For many years, the Philippines has been a global go-to for offshore outsourcing. The country is home to many capable professionals across a wide range of industries. This skilled workforce offers the willingness to work hard for livable wages—wages that are significantly lower than those you’d pay in Western countries.
And it’s not just the workforce in the Philippines that lends itself to outsourcing; in fact, the government itself has made the outsourcing industry one of its primary focuses, investing strongly in workforce training and incentive programs that encourage business owners of foreign companies to partner. Over time, this pro-outsourcing stance has led the Philippines to become one of the world’s top outsourcing destinations.
Business process outsourcing (BPO) is the process of outsourcing certain business functions of your organization to another company. The Philippines is the leader in BPO outsourcing in Southeast Asia. The BPO industry has been around since the 1990s and has been growing since then. In 2017, the Philippines’ BPO industry generated a revenue of $24 billion. In 2016, there were around a million people employed in the industry. The majority of the BPO industry in the Philippines focuses heavily on call centers, however many Filipino BPO companies specialize in other functions, such as IT, payroll processing, healthcare, and marketing services.
The history of Filipino outsourcing can be traced back to the 1970s when American companies first started hiring Filipino workers to do data entry for them, as the Philippines had a good supply of workers with English proficiency. The Philippines was an excellent choice for outsourcing due to quality talent and a low cost of living, which made it possible for U.S. businesses to offer low wages that workers viewed as good pay.
As time passed, the demand for English-speaking outsourced workers increased. This allowed outsourcing companies to start hiring and training more people for these jobs. The outsourcing industry grew significantly in the 1990s, and the Philippines became a preferred BPO destination in Southeast Asia. By the 2000s, the industry started gaining popularity and multinational companies started outsourcing their IT and customer service operations to the Philippines.
The BPO sector is a now major portion of the Filipino economy, and major outsourcing hubs have been established in the Philippines. Compared to the initial days of outsourcing in the Philippines, advancements in technology have made working with outsourced teams simple. The COVID-19 pandemic allowed companies to experiment with remote workers, so in many ways, a remote worker down the street or around the globe is very similar.
Companies from around the world often negotiate contracts with outsourced teams in the Philippines, with a majority of outsourced work coming from countries including New Zealand, Australia, Europe, and the U.S.
Both startups and established businesses alike outsource work to the Philippines. Google, Facebook, Wells Fargo, Nike, IBM, Coca-Cola, LinkedIn, and many other well-known companies have found long-standing trust, confidence, security, and high-quality Filipino workers when outsourcing to offshore teams, and have built out new outsourced operations there over the years. Some build their own offices and some outsource to BPO companies.
The Philippines offers a uniquely qualified, and highly educated talent pool. In fact, as of 2019, the Philippines’ literacy rate was 98.4%—almost identical to the United State’s rating of 99%, according to UNESCO.
With more than a thousand universities throughout the country, and most of them public, most Filipino citizens have every opportunity to acquire a high level of education, often specializing in a particular area of interest.
Many Filipino students opt to focus on BPO services, with various BPO education centers providing specialized education and training for the next generation of outsourced workers. BPO service centers throughout the entire country, including Metro Manila, Davao, Bacolod, Cebu, Iloilo, and more. These BPO companies are a critical part of the Philippine economy and Philippine government support ensures continued educational opportunities and training in the contact center industry.
Another reason that makes the Philippines an ideal outsourcing destination is the infrastructure in the country. The government has continued to build strong technological infrastructure, which has resulted in a more connected country with state-of-the-art Internet connections and mobile phone networks. This makes it easy for companies, both in the Philippines and abroad, to stay in touch with each other.
There’s a very strong trade association called the IT Business Processing Association of the Philippines (IBPAP) with several more specific sub-associations under it, such as the Animation Council, in which companies such as Disney could outsource work. Other councils include ones for health information management, global in-house contact centers, etc. Their influence has pushed the government to create special incentives and tax breaks for companies that are operating in the BPO sector. This makes outsourcing in the Philippines even more cost-effective for companies compared to outsourcing in other countries.
There are several reasons the Philippines is a top BPO destination, and why foreign companies opt to outsource their work to the Philippines. These include:
The main reason why businesses choose to outsource to the Philippines is because of the low labor costs involved. Because the salaries in the Philippines are 3x to 4x lower than the salaries in Western countries, the overall operating costs are significantly reduced. This makes outsourcing to the Philippines a very cost-effective business model for companies around the globe.
Culturally speaking, the Filipino people value hard work. When in the workplace, employees are celebrated for paying attention to detail, following established processes, and contributing to the overall team. Their coworkers become a work family, and teams succeed because everyone involved works towards their common goals.
Filipino children begin to learn English as a second language before they begin school, and then it is taught formally from a very early age. This means that most Filipinos are very proficient in the English language. They also do not have a strong accent, as compared to offshore locations like India or Singapore.
When you outsource your operations to the Philippines, you have access to a large number of remote workers who work various shifts across the 24/7 rotation. For the employee, different shift availability makes it easier to find the right balance between work and personal life. For you, that means you will have employees available 24/7. This leads to better productivity and higher engagement among employees, as they can manage their time better.
Over the past decades, Filipino workers in general have showcased a reliable track record of being able to learn and mimic specific business processes quickly. With a few SOPs and minimal training, your outsourced Filipino team will be off and running with your BPO processes. This means you gain the flexibility to quickly scale your business needs up or down as needed, expanding or contracting your team based on seasonality, market shifts, or other impacts.
The Philippines is a former colony of Spain, Mexico, and the United States from various points in its history, so the Filipino people have long been immersed in Western media and are heavily influenced by US pop culture. This cultural similarity is a big factor when choosing an outsourced service provider in the Philippines. Filipino workers are already fairly assimilated into Western culture and can pick up on your business, culture, needs, and tasks faster and more effortlessly.
The Filipino government has gone to great lengths to encourage BPO as a large part of its growing economy. As a result, they have enacted legislation to ensure privacy laws and policies are up to international standards. The Philippines’ 2012 Data Privacy Act ensures that the security of privileged information is protected by law. This means companies dealing with healthcare information, educational data, financial information, or any other kind of protected personal information can rest assured that their data will be safeguarded.
In addition to the legal policies that have been adopted, the Filipino government has gone even further to provide its BPO industry with every opportunity for growth. For instance, both public and private high schools and universities offer specialized initiatives that provide students the education and training they’ll need to go straight into outsourced work upon graduation. To further support outsourcing companies, multiple industry-specific outsourcing groups have been established to campaign and work together with government entities, to secure more funding, increase support, and guarantee legal protections for their work. Indeed, outsourcing is a massive, well-supported industry in the Philippines, and businesses that send their work to the Philippines benefit from that support.
For the most accurate estimate of potential costs for outsourcing to the Philippines, you’ll need to chat with an outsourcing expert about the type of work being outsourced, how much work needs to be done, and the size of the team you require. However, average outsourcing costs often range from $500 to $1,500 per month.
Outsourcing business processes to the Philippines is impressively more cost-effective than hiring local workers for most U.S., Canadian, and British businesses—and likely many others, as well.
In fact, according to Payscale.com, the average hourly wage for BPO workers in the Philippines is just 144 Philippine Pesos or about $2.50 USD per hour—this is in comparison to U.S.-based call center representatives, who earn an average of $18.03/hour. Regardless of the specifics of your own outsourcing needs, it’s easy to assume that outsourcing will cut labor costs for your business.
Many different outsourcing services can be performed by partners in the Philippines. For example, contact centers/call centers, IT services, data entry, technical support, accounting, and marketing are all BPOs that are outsourced. The following areas are worth considering.
Call centers are the most common outsourced BPO function. Here, your outsourced team handles inbound calling, outbound calling, chat & email, transcriptions, translating services, back-office duties, and general customer support.
Digital marketing is a major part of most companies’ strategy, and therefore it can be incredibly time-consuming and expensive. Filipino BPO companies offer everything your marketing strategy requires, including lead generation services, social media management, SEO and SEM content creation, graphic and video design work, and even e-commerce store maintenance.
Information technology, software development, website programming, and technical support/help desk services are other BPOs that are frequently outsourced. In the Philippines, there are countless trade and university programs for coding, development, and information systems. A cultural high-level adoption of emerging tech also exists.
Every year, a hundred thousand Filipinos graduate from university with a degree in nursing or another healthcare-related field, however, the wages for nurses to work in a hospital environment are distinctively lower than those working in healthcare informatics. Therefore, the healthcare outsourcing business is very well established. Healthcare services include appointment setting, billing, data processing, transcription, medical coding, etc. — all in HIPAA-compliant settings and systems.
Another area of business process outsourcing that is popular with Filipino service providers is financial management services. Because of the long-standing connection between the Philippines and the United States, many Filipino schools teach US standard accounting and financial management. This makes it an ideal location for the outsourcing of bookkeeping, accounting, forensic auditing, financial statement preparation, and tax services.
In fact, the Philippines Bureau of Internal Revenue is patterned largely after the IRS. This makes things a little easier since US financial professionals will find familiarity.
We’ve covered a lot of benefits of working with offshore teams in the Philippines, including a lot of what makes Filipino teams similar to US domestic teams. So, now let’s take a look at what might come up culturally that you should be ready for.
Non-confrontational Culture: The Filipino culture is very non-confrontational overall. While this makes for a smoother working environment for your outsourced team, it can also create a business situation where a team member says “yes” to every comment or request. The reality of the situation can sometimes be that they’re holding back information to avoid conflict. For example, if you ask your outsourced designer “Will my project be complete by Wednesday?” she may respond with “Yes, of course,” even though she knows there are still about 16 hours of work left to do, and the project may not be completed until Thursday.
Family Comes First: Here in the US, employees need a strong work-life balance to feel content and successful. This is also true in the Philippines, however, the concept of family extends much further than the immediate core family members considered by US standards. In Filipino culture, if your sister-in-law’s dog is sick, you may leave work to go help her take the dog to the vet—and from a business perspective, this would be a perfectly acceptable reason for calling out.
Preference for Predictable Salaries: Regarding compensation, Filipino workers tend to want more guaranteed stability. More often than not, Filipino workers will be averse to performance-based compensation, wanting a strong base salary that they can rely on instead. In addition to base compensation, workers tend to lean into team performance goals over individual ones. Regarding rewards for hitting those goals, it doesn’t always have to be monetary. Team gatherings such as a pizza party or “lunch out with the boss” are well-received, and reinforce the work-family atmosphere at the same time.
Expanded Employee Benefits: Finally, there are cultural considerations around employee benefits. While US employers typically cover a portion of an employee’s benefits, Filipino employers often cover the entire cost of health insurance for the employee and their family. This is a huge driving factor in recruitment, and employees hold an employer’s ability to help care for their family in high regard.
Sometimes companies come to us that have tried other outsourcing providers and are looking for a better one. We ask them what went wrong with our competitor, and the list of reasons is often similar. Here are some mistakes to avoid when selecting an outsourcing partner.
They are:
Now that we’ve covered the major benefits and considerations to think about when outsourcing to the Philippines, let’s look at the best practices used in selecting the right outsourcing partner.
With multiple facilities in different cities across the Philippines (and around the world, for that matter), finding the right partner for your industry, workflow, and budget can be a big job.
TDS Global Solutions makes this process easy. As one of the first organizations to have started working in the Philippines BPO industry, our decades of experience in this unique marketplace helps us easily match your business with the center that best suits your needs.
Our team will help you decide where to outsource your BPO tasks, and which partners offer the proper skills and price point. We’ll provide guidance during onboarding and task handoff to make sure your outsourcing experience is as smooth as possible. We can even help you evaluate facilities outside our network using our contact center assessment tools and consulting services.
All of this is available to our partners with little or no fees, as our outsourcing advisory services are generally paid through the referral agreements we have with partners you select.
Getting your outsourcing efforts started is easy when you partner with our expert team. Fill out our contact form or call us at +1-888-788-4441. We’ll ask you a few questions about your needs, wants, and anticipated future growth and help you screen high-quality call centers or BPO service providers within the TDSGS family.
Sometimes, business owners know exactly the services and processes they want. If that’s you, bring that information to your initial call. But more often, you’ll know you need some call center and BPO services but need help navigating the complicated world of outsourcing and offshoring. We’ll start with your goals and identify services that can help you save time, money, and headaches.
The Philippines is an excellent option for outsourcing business functions because of its long history of success with renowned companies, a wide breadth of skilled workers who are knowledgeable in many business functions, the ease of managing teams, and significant cost savings over in-house or onshore outsourced employees.
There are many opportunities for outsourcing to the Philippines due to a strong BPO trade association and the government’s subsequent investment in the industry through incentives and educational prioritization of BPO-related skills. But there are also both cultural advantages and considerations the Filipino workforce brings, including strong adoption of Western culture and family-centered priorities.
This is why it’s essential to work with an expert in Filipino outsourcing to identify the best partner for your business needs. TDSGS can help your organization find the right Philippines outsourcing partner with a consultative approach to identifying contact centers and BPO service providers that align with your company’s goals and growth potential. Let us know if you’re looking for a partner by filling out our contact form. We look forward to serving you!
