For more than twenty years, the BPO industry in the Philippines has been a business and economic powerhouse that shows no sign of slowing. Fueled by American companies looking to save money on their business processes, the Philippines currently ranks as the world’s second largest BPO destination.
Needless to say, this explosive growth has been a boon for the country’s economy, and the BPO industry is the Philippines’ second largest income source. According to statistics from early 2020, the BPO industry comprises more than 800 registered companies, employs more than 1.2 million Filipinos, and generates more than US$26 billion in annual revenues, a figure that accounts for 7.5% of the country’s GDP. As a point of comparison, in 2000, there were only about 20 BPO companies operating nationwide.
What Comprises the BPO Industry in the Philippines?
The BPO industry in the Philippines covers eight sub-sectors: call centers, knowledge process outsourcing, back offices, animation, software and game development, engineering design, and transcription. 70% of all outsourced business processes are related to customer acquisition, management, and retention. Customer care, inbound sales, technical support, lead generation, and telemarketing are the most frequently outsourced services. The remaining 30% are back-office related services such as content moderation, claims/order processing, and enterprise data management.
American Businesses Continue to See Success
According to Ralf Ellspermann, CEO of PITON-Global, an award-winning BPO provider in Manila, Philippines, the United States remains the biggest customer for Philippine outsourcing providers, while the demand for BPO services from Australia, and the UK continues to grow at a steady pace.
Attracted by lower rates and a young and literate workforce who speak excellent English, Fortune 500 giants like Amazon, Verizon, United Health Group, and American Express all either outsource to BPOs in the Philippines or have established their own in-house (captive) operations in the country. In addition to lower rates, American companies can expect a better business performance that maintains focus on the company’s core competencies.
But it’s not just the mega-corporations who are outsourcing to BPO companies in the Philippines. Inspired by the success of bigger companies, small and medium enterprises (SMEs) have increasingly turned to the Philippines for the same type of success and savings. Today, there are more than 10,000 US-based SMEs partnering with BPO vendors in the Philippines.
What Are the Advantages?
Facts and figures like those above don’t lie, and after twenty years, it’s obvious that business process outsourcing to the Philippines continues to bring great success for both the country and the offshore BPO providers. Let’s take a look at just some of the advantages of outsourcing to the Philippines.
Pricing and savings are the biggest draws of outsourcing to the Philippines. The cost of labor is almost half of that in the United States, and American companies can save on office space, computers, software and equipment, health benefits, legal and HR costs, and taxes. In the long run, American companies can save up to 60% by outsourcing to BPOs in the Philippines. Cost competitiveness is also the key reason why the Philippines recently surpassed India as the country with the largest number of voice-based BPO services.
A Skilled Workforce and Cultural Affinity
With an average age of 24 and a literacy rate of 94%, the Philippines boasts a young, highly educated workforce that speaks excellent English—highly important in the call center sector where clear communication is key. Moreover, the young workforce is already steeped in tech, and IT workers find a booming marketplace with no shortage of jobs. To better prepare Filipino students for successful careers in the BPO industry, the government has partnered with the country’s top universities to provide a BPO-specific curriculum.
The long-time close cultural ties between the US and the Philippines works as another advantage. The Philippine education system closely resembles that of the US, and students are well-schooled in aspects of the American culture, making it easier for them to work closely with American clients. Also, since the Filipino legal, accounting, and regulatory process are based on US law, graduates in the Philippines are able to compete for work for American firms.
Data Privacy and Security
Since outsourcing operations usually include the sharing of confidential data, the Data Privacy Act passed by the Philippines government in 2012 ensures that privacy standards comply with international standards. According to this act, there are strict regulations in place to keep valuable, confidential data safe from unauthorized access, making the country an even more desirable destination for BPO outsourcing.
Industry experts predict that BPO to the Philippines will continue. As American companies figure out how to navigate a coronavirus-ravaged economy, experts believe they’ll increasingly partner with to save money and streamline processes, a move that will only fuel the continued growth of this booming industry.