Why Outsourcing To The Philippines Is Booming
Whilst there’s a genuine need to create more jobs at home, the reality in today’s global economic marketplace is that a business must contain it’s costs in order to deliver products and services at a price the market demands.
This need to streamline internal costs has led to an enormous growth in Business Process Outsourcing (BPO), particularly OFFSHORING, the term used to describe the outsourcing of BPO functions to offshore centers.
This is most evident in centers such as the Philippnes where the outsourcing industry is booming…
- The (BPO) industry generated $7.2 Billion in revenues in 2010 and is projected to grow by 15-20% during 2011.
- The 3 largest private employers in the Philippines – all with 20,000+ employees – are within the BPO sector.
- An estimated 500,000 people are already employed in outsourcing-related roles, a figure which is projected to exceed 1 million by the end of 2012.
- Companies such as Citibank, AIG, HSBC, Shell, Disney, Pixar and H&R Block are amongst the many using BPO facilities in the Philippines.
Manila – The Outsourcing Capital of The World
Manila is the main BPO center in the Philippines. It has been described as the “outsourcing capital of the world” because of the concentration of outsourcing functions being performed in ONE city.
The infrastructure has developed enormously in recent years with the main locations of outsourcing operations – Makati, Ortigas, and Alabang – providing world class infrastructure and recreation facilities as highlighted above.
Manila is not the only outsourcing center in the Philippines as BPO facilities (mainly call centers) can be found in many other centers. Their attraction: lower labor costs than Manila.
Much More Than Call Center Services
The BPO industry in the Philippines initially prospered on the back of low cost call centers.
However, the industry has evolved and today’s call centers are more like business centers with voice-based requirements often representing only 50% of what the center does.
Today, it is not unusual to walk into a call center and see 20+ staff doing graphic design work with not a telephone in sight. This is a very different image of a call center to what most people know!
The applications Philippines-based BPO service providers handle are very diverse, including:
- MTV viideo production
- the animated intros you see on many of the new movie releases featured on the Internet
- legal research
- engineering design
- transaction and form processing
- graphic design
- … and much more
The Local Workforce
The local workforce has been the main driver behind the enormous growth of the outsourcing sector in the Philippines …
- With higher education a priority, the literacy rate in the country is 94.6%. English is taught in all schools, making the Philippines one of the world’s largest English-speaking countries because of these wage differentials.
- Every year, there are some 350,000 graduates enriching the professional pool.
- Wages are typically less than a fifth of those in most western countries. Foreign companies that are now outsourcing to the Philippines estimate a minimum 30% to 40% business cost savings due to these labor savings.
- Whilst the big attraction has been the local workforce’s fluency in English, there are now many service providers which specialize in other languages. This has been made possible by the return of many Overseas Foreign Workers from tenures in Europe and other parts of the world during which they mastered the language of the host country.
If you want to explore offshore outsourcing options in the Philippines, then you may like to consider our Offshoring CONNECT service!