2025 Philippines outsourcing industry report

Outsourcing to the Philippines

Remote and hybrid work

By 2025, most outsourcing companies are expected to offer flexible work arrangements, allowing them to attract global talent while maintaining a strong local workforce. The ability to provide remote outsourcing solutions gives Philippine companies a competitive edge, particularly in sectors like software development, customer service and technical support.

This shift has also prompted adjustments in government regulations. Incentives previously tied to traditional office setups are now being modernized to accommodate remote and hybrid work models, reflecting a commitment to supporting the growth and evolution of the outsourcing industry in the Philippines.

AI and automation

The rapid evolution of technology is driving significant changes in the BPO sector, with artificial intelligence (AI) playing an increasingly important role. The global market for AI in the BPO industry is projected to reach $3.5 billion by 2026, as providers seek to leverage AI to reduce costs, increase efficiencies, and enhance customer experiences.

While automation tools are streamlining processes and reducing the need for human intervention in repetitive tasks, they are also creating a demand for a new breed of highly skilled talent. BPOs now require more employees with the creative capacity and business acumen to manage automation and handle complex inquiries that demand a human touch.

The Philippines is championing the development of an Association of Southeast Asian Nations (ASEAN) AI regulatory framework to establish regional guidelines for ethical and responsible AI use. This framework will address crucial aspects like data privacy and cross-border collaboration, ensuring that Southeast Asia can effectively navigate the complexities of AI adoption.

Cybersecurity and infrastructure

The Philippine BPO industry is not only recognized for its highly skilled workforce and cost-effectiveness, but also for its unwavering commitment to cybersecurity. Leading organizations like the Contact Center Association of the Philippines (CCAP) are championing initiatives to safeguard the industry and build digital trust.

Here’s how the Philippines is ensuring client data remains secure:

• Proactive approach: the CCAP is leading the charge by urging BPO companies to place cybersecurity at the core of their operations. They are actively developing innovative solutions and investing in cutting-edge technologies to combat cyber threats.
• Government support: the Philippine government is committed to strengthening the nation’s cybersecurity infrastructure. Their National Cyber Security Plan includes establishing a network of Computer Emergency Response Teams (CERTs), a Cybersecurity Intelligence Fusion Center and an ICT Academy to cultivate a skilled cybersecurity workforce.
• Industry collaboration: CCAP has implemented a system for its members to share information and best practices related to online fraud prevention. This collaborative approach ensures that the entire industry remains vigilant and informed about emerging threats.

Regional growth

Knowledge process outsourcing

The evolution of outsourcing is best evidenced by the emergence of knowledge process outsourcing (KPO), where clients seek offshore support from individuals that typically have degrees or expertise in specialist fields. With a global market value of $54 billion in 2020, the sector is expected to generate $125 billion in revenue by 2025 as jobs become less about business process transaction-based tasks and more focussed towards knowledge-based work such as market research, legal processing, medical transcribing, fraud analytics and web development.

The Philippines is embracing this opportunity, with IBPAP projecting a rise in the number of mid- and high-skilled jobs, as well as those that require specialized expertise. The country’s high English literacy and proficiency rates have long been attractive to onshore clients and will prove even more so as they increasingly expand their search for highly skilled talents. One example is its reputation for digital media, with the archipelago having established itself as a leading outsourcing destination for content production, editing, proofreading, publishing and digital marketing.

Customer experience

With studies revealing that 86% of consumers are willing to pay more for a great experience, it is no surprise that Forbes has found that “improving the customer experience” is the second most cited reason for outsourcing. Where outsourcing was once primarily about cost reduction, the sector is increasingly focused on meeting high quality expectations of customers and perfecting the omnichannel customer service experience. The customer experience outsourcing industry is due to grow by almost a third by 2030 and providers in the Philippines will be investing heavily in ensuring their staff can positively impact their clients’ brands, retain the trust of their customers and, crucially, help drive profitability.

Corporate social responsibility

It is no longer enough for organizations to be solely focused on the economic consequences of their actions. The concept of Corporate Social Responsibility (CSR) has gained traction in recent years, with more and more businesses realizing they not only have a responsibility to their shareholders and clients but the wellbeing of the society around them. This is especially important for outsourcing providers that operate in developing economies such as the Philippines. From investing in education initiatives and reducing their environmental impact to providing disaster support in times of crisis, one can expect more outsourcing providers in the Philippines to lead the way with CSR initiatives and inspire their onshore clients to do the same.

Conclusion

As the focus moves to providing more knowledge-based services over traditional low-skill tasks, the Philippines outsourcing sector is perfectly positioned to meet the challenge. Specifically, as a Probe Group business, MicroSourcing has the diverse capabilities to offer highly skilled talent across a wide range of industries and roles. To discuss how MicroSourcing could add value to your business, click here to arrange a consultation.