Written by Dion Jay Tality
As a business leader, you constantly seek ways to improve your operations and reduce costs. Offshore outsourcing can be an effective solution for achieving this objective. But some companies pick an outsourcing destination without proper research, resulting in challenges and complications.
The Philippines is a well-established outsourcing hub and the world’s call center capital. It is one of the biggest contributors to the global business process outsourcing (BPO) market share. Offshoring providers in the Philippines should be among your top outsourcing choices.
Let us explore some Philippine outsourcing facts to understand whether outsourcing to the country is worthwhile.
An Overview of Philippine Outsourcing
Business process outsourcing is when a company hires a third-party service provider to handle its business processes. These can be front-office or back-end functions such as customer service, data entry, and information technology (IT) support. Businesses can outsource these processes to onshore, nearshore, or offshore vendors.
Offshore outsourcing is the most popular option due to its cost-saving benefits. Companies in the U.S., the UK, Canada, and Australia usually outsource to countries such as India, Ukraine, Poland, Brazil, Mexico, and Argentina. The Philippines, of course, is a strong contender in the outsourcing arena.
Although facing stiff competition with India, Central America, and fast-emerging Eastern Europe, the Philippines has become a top outsourcing destination. As mentioned above, the country has become the BPO capital of the world.
Learn more about its history of outsourcing in the next section.
Philippine Outsourcing History: Key Statistics
The Philippines has a long history of outsourcing, starting with Accenture in 1992. It has had a glorious transition into what it is today—a leading outsourcing hub.
The nation’s business climate and cost-effective labor have made it a popular destination for multinational corporations and small and mid-sized enterprises (SMEs) looking to outsource.
Here are some Philippine outsourcing facts and figures:
- 1992: Accenture outsourced services, including software development, to the Philippines.
- 1995: The Philippine government signed the Special Economic Zone Act, creating ecozones for investments.
- 1997: Sykes established the first multinational BPO company in the Philippines, specializing in inbound call center support.
- 1999: eTelecare Global Solutions set up the first call center in the country.
- 2005: The BPO sector grew to 3% of the global market and nearly 2.5% of the country’s gross domestic product (GDP).
- 2006: ePLDT Ventus became a major player in the country’s BPO industry, comprising 5.4% of the local economy.
- 2010: The Philippines became the BPO capital of the world, with over 525,000 agents employed in call centers.
- 2012: The Philippine BPO revenue grew to 5.4% since 2006.
- 2014: Over 75% of U.S. businesses outsourced to the Philippines, generating $18.2 billion in revenue.
- 2016: The Philippine BPO industry had a 17% compound annual growth rate (CAGR) and offered about 1.3 million employment opportunities.
- 2018: The Philippines ranked second on the Tholons Top 50 Digital Nations list, and Manila placed second in the Top 100 Super Cities.
- 2019: The Philippines ranked sixth among the fastest-growing countries for freelancers.
- 2020: The Philippines ranked fifth on the Tholons Top 50 Digital Nations list.
- 2022: The IT business process management (BPM) market made up 13% of the global market share, with a projected revenue of nearly $30 billion.
The Philippines has a rich outsourcing history. This nation remains a leading destination, and this title will not fade soon. So if you plan to outsource tech solutions and customer support services, the Philippines has much to offer.
Top 10 Philippine Outsourcing Facts and Figures
The Philippines has established itself as a prime location for BPO services, whether front- or back-office outsourcing. We should highlight why the country has become a go-to destination for businesses worldwide here in this article. The Philippine outsourcing data and statistics speak volumes about the BPO industry’s reputation, credibility, and competency.
Let us explore the top 10 Philippines outsourcing facts and figures you should know.
1. The Philippines Is a Top Outsourcing Destination in the World
(Outsource Accelerator, 2022)
A leading aggregator marketplace for outsourcing, Outsource Accelerator, cites the Philippines as the top outsourcing destination. It also mentions that the nation is known as the BPO capital of the world. Companies outsource to this country mainly to reduce costs, decentralize command, and focus on core competencies.
The Philippines has made it to the Tholons list almost every year. In 2018, the country ranked second in the Top 50 Digital Nations, with Manila placing second in the Top 100 Super Cities. In 2019, the Philippines ranked fifth, with Manila and Cebu placing second and 12th, respectively. The country’s place went down to 18th in 2021 due to a decline in the workforce during the pandemic, but expect it to climb back to the top spot.
2. The Philippines Is the World’s Call Center Capital
(Outsource Accelerator, 2022)
Outsource Accelerator recognized the Philippines as the world’s call center capital. It says clients admire the nation’s incredible talent, personalities, and character. The Los Angeles Times confirmed this Philippine outsourcing fact in 2015 through a news report.
Furthermore, the Philippines keeps up with the global BPO trend for multichannel support. BPO firms have transitioned from call centers to contact centers to provide omnichannel solutions and enhance customer experience. They now use digital tools such as contact center as a service (CCaaS) and customer relationship management (CRM) software.
3. The Country’s IT-BPM Market Growth Could Hit $29 Billion in 2022
(Outsourcing Journal, 2021)
The Philippine IT-BPM industry could grow from $26.7 billion in revenue in 2020 to $29 billion by 2022. This sector grew by 1.8% from 2019 to 2020, adding 23,000 full-time employees (FTEs) and reaching a head count of 1.32 million. Further, the Philippines added another 120,000 FTEs in 2020, achieving 1.44 million in 2021.
The country’s IT-BPM industry ranked first in voice-related services. However, it also offers non-voice services, expanding its horizontal BPM services (e.g., finance and accounting) and vertical-focused solutions (e.g., healthcare information services). The country has transitioned from being a low-cost hub to providing quality services with competitive pricing.
4. The Country’s IT-BPM Market Comprises 13% of the Global Market Share
(Outsourcing Journal, 2021)
The Philippine outsourcing facts and figures do not lie. The country’s IT-BPM market now accounts for 13% of the worldwide market share. That is a big chunk of the global outsourcing market, proving that the Philippines has become a leading destination for IT-BPM services.
India remains the top outsourcing player, followed by the Philippines and the U.S. But according to Colliers, the Philippines could capture a bigger slice of the BPO global market share. This forecast is plausible; the country has over 700 BPO firms and 1.44 million FTEs. Thus, the future of the Philippine BPO industry looks even brighter and more promising.
5. The Country Has More than 700 BPO Firms in Various Locations
(Outsource Accelerator, 2022)
According to the same Outsource Accelerator report, the Philippines has over 700 BPO companies. In its 2020 report, Magellan Solutions also confirmed that the country has 788 BPO firms reported by PEZA. So whether you are outsourcing customer support, sales, or data entry services to the country, you have several options.
Recently, the Philippine BPO industry has even expanded to the provinces. The IT and Business Process Association of the Philippines (IBPAP) cites that 30% of the industry’s workforce is outside Metro Manila.
The Department of Information and Communications Technology (DICT) has also initiated the Digital Cities 2025 program to aid 25 locations outside Metro Manila in becoming full-fledged digital cities by 2025.
6. The BPO Sector Exceeded 1.43 Million FTEs and $29 Billion in Revenue
(Business World, 2022)
The Philippine BPO industry exceeded its employment and revenue targets last year of 1.43 million FTEs and $29.1 billion in revenue. Such growth was due to global consumer demand, high confidence in the country’s work-from-home (WFH) setup, and the emerging BPO segments. Digital transformation across horizontal and vertical markets has also become a key driver for its growth.
Consider these Philippine outsourcing facts and figures from IBPAP. In 2021, the BPO sector provided 1.44 million direct jobs and 3.61 million indirect jobs. It has almost reached $30 billion in revenue, and the numbers are growing. Ultimately, BPO has become the country’s biggest employment generator.
7. The Country’s BPO Market Accounts for 7.5% of Its GDP
The BPO industry is a significant contributor to the Philippine economy. IBPAP reported that this market generated $29.5 billion in revenue, contributing 7.5% to the country’s GDP. Its market growth shows no sign of stopping or even slowing down.
According to The Manila Times, the Philippine BPO industry thrived amid the pandemic. While it employed 1.3 million BPO agents in 2019, this number is growing by 8% to 10% yearly. The BPO sector also contributes almost $30 billion annually to the Philippine economy.
8. The Country’s BPO Sector Aims To Reach Nearly $60 Billion by 2028
Here is another Philippine outsourcing fact: The BPO industry has its sights set on reaching $59 billion in revenue by 2028. This goal is part of the Philippine IT-BPM Roadmap 2028, launched by IBPAP. The following are some key initiatives to consider:
- BPO market growth. IBPAP projects the BPO sector to double its revenue by 2028. It targets a 10.4% CAGR, potentially hitting $59 billion in revenue during the forecasted period. The Philippines might also become the next “experience capital of the world,” potentially adding another feather to its cap.
- Evolving business landscapes. The rising demand for IT-BPM services presents new opportunities for the outsourcing industry. As such, the country adopts hybrid work, implements favorable policies, improves infrastructure, and increases its supply of skilled talent. All these initiatives are part of the 2028 roadmap.
- Employment opportunities. The IT-BPM industry aims to provide 1.1 million direct jobs and 2.5 million FTE positions. It also seeks an additional three million indirect jobs in allied sectors such as retail, hospitality, real estate, infrastructure, and transportation. This way, the country provides its people with job opportunities while serving its target clientele.
9. BFSI Tops Primary Verticals in Philippine Outsourcing
According to BOI, the four main verticals in the Philippines are the banking, financial services, and insurance (BFSI), IT and telecom, manufacturing, and healthcare segments. In recent years, many companies in these segments have outsourced to the country for business optimization and cost reduction.
Vertical evolution is one of the BPO trends to watch locally and globally. To keep up with this trend, Colliers cited that the Philippine government should focus on three imperatives: regulation, cost, and labor. The country should continue to provide a cost-effective workforce while implementing favorable laws and regulations.
10. IBPAP Is the Main Enabling Association for the Philippine BPO Industry
(Outsourcing Journal, 2021)
Did you know that the country’s outsourcing industry has full government support? Many stakeholders are also actively supporting this sector. That is one of the Philippine outsourcing facts you should know because it encourages you to invest in the country and make informed decisions.
IBPAP is the primary enabling association that supports the country’s outsourcing industry. But it has partner affiliations such as:
- Contact Center Association of the Philippines (CCAP)
- Healthcare Information Management Association of the Philippines (HIMAP)
- Global In-house Center Council Philippines (GICC)
- Game Developers Association of the Philippines (GDAP)
- Animation Council of the Philippines, Inc. (ACPI)
- Philippine Software Industry Association (PSIA)
Furthermore, the nation consists of major players in the BPO industry. Most of these BPO firms are already well-established, and the country continues gaining emerging industry players.
An emerging BPO player, Unity Communications has recently earned numerous awards and accolades. It offers various outsourcing services, from customer service and IT support to administrative work. It caters to different industries, from e-commerce to healthcare.
As a reputable offshore service provider, Unity Communications helps you achieve your goals and meet your business needs. Get in touch with us today to see how we can help.
Top Reasons for Outsourcing to the Philippines: Key Statistics
Outsourcing to the Philippines has become a popular trend for several reasons. Whether you employ customer service or technical support outsourcing, having a BPO partner in the country helps scale your business and reduce your expenses. But there is more to these benefits than meets the eye.
Here are the top reasons for outsourcing to the country, backed mainly by vital statistics:
- Cost savings. According to Outsource Accelerator, outsourcing can save businesses up to 70% in labor costs. The average hourly rate for BPO vendors in the Philippines is only between $12 and $14 compared to $24 to $28 in the U.S. This offers significant cost savings for companies looking to maximize their resources.
- Skilled and diverse workforce. The Philippine BPO industry added 120,000 FTEs in 2020, amounting to 1.44 million FTEs in 2021. This experienced and diverse workforce is capable of handling various business processes. Likewise, the investment in employee upskilling makes a world of difference in its workforce.
- English-language proficiency. In the 2022 English Proficiency Index (EPI) edition, the Philippines ranked 22nd out of 111 countries. It is also the second-highest-ranking country in East and Southeast Asia. This language competency makes it easy for Filipinos to communicate and collaborate with others globally.
- Cultural compatibility. The Philippines has a history of colonization under Spanish, American, and Japanese rules. This colonial past has created a melting pot of diverse cultures, making it easy for Filipinos to work with other nationalities. Specifically, the country’s shared culture with the West has paved the way for continued business partnerships.
- Desirable traits. The Philippines has a pool of hard-working talent with good work ethics. Filipinos’ commitment to work and determination to succeed make them a highly coveted asset to any business, the BPO sector included. Filipino culture also values hospitality, politeness, and patience—highly desirable traits in business.
- Full government support. The government initially enacted the Special Economic Zone Act to attract foreign and local investors. It later introduced the Philippine Economic Zone Authority (PEZA), which provides businesses with tax incentives. Since then, the government has implemented various programs to support BPO growth.
- BPO growth and expansion. The Philippine outsourcing industry is growing and expanding. It is poised to become a major contributor to the global outsourcing market share, making up 13%. Such growth and expansion solidify the Philippines as a top destination for outsourcing.
The Bottom Line
Outsourcing to the Philippines offers numerous benefits to businesses across various industries. These include a thriving BPO market, cost-effective prices, highly skilled labor, proficient English speakers, cultural alignment, and government support.
The Philippine outsourcing facts and figures demonstrate the nation’s status as one of the leading BPO destinations worldwide.
Before outsourcing, carefully evaluate the nation’s current market and future trends. Understand and prepare for the opportunities and risks of outsourcing to the country. More importantly, select a BPO partner that aligns itself with your business goals, needs, and budget.
Considering these factors can help you maximize the potential of the Philippine outsourcing sector for business growth and success.