What is Outsourcing?
The Philippine outsourcing industry is growing rapidly as the Philippines steadily climbs the list of the largest outsourcing destinations. Many companies look at India as the obvious choice; but with the rapidly increasing salaries in India and the retention problems BPO companies have, many are realizing the benefits of choosing to outsource to the Philippines. Here's why:
Cultural Compatibility
Unlike India and China, the Philippines has a culture that is very compatible with Western cultures. After being a Spanish colony, the Philippines was governed by the United States from 1899 to 1946; the after effects are still very evident today. Television and movie theaters are almost fully dedicated to American productions that are shown in English without subtitles. English is the primary language for business and education in the Philippines. Although the official language is Filipino, the Philippine government has considered changing the official language to English due to its widespread use.
Low Costs
The Philippines is a very low-cost country compared to other Southeast Asian countries. Salaries in the Philippines are a fraction of those in the Western world, with the daily minimum wage set at about $8 per day. Newly graduated employees with college degrees from reputable schools can be hired at about $300 per month. These low costs also apply to all other business expenses such as office rental, utilities, supplies, and third party services.
One thing that is more expensive in the Philippines is its telecommunications. Internet infrastructure is constantly being upgraded as the government realizes the need to invest in sustaining current BPO developments. However, the connections in the Philippines are still very slow compared to countries like Japan and South Korea. The high price on a good Internet connection means that savings on labor and operational costs can sometimes be countered by an increase in telecom costs.
Philippine outsourcing is always going to be very low compared to prices in the US and Europe. You can expect to operate an offshore team at about 30-40% of the costs of a domestic team. For more pricing details, read our pricing section.
Highly Skilled and Available Workforce
The Philippines has a very high literacy rate of about 94%, with basic education made available to virtually the entire population. The University of the Philippines, Ateneo de Manila University, De La Salle University, and the University of Santo Tomas are reputable universities delivering graduates who occupy top positions internationally. Filipinos are creative and expressive people by nature and many of them choose courses like creative design, multimedia arts, freehand drawing, and animation. There are many schools and colleges that provide excellent education and training in these creative fields.
Because of its historically weak local economy, the Philippines has always had a hard time providing jobs to the hundreds of thousands entering the workforce each year; causing a significant portion to migrate overseas. The Philippines owes its rapidly growing BPO industry for providing local opportunities to workers that would otherwise have to leave their homeland. For these reasons, BPO firms are having little trouble finding highly skilled people for their clients. This is in stark contrast with India, where finding and especially keeping employees is a serious problem.
Economic Growth & Stability
One of the things that kept the Philippines from developing fully in the past was political instability. Even after ousting the dictator, Marcos, there have been several coup attempts that have prevented foreign investors from seriously considering the Philippines. As a result, these investors chose different destinations like Thailand and South Korea; countries that grew as the Philippines stood still. This situation has changed as foreign investors rediscover the Philippines.
With the current president, Gloria Macapagal-Arroyo, serving her second term, the Philippines has been stable for more than a decade. The current government still has a lot of work to do as problems like poverty, corruption, bureaucracy, and the gap between rich and poor loom. These have served to further magnify the importance of the Philippine outsourcing industry with the government consistently supplementing the emergence of BPO operations. They have set up special economic zones and established a Philippine Economic Zone Authority to promote these kinds of investments by granting fiscal and non-fiscal incentives. Salary levels are rising and a middle class is emerging. These positive signs become more and more apparent when you look at not just Metro Manila but also other cities like Cebu, Clark, Pampanga, Baguio, and Davao where development and real estate projects seem to be around every corner.
As the Philippines uplifts itself, it has gained a new reputation as the preferred BPO destination, a source of highly skilled labor, and home to some of the warmest and friendliest people in Southeast Asia.
If you have any questions about outsourcing to the Philippines, or you want to get the ball rolling, contact us. You are also more than welcome to visit our headquarters.
