Philippine Outsourcing

With the global BPO industry worth around USD 255 billion, the Philippine outsourcing industry is certainly looking to be a highly profitable niche. The Philippine outsourcing industry is primarily composed of call centers, BPOs (business process outsourcing), and KPOs (knowledge process outsourcing) providers, and currently holds about the second largest chunk of the outsourcing market behind India.

The Philippine outsourcing industry is growing at a fast rate, with more and more companies opting to either set up their own call centers and satellite offices to handle non-core processes or work with BPO service provider. This opens up not only a great source of income for the country but also an industry that can reduce unemployment, providing jobs especially to the newly graduated.

The country is a favorable destination for companies looking to outsource their business and knowledge-based processes for several reasons. First, the Philippine outsourcing industry can tap into an annual turnout of 400,000 English proficient graduates so there really won’t be a lack in potential manpower. Second, the Philippine government maintains encouraging tax, investment and labor policies. Also, as a developing country, the Philippines’ labor, telecommunication, and real estate cost comparatively lower than other countries; companies looking to outsource will appreciate the cost effective solution this outsourcing destination provides. Also, the Philippine government gives an export tax and fees exemptions to companies that open in special IT parks and Special Economic Zones (SEZs).

The Philippine outsourcing industry also has another ace up its sleeve: the country has a natural affinity for Western cultures. India, on the other hand, works on its strengths, including sheer numbers and a specialization in IT services, specifically software development. A couple of downsides to India’s recent development are that it has become relatively more expensive and specializing in IT has left other areas in the outsourcing market like customer service. The Philippines and other developing countries can capitalize on filling the gap.

A rising branch in the outsourcing market, KPO, is a good place to start. The Philippine outsourcing industry can take advantage of the country’s experienced and highly skilled talent pool in accounting, legal, medical, and other fields. Since there is a growing demand for outsourced talent that specialize in research and development, accounting and bookkeeping, law transcription, animation, web content and SEO, and data encoding, among other things. At any rate, the Philippine outsourcing industry is primed to take a bigger part of the BPO and KPO markets, though it will need to improve on a few things to stay competitive.

Proper and continuous training in English proficiency and knowledge based skills would be important to the Philippine outsourcing industry in the coming years, as well as strict recruitment policies. Also, outsourcing companies should keep an eye on their attrition rates as well. Companies can lose money – in training and recruitment – from high attrition rates so they would do well to keep their employees happy.

All things considered, the Philippines outsourcing industry can be very competitive but only if it keeps up its low cost but highly skilled workforce, quality of service, and if it continues to present friendly policies for foreign investment.