achievable: Your goals must be practical and easily attainable.
  • Relevant: Your purpose for hiring a BPO provider must meet your growth requirements.
  • Time-bound: Your desired BPO outcome must have deadlines to establish urgency.

Take these scenarios as examples when planning your BPO investment in the Southeast Asian archipelago.

SITUATION 1:

With the sudden popularity of your clothing business, your team encounters production delays as orders continue to increase in volume. You research onshore providers to help improve your manufacturing process at affordable costs. However, most of these vendors do not meet your budget.

So you decide to offshore your manufacturing to the Philippines for more cost-effective support. You also discover that the country has the talent you need to retain your products’ quality at your desired working speed. As a result, you select an offshore provider that helps you improve your production by 50% annually.

This scenario reflects a SMART offshoring objective because it is:

  • Specific: hire a Filipino service provider to enhance clothing production
  • Measurable: improve the manufacturing process by 50%
  • Achievable: the vendor employs a highly trained workforce capable of providing fast production support
  • Relevant: offshoring helps address production delays while saving on costs
  • Time-bound: see improvement within a year

SITUATION 2:

You need more customer service agents to handle an expected surge of support requests during the holiday season. Failing to add more workers means your in-house team suffers from overtime.

Since the main issue concerns your customer service unit, outsourcing consumer support is your best solution. So you hire a service provider from the Philippines to temporarily boost your customer service operations by 10% during the holiday.

Such a scenario is an example of a SMART outsourcing goal because:

  • Specific: contract a provider to boost customer service
  • Measurable: increase customer service operations by 10%
  • Achievable: the provider has agents trained to take on urgent tasks
  • Relevant: offshoring helps expand your customer service manpower to meet a surge of inquiries
  • Time-bound: maintain smooth consumer support processes during the holiday season

2. Create Criteria for an Ideal BPO Partner

After listing your SWOT and SMART goals for offshoring and outsourcing to the Philippines and listing down your goals, create criteria for your ideal service provider. 

Study the country’s business process outsourcing market. Ensure you know its policies, procedures, and economic structures. When looking for Philippine providers, research their service offerings, pricing, payment options, workforce skills, technologies, and work strategies. 

Turn to online directories, industry associations, or referrals from colleagues and business partners to find reliable service providers in the country. Also, consider using online marketplaces or BPO platforms that connect businesses with potential providers.

Based on the results of your search, develop criteria for your desired service vendor. Consider the following qualities when creating your own:

  • Broad experience and in-depth field knowledge
  • Strong industry reputation and high-rated credibility
  • Excellent quality service and work performance
  • Skilled, highly trained, and English-proficient workforce
  • Advanced technology and infrastructure
  • Cost-effective pricing and multiple payment options
  • Compatible business schedules and operations
  • Aligned language and culture
  • Robust security and compliance
  • Superior project turnaround time
  • Scalability and flexibility

3. Launch a Proposal Call

Launching a proposal call is your next step toward offshoring and outsourcing to the Philippines. This step requires careful planning to convey your needs and service payment capabilities clearly. You should combine all the insights you get from your market research. 

Whether you want to outsource tech solutions or other non-core functions, follow the step-by-step guide below to ensure you get the right offers from potential providers.

  1. Define project requirements. These prerequisites include service scope, timeline, budget, needed workforce size, and other relevant details. This ensures the submitted proposals fit your specific needs.
  2. Create a proposal request. Make sure the request outlines your project requirements and provider qualifications. The document should contain a detailed project description, a list of deliverables, and vendor criteria.
  3. Post the proposal call notice. Publish the proposal request notice through your official websites and social media accounts. Make sure to provide a clear deadline for submitting offers and specify any additional information you require from vendors.
  4. Assess and screen proposals. Upon receiving proposals from interested service providers, evaluate them based on the criteria you have created. Make sure their offers align with your indicated requirements. Seek referrals, conduct one-on-one interviews, or request additional vendor information to support your decision-making. 
  5. Select a service provider. Once you complete the fourth step, decide and pick the best Philippine BPO provider. 

4. Conduct a Cost Analysis

Executing a thorough cost analysis helps determine whether offshoring and outsourcing to the Philippines is a wise decision for your business. 

You must ensure cost savings and investment returns if you avail of technical support outsourcing, back-office offshoring, and related services. 

Reach your targets by implementing these practical ways. 

  • Examine offshoring and outsourcing costs. You must identify the cost of hiring a Philippine BPO company. These expenses include labor, infrastructure, regulatory compliance, and travel costs (only if applicable).
  • Compare Philippine BPO expenses to domestic hiring costs. List all offshoring and outsourcing costs for your needed support. Weigh them against domestic expenses for the same work. 
  • Calculate potential cost reduction. Once you compile all sample computations, get the difference between offshoring and onshoring BPO. This step gives you an overview of potential savings from outsourcing overseas.
  • Factor in other benefits and risks. Expect other benefits from working with a Philippine BPO provider, such as access to a larger talent pool and improved productivity. Do not forget the related risks, such as communication challenges and cultural differences, when performing the cost analysis.

5. Finalize a Service-level Agreement

Offshoring and outsourcing to the Philippines demand keen attention to detail and open communication with your chosen service provider. You must ensure the provider matches your operational and financial needs. 

Follow these tips when finalizing a service-level agreement (SLA) for outsourced contact center as a service (CCaaS) and customer support processes. Doing so allows you to avoid future conflicts and high violation costs.

  • Review contract terms before signing. Ensure the SLA accurately reflects your project requirements and desired outcomes. Consult with legal counsel to assure fairness and legality.
  • Determine areas for negotiation. Such areas might include pricing, payment terms, project milestones, intellectual property rights, and confidentiality agreements. Prepare to clearly articulate your position on these factors.
  • Communicate with the service provider. Clarify each party’s expectations, goals, and requirements. Exchange feedback and suggestions with your BPO partner. Address any concerns that arise during the finalization phase.
  • Ensure compliance with laws and regulations. Check whether the provider adheres to all crucial laws in the Philippines and your home country, such as labor and tax laws. It helps you avoid sanctions and violation fees.
  • Accept and sign the SLA. Proceed to contract signing after verifying that all parties agree to the final terms. Certify all signatures with the date and seal. Make sure each party receives a copy of the contract.
  • Establish collaboration and reporting strategies with your service provider. These activities inform both parties about project accomplishments, issues, and significant contract changes. They include regular meetings and progress reports.
  • Provide training assistance for third-party contractors. Develop a comprehensive handbook to support workers’ training. This document should detail all important data the third-party team needs. It familiarizes them with your business offerings and policies.
  • Monitor the provider’s progress and performance. This step helps ensure your BPO partner meets the SLA terms and your desired outcomes. Use key performance indicators (KPIs) and other metrics to assess the provider’s progress and output. In-house team and customer feedback helps identify critical problems and improvement areas.

As one of the Asia-Pacific region’s most trusted offshoring and outsourcing destinations, the Philippines accounts for 10% to 15% of the global BPO market. This figure means many enterprises receive positive results when working with Filipino providers. But note the steps detailed above to attain long-term success when adopting these business approaches. 

The Bottom Line

Companies, regardless of their scale, increasingly leverage offshoring and outsourcing to the Philippines for cost efficiency and access to skilled labor. However, it’s crucial to discern the right provider that aligns with your needs to ensure optimal returns on BPO investments.

Establishing your qualifications, launching proposal calls, and seeking referrals further assist you in selecting the right provider. Meanwhile, cost analysis and contract negotiation ensure positive output and a good working relationship with your chosen vendor in the long run.

Add Unity Communications to your list of ideal BPO partners as you hunt for a Filipino service provider. The top-notch offshoring and outsourcing company has highly trained professionals and robust solutions to satisfy your front- and back-office support necessities.

Joyce Ann Danieles
Joyce Ann Danieles is an SEO content writer from Manila, Philippines. She’s comfortable writing outsourcing-focused articles, helping you clarify the confusing concepts surrounding the BPO industry. With her experience in news writing and copywriting, she’s always ready to feed your brain with random facts and creative insights.   Outside work, Joyce explores the world of literature. She tries to write fiction she hopes to share with everyone someday.
Joyce Ann Danieles

Joyce Ann Danieles

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