The Pros and Cons of Outsourcing Customer Service in the Philippines

In a highly competitive market, businesses must constantly improve their value proposition and services to stand out. 

Good customer service is crucial to creating new customers and retaining existing ones. Your existing client base has the potential for new sales, so taking good care of your customers leads to recurring sales.

Many businesses hire offshoring providers in the Philippines to ensure high-quality customer service. Read on to learn the advantages and disadvantages of outsourcing customer service to the Philippines.

Advantages of Outsourcing Customer Service to the Philippines

The Philippines is a top choice among global outsourcing destinations. Its outsourcing industry recorded $29.1 million in revenue in the first half of 2022 and currently employs 1.44 million workers.

One big reason for the country’s rise in the global outsourcing scene is its proven customer service management. The Philippines is a world leader in customer service for many reasons. 

Below are reasons you should choose this destination to handle your customer support operations:

Excellent Work Ethics

Filipinos are naturally hardworking and respectful people. They respect elders and show courtesy to others. They have no problem interacting with foreign companies and customers.

More importantly, they have an excellent attitude toward work. Filipinos have very close family ties. They are more motivated to excel at their jobs because they want to provide for their families and give them a good life.

Filipino workers display grace under pressure. They maintain tact and treat even irritable customers with courtesy and respect. Their work ethics and patience make them ideal for customer service and technical support outsourcing.

Cultural Melting Pot

The Philippines was once a colony of various countries. Spain colonized it for 333 years, originating many of the country’s practices and traditions. The nation also became a United States and Japan colony for 48 years and three years, respectively.

Decades later, the Philippines still maintains close ties with the U.S. Moreover, the archipelago has been an important trading partner to its Asian neighbors for several years. These prosperous partnerships are possible due to the country’s advantageous location in the South China Sea.

Its history and relationships make the Philippines a cultural melting pot of different beliefs and values. Filipinos inherited traditions, norms, and institutions from the various cultures they have interacted with. As a result, they are more open to accepting and working with foreign clients. 

Filipinos can adapt to any culture, making the country an ideal business process outsourcing (BPO) destination.

High Literacy Rate

The Philippines has one of the highest literacy rates in the world, at 99.27%. This high rate results from a collaborative effort to increase the number from where it was in the 1930s.

The national government also partnered with universities to draft a curriculum that enhances student skills relevant to BPO work. This facilitates their entry into the outsourcing industry and equips them with the necessary knowledge.

Moreover, the Technical Education and Skills Development Authority (TESDA) helps build contact center training hubs for people interested in joining the sector.

Affordable Wage Rates

The average salary of BPO workers in the Philippines is $5,356 per year, plus benefits. In the U.S., a typical customer service representative earns a base salary of $57,272 annually.

When you outsource customer service, you only need to pay a per-hour fee, which covers the wages of entry-level agents. You can hire a full customer service team for $9 to $15 per hour. This amount includes rent, utilities, payroll, benefits, and contingencies.

Outsourcing customer service to the Philippines helps you save on resources and guarantees that the work rendered is of high quality.

Exceptional English Proficiency

English remains a medium of instruction in schools and universities and the language used in businesses in the Philippines. GlobalEnglish conducted research that found the Philippines ranked first in Business English, scoring higher than the U.S. and the UK.

The country has a reputation for having a high level of English proficiency, as evidenced by the number of people worldwide who hire Filipinos to teach them English. Filipinos also have a close American accent, so customers have no problem speaking with and understanding Filipino agents on the phone.

Providing exceptional customer service is more than having the technical skills to achieve established metrics and benchmarks. Filipinos also have the right behavioral patterns and attitude to help customers resolve their issues within an appropriate amount of time.

Disadvantages of Outsourcing Customer Service to the Philippines

Whether it be data entry services or customer support, partnering with an outsourcing provider has drawbacks. 

Consider the following challenges of outsourcing customer service to the Philippines: Make sure to work with a service provider that balances the advantages and disadvantages of outsourcing.

• Inadequate personalization. When outsourcing customer service, you risk losing touch with clients. Monitoring customer interactions is harder. Customers might take their business elsewhere if agents fail to follow your protocol or lack the product knowledge to resolve an issue.
• Noticeable process changes for customers. The lack of sufficient training for new customer service representatives creates a noticeable change in support quality that customers might feel. Prevent low satisfaction ratings by designing a comprehensive training procedure for all customer service agents before deployment.
• Unaligned quality control standards. Passing control of functions you have previously managed to a service provider is challenging due to misaligned quality control standards. Hence, you want to establish clear control procedures to ensure the third-party team performs at a suitable standard that aligns with your internal efforts.
• Insufficient industry expertise. Third-party customer service representatives do not have the same intimate understanding of your brand and industry. They might not use the same industry jargon as in-house teams. Avoid unmatched expertise by vetting agents based on industry familiarity or providing additional training.  

Excellent customer service is about doing your best to meet client demands. Although outsourcing comes with certain challenges, the right partner mitigates the risks and empowers you to reap the benefits.

Your back-office outsourcing partner should have an outstanding reputation that speaks for itself and a team of creative, technical, and administrative agents who can handle any task.

Customer Service Outsourcing Landscape in the Philippines

The large supply of well-educated, English-speaking Filipinos combined with a culture that places high importance on hospitality makes outsourcing customer service to the Philippines an ideal choice. The investment of Philippine contact centers in advanced technologies has also pushed the boundaries of what is possible in customer support.

For example, chatbots and virtual assistants powered by artificial intelligence (AI) can handle simple customer questions and complaints, freeing up human agents’ time. Moreover, machine learning (ML) algorithms and AI-powered analytics analyze client data and generate insights about customer preferences and behavior, improving service personalization.

Contact center as a service (CCaaS) solutions enable Philippine service providers to avidly embrace the integration of messaging and social media platforms. These channels let customers contact brands using platforms they use daily, making support more convenient. Social media platforms also allow companies to respond quickly to customer messages.

The Philippines can manage customer service’s regulatory and technical complexities. The country is an excellent location for delivering world-class and affordable support.

Why the Philippines Is Better Than India in Customer Service

The Philippines and India are two prominent countries in the outsourcing game. They paved the way for the success of BPO in Asia. However, the Philippines tops India in many aspects.

The Philippine outsourcing industry began in the early 1990s, and Western companies started investing in the country in 2000. Meanwhile, India arrived a decade earlier. Their BPO industry started in the early 1980s.

While India excels at outsourced tech solutions and software as a service (SaaS), outsourcing customer service is better done in the Philippines because of many factors, including:

• Language proficiency. Apart from high English proficiency, the accent plays a vital role in customer service. After training and practice, the Filipino accent becomes more neutral, making it easily understandable for foreign customers.
• Time difference. Countries such as Australia prefer outsourcing to the Philippines due to the shorter time difference. Australia is only two to three hours ahead of the Philippines, unlike India, which has a difference of five hours and 30 minutes.
• Culture. India and the Philippines were once UK and U.S. colonies, respectively. The Philippines still adopts parts of Western culture, which helps Filipino agents understand certain slang and expressions from foreign customers.
• Education. The education system in the Philippines is similar to that of the U.S. With the government’s support, students undergo programs that prepare them for BPO work. Compared to the 10% of employable graduates in India, the Philippines produces 30% annually.
• Service quality. The Philippine cost of labor is marginally higher than in India. The country’s service quality for customer support is also higher since it has wide access to the best talent and human resources for the role.

India has some advantages when it comes to outsourcing software and information technology. But the Philippines should be your first choice if you are looking for excellent customer service skills.

The Bottom Line

Outsourcing customer service to the Philippines is a successful strategy for many companies, giving them access to English-proficient and highly skilled workers. It delivers round-the-clock support, cuts costs, and improves satisfaction.

As businesses become more aware of the benefits of outsourcing and the sector’s growth potential, the customer service sector in the Philippines will continue to thrive.

Contact Unity Communications to learn how outsourcing can help you.