Why Outsource to the Philippines?

Last updated on 

March 30, 2022

by

The VA Reviewer

The Philippines is one of the world’s finest destinations for tourism and outsourcing various business processes. The offshore industry in the Philippines has a long history. 

Many multinational corporations with headquarters in other countries have established satellite offices in the Philippines. These businesses come from various industries, ranging from manufacturing to technology.

In 1992, the Philippines’ first Business Process Outsourcing (BPO) contact center was built. And in 1995, the Philippine government established a special economic zone for the following purposes:

  1. support outsourcing;
  2. recognizing a promising opportunity; and
  3. encouraging more foreign companies to have their customer support centers.

Since then, hundreds of outsourcing companies have established operations in the Philippines, employing over 1.4 million people.

Why do Foreign Businesses Outsource to the Philippines?

Multibillion-dollar corporations aren’t the only ones who can benefit from outsourcing in the Philippines. Human Proof Designs’ success story demonstrates how small businesses can benefit from the country’s favorable outsourcing climate. 

Brad Vandenberg, the company’s COO, has seen the company develop from a small staff of 15 to 200 people in less than 18 months. And he credits outsourcing to the Philippines for this expansion. Human Proof Designs was able to extend its service offerings and expand its workforce.

Since its inception in 2016, the company has grown to include high-quality authority sites for Internet marketers, excellent training for site buyers, and specialized websites and articles. They’re also working on a training course for Internet marketers that will be available soon. 

But specifically, what are the advantages of outsourcing to the Philippines?

Read why it’s such a good bargain for businesses worldwide.

English Proficiency

The Philippines is one of the best English-speaking countries outside of the West, and this trend is expected to continue. The country maintains its high ranking in Asia in the 2019 EF English Proficiency Index (EF EPI), second only to Singapore. The Philippines came in 20th place overall. The Philippines’ ranking as the second-most populous country in Asia bodes well for foreign companies looking to outsource labor here.

Seventy percent of Filipinos speak English fluently. Most local children start learning the language before they start school. Their English proficiency is reinforced once they begin formal education. English is the second language of instruction in the Philippines and the primary language of commerce.

Filipinos’ command of the English language, among other factors, makes outsourcing in the Philippines advantageous for foreign companies, particularly in BPO sectors that rely heavily on chat support and virtual assistance.

Furthermore, the country’s educational system closely resembles that of the West, from the K-12 curriculum to the medium of instruction. Western media is also widely available in the Philippines, making English even more accessible.

Low Cost

Businesses can save 60 to 80 percent of their operational costs by working with contractors in the Philippines. It is due to the country’s low cost of living. 

Fresh graduates in the Philippines earn a pittance compared to their counterparts in the West. The daily salary of a Filipino professional may be equivalent to the hourly wage of an employee in Europe or the United States.

This gives you the opportunity and leeway to direct your funds to other core activities that your company wishes to pursue. Most importantly, you will receive high-quality output at a low but reasonable cost.

Cultural Similarities

The Philippines, formerly colonized by the Spanish, Americans, and Japanese, retains vestiges of its past. Western culture is still deeply embedded in people’s daily lives, and Filipinos continue to be highly adaptable to other cultures.

Developing harmonious relationships with current and prospective clients yields positive results for your company. And to accomplish this, the parties involved must agree on business objectives and behavioral tendencies.

Many small firms and solo entrepreneurs see the Philippines’ hustle culture as pervasive as in the United States. This can-do attitude allows Filipinos to complete tasks quickly, which Americans value, prompting them to outsource labor to the Philippines.

Flexible Hours and Workforce

The time difference is one of the most significant issues in offshore outsourcing. When you outsource a service to a country with a 12-hour time difference from yours, you’ll run into conflicting schedules and collaboration issues.

As a result, establishing an offshore workforce in the Philippines allows you to scale rapidly and efficiently without investing in capital or infrastructure. You can quickly and affordably expand your team. Similarly, if you have seasonal employment or your firm turns for the worst, you can reduce your crew again. You may generally negotiate low commitments and relatively flexible terms with outsourcing suppliers.

Talented Workforce

The Philippines has a wide range of young populations outgrowing the country’s dependent children and retired workforce. This young population’s median age is 23 years old. In addition to an abundant labor supply, the statistics indicate a highly educated workforce with a literacy rate of 97.5 percent.

Local universities and colleges add more than 500,000 skilled and qualified workers to the labor force every year. According to experts, the Philippines will benefit from this young and talented workforce in the coming years.

Minimized Legal Liabilities and Management Issues

Employing people in any country entails regulations, compliance, administration, tax, and cost considerations. Some countries and industries impose a more significant burden than others. Hiring offshore staff through a Philippine outsourcing provider allows you to avoid the risk and expense of hiring people in-house or directly.

It does not mean that you can mistreat your employees, but it does simplify your administrative processes and limits your cost and liability exposure – which is fantastic.

The Philippines has a well-established labor law and is generally pro-labor. It can be a complicated system if you must deal with it directly. However, when you work with an outsourcing provider, they will handle all day-to-day and compliance aspects of your team’s HR.

Data Protection and Privacy

For more than three glorious decades, the Philippines has been a popular outsourcing destination. It has developed an incredibly sophisticated industry and a robust regulatory environment to support the sector during that time. 

For more than two decades, the Philippines outsourcing sector has been processing compassionate client data. The Philippine outsourcing industry processes everything from US health insurance, medical records, and personal financial data for some of the world’s largest public and private companies.

The Philippines can provide any compliant environment and work system, and the country has one of the most stringent data privacy acts in the world (modeled on the European GDPR).

Strong Government Support

Considering the BPO sector as one of the most important contributors to the country’s economic growth, the local government provides significant support for the industry through rules and incentives that encourage corporations to choose the Philippines as their offshore headquarters. They established the Philippine Economic Zone Authority (PEZA) and special economic zones (SEZ) to provide incentives.

The Philippine government also provides fiscal and non-fiscal benefits, such as four and eight-year tax holidays. The local government also emphasized its dedication to assisting the BPO industry through the Philippine IT-BPM Roadmap 2022, aiming to create 1.8 million new jobs and $40 billion in revenue for Filipinos by 2022.

Marginal Benefits

You can use outsourcing to implement a “follow the sun” workflow strategy. You have employees on call 24 hours a day, seven days a week. 

While your onshore employees are sleeping, you can expect your offshore operation from halfway around the world is working. Thus, it shortens your delivery cycle, allowing faster production and shorter process development times.

Takeaway

As previously stated, selecting the Philippines as your outsourcing destination allows you to maximize the benefits. The country will enable companies to experience massive growth without costing you much.

So, whether you need to outsource creative services, website development, IT support, or contact center solutions, the Philippines’ talented workforce and government-sponsored benefits can help. If you still have questions, try reading these articles to help you decide.

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