7 reasons for outsourcing to the Philippines

Gary Culverhouse
Gary Culverhouse
    6 minute read

Managing a business can be a tough job; having to control costs without compromising quality is a constant. Businesses are always looking for strategies to help find the ideal balance.

To achieve this, many hire quality employees in different parts of the world in specific labour markets that offer highly skilled, well-educated workers without sacrificing quality. This is known as outsourcing or offshoring. Why engage in outsourcing? To hire quality employees in lower cost economies to leverage these cost efficiencies. 

The Philippines is one of the fastest-growing economies in Southeast Asia with companies all over the world viewing the country to be one of the best outsourcing locations. In the Philippines, the outsourcing industry is worth AU $38.7 billion and anticipated to grow 6% in 2022, and is also responsible for employing over 1.2 million people. In this blog we explore seven reasons why.

1. Time difference is not an issue

Filipino employees are willing to work shifts even if it means working at night, on holidays, and different timezones to accommodate clients regardless of where they are located in the world. In Australia, the Philippines actually has the same time zone as Perth and is two hours behind Brisbane, Sydney and Melbourne. Flexible schedules also allow for increased operating hours, particularly in areas like customer service. Need a 24/7 contact centre or interested in having part of your team or certain team members work opposite hours to your onshore team? Filipinos are happy to help.

2. English language proficiency

Education First released their 2021 English Proficiency Index (EPI) scores for 112 countries around the world, and ranks the Philippines as 592 out of 700. For context, the highest rating country is the Netherlands, garnering a score of 663. The Philippine’s English competency is ranked 18th out of 122 countries and is ranked second only to Singapore in Asia, which garnered a score of 635. The EPI study is designed to quantify global workers' English competency in the workplace.

English is also one of the official languages of the Philippines and is used as a way of verbal and written instruction across the country's educational systems and institutions. A large part of the Philippine labour force works overseas and these workers typically come back to the Philippines after a few years. This means that a large part of the workforce has overseas experience and may have acquired foreign language skills beyond just English.

3. Highly-skilled talent

While it is a popular misconception that business process outsourcing in the Philippines is limited to call centres, there are a large number of providers offering talent across a multitude of fields including human resources, customer service, financial services, accounting, eCommerce, real estate, web development, digital marketing and administration support

The Philippines has excellent universities and a very young population. This means that hundreds of thousands of highly motivated students graduate yearly with college degrees on par with international education standards. The legal, financial and government systems of the Philippines are based on those of the United States. This means that most professionals are accustomed to Western ways of doing business. It also makes it easy for Western companies to work with Filipino accountants, lawyers and other professionals.

Filipino employees are quite resourceful and are able to find the easiest ways to carry out their assigned tasks with minimal supervision when given clear instructions. They are fast learners and are able to easily adapt to new systems, processes, technologies and workplace situations.

4. Excellent work ethic

Business owners invest in Filipino teams due to their excellent work ethic, values, integrity, loyalty, service-oriented mindset and the friendly working atmosphere they seem to foster. They value integrity just as much as they value time and show innate respect for individuals, both in a team environment and outside of work. Filipinos generally know what fun is without forgetting what responsibility entails and they place high regard on professionalism.

It's in their nature to be respectful and is evident in their workplace interactions with managers, colleagues and clients. They are able to work well under pressure due to their patient and calm demeanors. The positive attitude Filipinos have towards work is what generates the success behind outsourcing teams in the Philippines.

5. Quality yet cost-effective

Filipinos strive to produce quality work. This is obvious by looking at the outstanding business results produced by business process outsourcing companies in the Philippines. In fact, the Philippine economy is one of the fastest-growing economies in Southeast Asia with a GDP growth of 5.1% in 2021 and is anticipated to grow 6% in 2022.

Simply because Filipino talent is a low-cost alternative for businesses, does not mean quality is jeopardised. The difference in staff costs, benefits and operational effectiveness between countries makes the Philippines a more appealing location to outsource and grow an offshore team. The Philippines has made tremendous progress in terms of the quality and reliability of its infrastructure. Businesses can operate effectively and expats can enjoy a very high quality of life in Manila, Clark, Cebu and other Filipino cities. 

Salary levels are roughly 30% of what they are in most Western countries. This means that your company could easily accomplish cost savings of up to 70% on employee costs alone. The cost of living and the cost of doing business are roughly 50% lower.

The cost of living in the Philippines is also much lower than most Western countries. However, a lower cost of living doesn't mean a lower standard of living. In fact, many outsourcing companies in the Philippines offer employment to local Filipinos to help support them and their families.

6. Strong government support

As one of the economic pillars and main revenue generators of the country, the Philippine government recognises the potential of the outsourcing industry by providing strong support and infrastructure for outsourcing companies and for businesses setting up an outsourced team. Some of the government and industry initiatives to ensure the Philippines maintains its place as one of the top outsourcing destinations include:

  • Partnerships with universities in the Philippines to create  business process outsourcing (BPO) specific curricula to prepare the future BPO workforce
  • A voucher system from the Technical Education and Skills Development Authority (TESDA) as funding support for call centre training
  • Tax and non-tax incentives to support foreign investment
  • Creation of national Information and Communications Technology council.

7. Cultural compatibility

Tracing back, the Philippines was colonised by foreign forces from Spain, the United States, Japan, Portugal and other countries. As a nation that was colonised by various foreign countries in the past, Filipinos were influenced by ethical values, traditions, customs, behaviours and ways of life that weren't originally theirs. 

This history is what has built the Filipino character at present. Not only have they adopted many of the western cultural traditions but also the lifestyle. They communicate effectively with their foreign partners in the industry as there is almost no language barrier and can speak about common topics of interest from sport, politics, television, news or work concerns. This western lifestyle adoption has created compatibility among Filipinos and foreign cultures giving them the edge against other nationalities in providing excellent BPO services.

The Filipinos are known for their warmth, hospitality, and generosity of spirit. The Philippines is culturally diverse, thanks to centuries of Asian, Spanish and American influences. This has made the Filipino people very open and easy to work with - they are social, friendly, motivated, hard working and are highly customer-focused.

Where to start?

Whether you are diving into the outsourcing pool for the first time or keen to make changes to your current business arrangements, discover our top tips to consider when developing your outsourcing strategy in our blog: ‘How to get outsourcing right’.

This blog was last updated on 16 May 2022. 

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