Written by Joyce Ann Danieles
Why would you hire an offshoring provider in the Philippines when you can collaborate with one from your home country?
Easy. The Southeast Asian archipelago is a hotspot for cost-effective third-party support. Filipinos’ English proficiency and expertise further attract foreign clients to invest in the industry. Its 10.3% revenue growth in 2022 alone shows that many businesses continue to trust service providers in the country.
But if you need more reasons to offshore functions to the Philippines, continue reading our list below.
Top Five Reasons to Outsource to the Philippines
Businesses adopt offshore outsourcing to access low resource costs and global talent. Specifically, they entrust their non-core functions to Filipino providers to capitalize on their flexible professionals, advanced solutions, and high-quality services without overspending.
The Philippine offshoring market saw a 10.3% revenue increase to $32.5 billion in 2022, according to a recent report from the Information Technology and Business Process Association of the Philippines (IBPAP). Its workforce count also grew by 8.4% to 1.57 million. The finance, healthcare, retail, technology, and telecommunications segments contributed to the expansion.
The country is a top-notch outsourcing hub worldwide for various reasons. It holds 10% to 15% of the global outsourcing market share. Let us explore below why companies continue to offshore processes to the Philippines.
1. Lower Operating Expenses
Acquiring third-party support equals reduced operating expenses, especially when offshoring to the Philippines. As a developing nation in the Asia-Pacific region, the country’s cost of living and wages are lower than in other nations, such as the United States.
For instance, based on the latest data from Salary.com and Talent.com, the average hourly rate of a customer service representative (CSR) in the Philippines is roughly $2. U.S.-based CSRs, on the other hand, earn an average hourly wage of $18. Thus, customer service outsourcing in the Philippines enables labor cost savings of between 50% and 90%.
Besides, you do not need to worry about real estate and equipment expenses when outsourcing because the service providers handle these resources. Depending on your selected service package, you just have to pay a monthly fee or subscription.
2. Educated and Skilled Talent Pool
The Philippine outsourcing industry houses a large pool of highly educated and skilled professionals. The country’s young population can adjust to your business’s strategies and requirements.
In the IT outsourcing (ITO) sector alone, the Technical Education and Skills Development Authority (TESDA) reported that 76% of Filipino ITO workers attained tertiary education. So if you entrust your technical support to a Filipino service provider, expect that its IT specialists possess in-depth knowledge and expertise.
In addition to its educational advantage, Filipino work attitudes indicate why many companies offshore to the Philippines.
- Flexible and eager to learn. Filipinos’ willingness to upskill allows them to effectively and accurately complete any task. They also have a knack for quickly familiarizing themselves with various work rules and regulations. Therefore, you can immediately hire and deploy them in the field even without extensive training.
- Resilient and optimistic. When outsourcing to the Philippines, anticipate collaborating with professionals with positive and hospitable attitudes. Filipino workers can handle pressure and deal with demanding clients with a smile and friendly demeanor.
- Resourceful and competent. Third-party Philippine workers look for innovative ways to resolve different workplace challenges. They also use creative strategies to deliver superb customer experience and achieve team goals.
- Team players. Filipino talent emphasizes the importance of solid teamwork and cooperation to achieve company goals and produce superior output.
3. High Language Proficiency and Cultural Compatibility
Ask business owners why they offshore to the Philippines; language proficiency and cultural compatibility are among their top reasons. Because your target market consists of native English-speaking consumers, you need staff to interact with them naturally. Hiring Filipino workers is your best choice.
The Philippines recognizes English as its second official language, adding the language as one of its core educational subjects. The country thus earned an Education First English Proficiency Index score of 578. The survey also ranks the Philippines second out of 24 Asian countries with high English proficiency.
As a result, Filipinos can adeptly use English to express their thoughts in concise written and spoken words. Their familiarity with Western and Asian cultures also helps expand your global reach.
Experts from the Philippines have a globalized mindset. Required or not, Filipinos are aware of industry news and trends. They use such insights to provide exemplary services, especially in customer-facing functions. Their ability to speak and understand a language or three also helps them provide a personalized customer experience.
4. Solid Government Support
Due to its economic advantage, the government strongly supports the Philippine business process outsourcing (BPO) market. The administration enacts critical policies and procedures to assist and safeguard BPO providers and foreign clients.
Here are a few laws that enhance and strengthen the country’s position as one of the top outsourcing nations worldwide.
- Republic Act No. 10844: The Department of Information and Communications Technology (DICT) Act of 2015 enables universal access to quality and cost-effective ICT services. The law aims to place the Philippines on par with other Southeast Asian countries by providing strategic, citizen-centric ICT infrastructure.
- Republic Act No. 10173: The Data Privacy Act 2012 ensures compliance with international data security requirements and standards. It imposes penalties for BPO providers violating the privacy and proper handling of confidential information.
- Republic Act No. 7916: The Special Economic Zone Act establishes selected areas to support local and foreign investors, including BPO companies. Businesses operating within these areas enjoy tax incentives and exemptions.
- Republic Act No. 11165: The Telecommuting Act enables flexible work arrangements in the country. The law highlights the crucial role of digitalization and technological advances in enhancing work-from-home (WFH) setups. BPO companies can offer telecommuting options under mutually agreed-upon conditions with their employees.
Besides these laws, the Philippine government has also rolled out several programs to further support the BPO sector.
- The provision of tax incentives encourages foreign clients to invest in the local BPO industry. These benefits include income tax holidays and reduced corporate income tax rates.
- Establishing BPO hubs or centers of excellence (CoEs) nationwide encourages the industry’s growth. These hubs provide incentives such as tax holidays. The CoEs include Metro Manila, Metro Cebu, Metro Clark, and Davao City.
- The Next Wave Cities Program helps set up new BPO destinations outside Metro Manila. The initiative creates digital job opportunities in the provinces. It also ensures lower operating expenses for BPO companies.
- The Philippine government supports BPO talent development and training programs. In particular, TESDA collaborates with BPO groups to host workshops and training sessions.
- The foundation of DICT funds tech and BPO startups to support the development of their products and services. The department also provides them with mentorship, resources, and networking opportunities.
5. Modern Infrastructure and Technology
The Philippine BPO sector optimizes multiple modern infrastructures and technologies to deliver high-quality services. These advanced solutions help speed up operations, improve process efficiency, and boost the customer experience. Gaining access to the technologies listed below is one reason foreign clients offshore to the Philippines.
- Customer relationship management (CRM) software simplifies the management of consumer interactions and data. The CRM platform assists BPO agents in handling customer information, connecting with clients, and delivering personalized services.
- Cloud computing facilitates remote data storage and access. The technology allows BPO companies to easily organize big data over the internet.
- Artificial intelligence (AI) simulates human intelligence to accomplish tedious, non-core functions. The solution helps reduce errors and backlogs.
- Robotic process automation (RPA) automates repetitive tasks such as data entry, information gathering, and reporting. RPA also provides quick responses to common customer inquiries.
- Voice-over Internet protocol (VoIP) technology enhances call and contact center services. It enables BPO companies to streamline agent-customer interactions over the internet without spending extra costs on traditional telephone lines.
- Data analytics platforms accelerate data collection and analysis to provide market insights for informed business decisions. Filipino service providers use these platforms to predict customer behavior, assess call data, and monitor performance metrics.
- Cybersecurity tools protect confidential data from cyber threats, unauthorized activities, and breaches. These solutions include firewalls, antivirus features, and encryption capabilities.
The government has invested in upgrading the country’s internet speed and connectivity to further address the pros and cons of outsourcing to the Philippines. This investment helps meet the industry’s need for reliable telecommunications infrastructure. The administration’s efforts include:
- Simplifying the licensing process for Internet tech modernization
- Building undersea internet cables and cell sites
- Installing free Wi-Fi in public places
- Working with the private sector for fiber connectivity projects
- Setting up a national broadband network
The Bottom Line
When asked why they offshore to the Philippines, small, mid-sized, and large enterprises have many answers: cutting operating expenses and optimizing highly skilled professionals are their top reasons. Of course, linguistic and cultural affinity also influence their BPO investment in the country.
The Philippine government’s strong support for the BPO sector gives foreign clients confidence that hiring a Filipino service provider is worth the price. Its comprehensive laws and initiatives provide significant advantages and protection to help companies achieve a competitive edge. Modern technologies also let companies keep up with the fast-paced market competition.
Are you convinced that offshoring to the Philippines benefits your business? Contact Unity Communications today. The award-winning service provider has a scalable and innovative team in the Southeast Asian nation to help drive your continued success.