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July 2017 | Outsourcing Blog | BPO Industry Updates and Articles

In 1992, the first contact center was built in the Philippines, and the special economic zone was established in 1995 to encourage foreign companies to base their customer support centers in the country. Since then, many call centers and outsourcing companies have started operations in the country and flourished.

Today, the Philippines is hailed as one of the top BPO destinations in the world, ranking 2nd after India. The BPO industry is growing at a rate of 15 to 18%. At this rate, the BPO sector will soon become the biggest GDP contributor.

Benefits of outsourcing to the Philippines

The success of the BPO industry is owed to the many advantages that the dynamic country offers its investors. Let's look at the benefits of partnering up with an outsourcing company in the Philippines.

Cost Efficiency

By partnering up with an outsourcing company, you can save approximately 60% to 80% in operational costs. This cost efficiency can generally be attributed to the low cost of living in the Philippines.

According to a consumer price index (CPI), the Philippines is a low-cost country compared to most western and Asian countries such as the US, UK, Australia, Singapore, and China.

In the Philippines, the salary of fresh graduates only amounts to a fraction of what newly graduated employees in the West would receive. The hourly salary of a regular employee in the US or Europe may be the daily salary of a Filipino professional.

Cultural Compatibility

The Philippines was colonized by Spain, and then by the Americans, followed by the Japanese. The impact of the country's colonization history is still evident in today's generation. Filipinos easily adapt to foreign culture as the English language and Western culture are deeply entrenched in its citizens' everyday lives.

Filipino culture today is greatly influenced by past colonizers and popular television shows, music, and theater from the West. In addition, hospitality is an important part of Filipino culture and tradition, making the Filipinos easy to work and socialize with.

English Proficiency

Seventy percent of the Philippine population are deemed fluent in English. Most children are taught the language even before they start schooling, and it's further reinforced when they enter pre-school.

English is the medium of instruction in schools and the primary language used in business. In the 6th edition of EF's English Proficiency Index, the Philippines ranks 13th out of 72 countries in terms of English proficiency. The same English Proficiency Index also revealed that the Philippines ranks as the 3rd (out of 19) country in Asia that’s best in English, after Singapore and Malaysia.

Highly Skilled and Available Workforce

The Philippines boasts a large and young population that's growing faster than the retired workforce and dependent children, with a median age of 23 years old. This results in an abundant supply of manpower and highly educated workforce with a literacy rate of 97.5%.

Every year, colleges and universities in the Philippines produce more than 500,000 graduates—contributing to the pool of qualified and skilled workers. According to experts, the country will continue to enjoy the advantages that this young and talented labor force brings for the coming years.

Economic Growth

The Philippines is enjoying a robust economy, as Filipino people have stronger purchasing power according to the 2017 KPMG Philippine Consumer Market Report. This goes together with the increase of remittances from Overseas Filipino Workers (OFW) and the BPO sector both contributed to the country's GDP growth. Foreign investors can benefit from an emerging market in a business environment that’s ideal for growth and scalability.

The economy is growing despite certain issues such as poverty afflicting the country. The country has a strong consumer market for goods and services that attract both local and foreign investors. This large market is fueling the growth of the Philippine economy.

Track Record, Scale, and Maturity of the BPO Industry

Business process outsourcing started in the Philippines way back in 1992. Its history spans 25 years, with the BPO industry revenue growth increasing ten-fold since 2004. More importantly, the current global market share is at 10%, which has increased three times since 2004. By 2022, the global market share is projected at a whopping 15%.

Accenture, People Support, Convergys, and Sykes Asia were the first multinational companies to hold operations in the Philippines. They have since multiplied their operation sites and offices to include other cities in the country, such as Cebu, Davao, Bacolod, and more. Indeed, the Philippines has a track record of providing quality business process services at lower costs.

Government Support

The BPO sector is one of the top contributors to economic growth in the country, which is why the local government strongly supports it with incentives and regulations that can encourage companies to choose the Philippines as its offshore location.

Such incentive includes the establishment of special economic zones (SEZ) and the Philippine Economic Zone Authority (PEZA), and the fiscal and non-fiscal benefits like the 4-year and 8-year income tax holiday.

Furthermore, Department of Information and Communications Technology (DICT) Secretary, Rodolfo Salalima, confirmed that the local government would continue to support the BPO sector through the Philippine lT-BPM Roadmap 2022, which has a goal of reaching $40 billion in revenues and 1.8 million more jobs for Filipinos by 2022.

Fringe Benefits

Your business can opt for a "follow the sun" workflow so that your onshore operation begins when your outsourcing company ends theirs. This ensures an onshore-offshore delivery cycle for faster production and a significant reduction in your process development duration.

Wrapping It Up

Offshore outsourcing can be a great strategic move for any company and the Philippines is one of the best destinations for this business endeavor. The Philippines offer companies the opportunity to monumentally grow your business at much lower costs. It has developed through the years to become one of the top outsourcing destinations in the world. It boasts of both natural resources and talented workforce that you can leverage for the success of your business.

Whether you need contact center solutions, IT support, website development, or creative services outsourced, you won’t go wrong in choosing MicroSourcing as your offshore operations partner in the Philippines.

The Philippines is named as one of the top business process outsourcing (BPO) hubs in the world and has long surpassed India as a global leader in the call center sub-sector, with more than 1.2 million Filipinos employed by BPO and IT industries.

In 2015, it generated $22 billion in revenues with 17th annual growth, and was projected to overtake Overseas Filipino Worker (OFW) remittances by 2017 should the current growth rates continue, according to the Bangko Sentral ng Pilipinas (BSP).

Being the largest domestic industry in the country, BPO is seen as a key factor in GDP growth. According to a forecast reported by the Business Mirror, the Philippines and Indonesia will be leading the continuing growth of the ASEAN economies until 2019.

Last year, nine Philippine cities have made it to the Tholons 2016 Top 100 Outsourcing Destinations, with Manila retaining its 2nd ranking next to Bangalore, India. Other key BPO cities that made it to the list are Cebu City (7th), Davao City (66th), Sta. Rosa (81st), Bacolod (85th), Iloilo (90th), Dumaguete City (93rd), Baguio City (94th), and Metro Clark (97th).

Why choose the Philippines as your outsourcing partner

Outsourcing companies in the Philippines have a competitive advantage against other foreign countries in terms of cost efficiency, high literacy rate, English fluency, cultural harmony, and business continuity among others.

Young, intensive labor force. The country's labor market is one of its most significant competitive advantages, not just in BPO, but in various sectors as well.

The Philippines has a rapidly expanding worker pool and the labor costs continue to be competitive. According to the Oxford Business Group's 2017 report, the country produces around 550,000 college graduates annually.

Furthermore, labor costs in the country are lower than China, Mexico, and Malaysia. Meanwhile, having an education system closely aligned with that of the US, and English used as the medium of instruction, Filipino graduates are not just more likely to match, but are well-positioned to work for US-based companies.

Government incentives for investors. As early as 2002, the Philippine government has recognized the value of developing its BPO sector, allowing office buildings to be registered as "ecozones" and a number of generous investor incentives that remain in place today.

This includes tax holidays, corporate income tax exemptions that can be extended from four years to six or eight, and a 5% tax on gross income in lieu of national and local taxes that can be elected following the original tax holiday's expiration.

Other benefits are also directed towards skills and training, with vocational training schools receiving training grants and some BPO companies may be granted exception on local taxes and permits, and may receive value-added tax exemptions on inputs.

Qualities to look for in your Filipino BPO partner

Reputable experience. Find out the years of experience in the industry, past clients, and full compliance with all regulatory standards. You are entrusting a valuable part of your business to a third party that must have an excellent track record in withstanding market volatility and crisis management.

Expertise and specialization. Having highly qualified and highly capable personnel plays a crucial role in ensuring quality of service and boosting productivity.

Technology. State-of-the-art amenities and equipment that meet with industry standards will ensure that your operations are conducted seamlessly with minimal to no disruptions. This is also vital in faster and more accurately delivered services that will inspire confidence from your customers.

Effective, precise communication. Aside from language fluency, it's also important that you are able to communicate effectively without problems. Knowledge in your specific industry jargon is also a great help.

Commitment. Your BPO partner is not comprised of automated machines. Look for a strongly driven and committed partner that is an extension of your in-house company family.

4 Benefits of Outsourcing Your Business Processes

by: Mary Christine Galang

Wednesday, July 26, 2017 | Comments (0)

Category: Outsourcing Research / Trends

The decision to outsource your business process balances the needs and the risks that ultimately results in beneficial, sustainable growth.

Outsourcing has long proven to be a tremendous success for companies—small, medium, or large—across various industries. Innovations in technology and other business processes have further improved outsourcing as a whole.

Many inevitably turn to outsourcing to cut costs, perhaps the primary reason why it evolved to be an entire industry of its own. But outsourcing is more than just a cost-cutting measure. In the end, it must be wisely utilized as a competitive strategy.

Outsourcing benefits

Creating real sustained value and through maximizing the strategic benefits of outsourcing is the key. But before we arrive at that, let us first identify what are these benefits.

1. Building strong partnerships. Specifically, those that yield value and reduce risk. As with many things, outsourcing carries a potential risk when done poorly. A Forbes study suggested that companies that fail to receive a 25% return on investment should rethink and fix its current programs before going further. Choosing to have a third-party provider means shared focus, and it means exerting control is necessary. Your partnership must work not just for you but with you. Treat your external relations as a strategic extension of your domestic operations. That way, you will be fully equipped when unforeseen circumstances hit the market and limit its effect to your business.

2. Gaining access to global talent. Capability-sourcing is one of the smartest ways to frame your outsourcing needs. Having people from various backgrounds and offering a multitude of skill sets means applying their expertise to your business processes and increasing your company’s ability to grow.

3. Expanding to the local market. Establish your presence and create a network with local entities. Being proactive in seizing these opportunities allow you operate in large-scale operations in the local market ahead of your competitors. Furthermore, it is critical to boosting innovation in your business processes.

4. Disrupting traditional business models. Outsourcing allows you to focus on developing your core competencies and allocate non-core, often labor-intensive operations to your offshore partner. This will boost productivity, which is essential especially to consumer products companies, and at the end, makes for a flexible operation.

Choosing to outsource your medical encoding can significantly help with the bulk of work that this job entails, which requires efficiency and being up-to-date with the industry regulations, among other things.

It is, without a doubt, a highly important job. A hiccup in the process can result in delays in billing, claims, and reimbursements. The financial and technical aspects can greatly affect the patients’ well-being in many ways we might not anticipate.

In addition, billing and coding software have become integral to various kinds of operations and fields of profession. Depending on your needs and preferences, outsourcing can readily provide use of the latest technologies available.

Although in many smaller practices, both medical billing and coding are handled by one employee; the nuances between the two might overlap drastically as the workload gets heavier and file organization harder to manage.

Outsourcing Your Medical Encoding

If you are ready to outsource your medical encoding, consider these four questions:

1. What should I look for in an offshore medical encoding provider?

As a growing industry, there are a lot of companies that offer medical encoding and/or billing. Finding one that will not only fit your needs but will also help draw and optimize revenue for you is important. Secure this information:

  • Do a research (or consult) on companies with an excellent compliance record, especially when it comes to industry regulations.
  • Reputation and length in the business
  • Learn about their past and present clients. Ask for reference.
  • Availability of professional liability insurance.
  • Ask for a written contract of their provided services and a written compliance plan.

2. What are the qualifications of their employees?

A professional medical coder must have an extensive knowledge of anatomy and medical terminology and thoroughly familiarized with the codebook resources CPT®, HCPCS Level II, and ICD-10-CM and their coding systems. They must obtain the Certified Professional Coder credential.

The company must conduct regular seminars, training, and ongoing education to ensure their professional coders are up-to-date with the latest practices, as well as the new CPT and HCPCS codes.

3. How much does outsourcing medical coding services cost?

One of the driving factors of seeking third-party services in any field is to cut on costs. Medical coding outsourcing companies supply you the software needed, like Encoder Pro, TruCode, and FLASH CODE.

You will save on training fees and traditional employee benefits as well. The coding company ensures that their staff is highly trained and efficient as they take on jobs.

It is essential to find out about the company's start-up fee. You might be outsourcing the operation, but ultimately, you will still be responsible for refunds and claims.

4. Is the company compliant with regulations?

In the U.S. in particular, an HIPAA-compliant company is crucial in choosing your medical coding and billing company. This ensures that patients' rights are protected, especially when it comes to medical information. Coding (and billing as well) is not just a form of data entry. Safeguarding patient confidentiality is the cornerstone of this profession.

5 Commonly Outsourced IT Functions

by: Mary Christine Galang

Thursday, July 20, 2017 | Comments (0)

Category: Outsourcing Research / Trends

The IT outsourcing market has seen a continuous rise and remains to be pervasive among North American companies. Many companies, big or small, from various industries, increasingly rely on IT vendors for a multitude of tasks.

Over the years, companies moved from outsourcing basic tech support services to more complex and advanced operations. IT outsourcing firms have eventually expanded their services to include wireless support, network architecture, email marketing and management, e-commerce consultation, virus protection, and data backup and recovery.

Whatever industry you’re in and however big your company is, many IT functions are inevitable in order to keep your business operations going and secured.

Commonly Outsourced IT Functions

Below are the five most commonly outsourced IT functions:

  1. Email management. This sounds easier than done. But not only does this take care of managing a high-volume stream of emails, an IT team also offers protection against spam, adware, and common digital attacks. 
  2. In-office support. Outsourcing to an IT vendor will ensure that routine performance check-ups, regular maintenance, repairs, and an immediate support for connection, hardware, software, and network devices is available.
  3. Managed hosting. Similar to program leasing, server or application hosting from an IT outsourcing company allows you to access and use a shared server that you can pay for in order to exclusively use a protected server of your own.
  4. Data center outsourcing. From data collection to data storage and backup, third-party IT providers also offer data processing and resources that companies that don’t have their own IT department are equipped with. These include maintenance, updates, space, and of course, a trained staff.
  5. User training. Aside from technical functions, many IT companies also outsource their experts to other companies to conduct training and courses not just in the business sector but also in an educational capacity.

How SMEs Can Benefit from Outsourcing

by: Mary Christine Galang

Wednesday, July 19, 2017 | Comments (0)

Category: Outsourcing Research / Trends

More and more small and medium enterprises (SMEs) are tapping outsourcing companies for their essential functions. The Philippines’ Department of Trade and Industry projected the Information Technology-Business Process Outsourcing (IT-BPO) industry to worth $250 billion by 2022. A 2017 report identifies economics, geopolitics, and globalization as the three major global trends that shaped the BPO phenomenon in Asian countries. This is largely due to the increasingly fierce competition in global markets, resulting in a greater pressure on companies to efficiently run operations in a cost-effective and strategic manner.

This can put SMEs at a disadvantage for the following reasons:

  • The DIY route can get overwhelming. A lot of SME owners tend to wear multiple hats, covering various time-consuming tasks (often operational).
  • A smaller business likely means a limited skillset available. This can hinder business growth and development. Matching a specific job to the most suitable individual maximizes their talent to benefit the business.
  • Time mismanagement. An Entrepreneur article listed accounting as the most time-consuming task, followed by banking, artwork/design, social media, and copy editing. These aren’t considered menial jobs, with some becoming recognized as a specialty trade. It is not a foreign concept that poorly executed tasks due to time constraints often lead to errors.

Outsourcing benefits for SMEs

Streamlining business processes and functions through outsourcing greatly benefits SMEs and addresses the potentially problematic situations we’ve listed above.

  • Lower overhead costs. Outsourcing allows SMEs to control their capital costs, avoiding large expenditures and direct the money instead to revenue-producing operations. Labor costs are reduced as well, and SMEs have the advantage of hiring professionals for an agreed-upon period of time.
  • Scale your business. A good example is managed operations. This is a type of offshore process wherein businesses can exercise optimal control of costs, strategic control of operations, increase the level of performance and service quality, and focus on long-term growth with the capability to meet larger operational demands.
  • Increase efficiency. By outsourcing non-core but important operational tasks, SMEs can focus on the core competencies of the business. This also reduces the risk for error often attributed to lack of training or mismatch of employee skill set.
  • Higher retention rates. This is an overlooked aspect of a financially thriving business. SMEs that outsource will ensure their in-house staff can play to their strengths, maximize their talent, work passionately on what they love doing, and enjoy the benefits.
  • Outsourcing is where the sales are. In a Wall Street Journal report, companies grow much faster outside the U.S. than at home. It is a comparative advantage: while it is true that some U.S. companies’ production happens overseas due to lower labor costs, U.S. consumers, in turn, get cheaper prices.


Why Businesses Choose to Outsource IT

by: Mary Christine Galang

Tuesday, July 18, 2017 | Comments (0)

Category: Outsourcing Research / Trends

An IT infrastructure is one of the most vital support functions in a business. As your company grows, so does your need for a highly secured, maintained, and regularly updated IT support. This ensures that your business operates efficiently and effectively, and at the same time keeping your and your clients’ information safe from outside party.

However, for small- and medium-sized enterprises (SMEs), the cost of running an entire IT department can be daunting. This is why in the last few years, many businesses, including SMEs, have begun to outsource their IT functions to third-party providers.

In fact, according to the International Organization for Standardization (ISO), as much as 60% of the IT functions are being outsourced and accounts for as much as 10.2% of the average budget allocated for IT outsourcing alone.

There are numerous benefits to outsourcing that it has become an entire industry on its own. In some countries like the Philippines, it is one of the biggest and most dynamic economy drivers, with IT (and BPO or business process outsourcing) as the primary sector and second largest income source of the country.

Benefits of Outsourcing IT Functions

We listed down some of the most common reasons businesses opt to outsource IT:

  • Reduced costs. Outsourcing IT functions cuts spending by as much as 20 to 40%. At the very least, both capital and operational costs are more predictable when you outsource it rather than setting up your own IT support. A Gartner study concludes that businesses with less than 300 employees have seen significant savings on email management by 80 percent. Not only do you save on having to invest on (and eventually update) equipment, your business operations are also more time-efficient.
  • Increased flexibility. Companies that rapidly grow and/or in transition can extremely benefit from outsourcing IT. It enables them to scale up or down when they need to in order to accommodate changes in their system faster than a traditional hiring set-up.
  • More focus on core processes. If you are not running a tech company, chances are, IT is not one of your core competencies. But as mentioned, it is a major support function where many, if not all, of your operations rely on. This undoubtedly demands management and focus that might cause you to struggle in terms of time and personnel. With outsourcing, IT tasks and functions will be handled and managed professionally at all times, as you focus on developing your business and honing your competitive advantage.
  • Access to resources. Outsourced IT companies employ industry experts and provide the latest in technology. In addition to technical support, you also have the advantage of having a reliable team that can advise you on the best technology you can adapt for your business. Third-party IT vendors also ensure continuity of support at any given time. Your systems are routinely maintained and updated to keep up with industry requirements.
  • Reduce risks. IT outsourcing providers ensure that your company is well-protected from malicious parties and malware attacks. Not only do you have a fortified defense, you also reduce the risk of data loss with a highly secure backup and recovery system. Downtime disruptions are minimized, and you are immediately provided support in case of any network problems. 
  • Boost employee morale. Some companies do not realize that they run the risk of burning out their employees by assigning them multiple tasks that they may lack the necessary skills to adequately perform, especially tech-heavy tasks that require precise knowledge and skillset. Outsourcing these functions will allow them to focus and excel in what they’re good at.

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