The Ongoing Growth of Outsourcing in the Philippines

The Ongoing Growth of Outsourcing in the Philippines

Business process outsourcing (BPO) has become a serious economic driver in the Philippines, providing the South East Asian nation with one of its fastest-growing industries.

Each year, the BPO market injects around US$30 billion into the economy of the Philippines, delivering a much-needed boost to the country. As the international market becomes more diverse and flexible, ASEAN nations need to follow suit if they are to benefit from increased dynamism and a more remote-friendly working landscape.

Not only does BPO pump money into the economy, but it also provides significant employment opportunities in the Philippines.

In 2019, figures suggest that BPO companies were employing 1.3 million citizens in the Philippines — around 1.2% of the population. It also appears as if this figure is on the rise, growing by between 8% and 10% each year as more and more companies join the 1000+ firms already engaged in BPO activities in the Philippines.

Currently, it is thought that the Philippines comprises between 10% and 15% of the global business process outsourcing market, and this also appears to be increasing.

The future looks very bright indeed for BPO remote work in the Philippines, on both sides of the transaction. It appears that BPO will continue to drive the economy of the ASEAN nation, and at the same time, it seems that the Philippines’ BPO services will provide increased value and benefit to business owners in the future.

But why is this, exactly? Why is the Philippines such a vital part of the global business process outsourcing landscape?

Why Is Outsourcing in the Philippines So Valuable for Businesses?

There are a number of factors that make the Philippines such an ideal candidate for BPO operations:

Diverse Skillsets from a Highly Capable Workforce

The Filipino education system is becoming increasingly developed. While it is currently ranked behind fellow ASEAN nations such as Thailand and Indonesia, it outranks other nations in the region such as Vietnam, Cambodia and Laos. What’s more, international recognition of the domestic education system is on the rise — 15 Filipino universities placed among the world’s best in the Times Higher Education rankings in 2022.

The Philippines’ population also boasts higher levels of English proficiency than other nations in the region, largely due to the influence of the United States in the country’s history. This automatically makes the Philippines a more attractive option for organizations who use this lingua franca of international business.

This has contributed to a diverse set of skills, ready to be leveraged by companies looking for BPO opportunities. From healthcare to banking and finance services through to digital marketing, legal services, design and animation, Filipino firms can deliver across a range of different outsourcing verticals.

Relatively Low Labour Costs

There is a minimum wage applied to labour in the Philippines, but this minimum is different across different locations within the country. In some areas, the legally mandated minimum is US$6.57, or 316 Philippine Pesos, per day. This rises to US$11.17 each day — 537 Philippine Pesos — in areas such as Metro Manila, where the cost of living is higher.

This means international organizations can connect with labour of high quality without the costs associated with on-shore outsourcing. The disparity in labour costs is one of the factors that make BPO so important for businesses across a range of international markets.

An Excellent Geographical Position

The Philippines is in a unique position in terms of its geography. The island nation is the sole occupier of the northeast quadrant of the ASEAN region — an ideal situation for maritime trade and connections with other countries in the Asia Pacific sphere.

Meanwhile, close ties with other ASEAN countries — coupled with the relatively high levels of English language proficiency discussed above — make the Philippines a useful access point. Businesses from anglophone markets such as Australia, New Zealand, the UK, Canada and the USA can connect with the ASEAN region via the Philippines.

Shifts Towards a “Gig Economy”

There is a thriving freelance market emerging in the Philippines, with around 1.5 million Filipino workers now making a living via freelancer software platforms. This is an important shift in the BPO landscape within the Philippines, as increasing numbers of skilled and unskilled workers lend their talents to outsourced projects.

Technology is underpinning this shift. Increasing numbers of Filipino citizens now have access to digital technology of a high standard, making it possible to connect with remote opportunities from around the globe. In turn, this has helped the Philippines overcome some of the obstacles associated with Covid-19 restrictions and lockdowns.

Discover More About Outsourcing in the Philippines

Here at enablesGROUP, we are the BPO specialists. We are ready to help your business leverage the opportunities that outsourcing in the Philippines can provide. Get in touch with us today to learn more.