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Why is the Philippines a Better Outsourcing Partner than Other Countries?

 

For years, India has long been the number one destination for business process outsourcing (BPO) and shared services. Many countries have tried to establish their own space in the industry yet not one country seemed to be a noteworthy competitor, until today.

 

The Philippines has overtaken India as the world’s most in-demand outsourcing destination1. While India is still earning a lot more outsourcing revenue at $76 Billion2 and the Philippines at $113 Billion, the Philippines is bound to gain more grounds in the next few years as outsourcing companies, including India-based TCS4, are moving into the Philippines.

 

 

Although there are other Asian countries that have established their own outsourcing services such as China, Korea, and Sri Lanka, the Philippines has the following positive attributes that makes the country a better outsourcing destination than the others.

 

High Literacy Rate

According to the CIA World Factbook5, The Philippines boasts of a 92.6% literacy rate, one of the highest ratings among other countries in the developing world6. This high rating is also one of the factors that bring about the second advantageous attribute of the Philippines – top-notch workforce.

 

First-rate Workforce

When it comes to the quality of output the Filipinos produce, they offer higher quality services than India. The country has a rich pool of knowledge-based manpower that foreign companies are looking for. Moreover, according to US-based Meta Group, their study revealed that the Philippines ranked fourth7 in terms of IT competitiveness among countries like Israel, India, and Iceland.

 

Close Affinity to Western Culture

The Philippines was an American colony for 48 years. This helped the Filipinos understand the Western culture better since the Philippines is a highly Westernized country. The Filipinos can speak idiomatic American English better than Indians and their neutral accent makes them more understandable than other nations. Bottom line is that the Philippines has more westernized professionals that makes communicating and conducting business transactions easier.

 

Ideal Environment

Apart from the desirable working environment in the Philippines such as advanced telecom infrastructures, companies wanting to outsource in the country have support from the national government. For up to 8 years, the Philippine government offers foreign IT and outsourcing companies a 100 percent tax exemption, as well as provides cost benefits for business continuity, operational expenses, and infrastructure.

 

Diverse Outsourcing Services

Like India, the Philippines also has IT professionals such as software developers, web developers and designers, call center agents, and other IT professionals. The large number of Filipino professionals in these respective fields is opening new doors for outsourcing companies. This has helped the Philippines mature as a BPO hub in the world.

In addition to that, major animation studios such as Marvel, Warner Brothers, Disney, and Hanna Barbera, along with Japanese anime studios, including Toei, have already adopted outsourcing and established their presence in the country8.

 

What’s the Future of the Philippines?

Apart from these reasons, the cheap Philippine labor costs may be one of the primary advantages IT and outsourcing companies consider. The Philippines already has 600,000 Filipinos in the BPO sector and is still growing9. Within the next five years, the Philippines would have grown at a steady pace of at least 20 percent every year in BPO exports8.

Although there are still other countries trying their luck on outsourcing services, the Philippines’ current positive attributes is bound to keep them at a favorable position for years to come.

 

1    http://www.ciol.com/News/BPO/News-Reports/Philippines-overtakes-India-as-BPO-hub/144178/0/

2    http://www.sourcingline.com/resources/indian-outsourcing-industry-revenue-exceeds-76-billion-in-fy11

3, 9 http://ph.news.yahoo.com/outsourcing-stems-philippines-labour-exodus-051528999.html

4     http://www.zdnet.com/blog/india/philippines-trumps-india-for-bpo-business-tcs-opens-center/259

5     https://www.cia.gov/library/publications/the-world-factbook/fields/2103.html

6     http://www.state.gov/r/pa/ei/bgn/2794.htm

7      http://www.philstar.com/Article.aspx?articleId=168820

8      http://www.globalservicesmedia.com/Destinations/Asia/Philippines,-India-Compete-for-Outsource-Dollars/25/22/0/GS101119448968

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