Business Process Outsourcing in the Philippines: Statistics and Overview of the Future

Outsourcing services is a rising trend around the globe. It is defined as a contractual agreement between companies agreeing to hire another company’s services to perform certain jobs. Business Process Outsourcing, also known as BPO, is one of the subsets of outsourcing that emerged to become a huge industry in the global market. BPO is a business practice wherein a company outsources operations of a business process to another company that acts as a service provider. The industry has various sectors such as call centers, back office, contact centers, tech support, data transcription, animation, software development, game development, medical transcription, data analytics and more.
Over the years, the Philippines is one of the biggest contributors to the growth of the global BPO industry. It has grown to become Capital of the BPO Industry. This is simply because of the rapid advancement of business process outsourcing in the Philippines. In a very short span of time, this sector has become largest source of employment for the Filipinos. At the same time, it has become second largest contributor to the development and growth of the economy as well as of foreign exchange earnings.

As call centre service providers and other BPO industry services, the Philippines has become the top destination among the biggest businesses. It remains attractive to many foreign clients due to various reasons. Low operational costs and proficiency in the English language are two prime reasons why foreign investors are drawn to the Philippines for third-party operations. Business Process Outsourcing of the Philippines has overtaken its rival and it now covers about 16-18% of the global market share of the industry. Out of which, a large percentage is contributed by sub-sector contact centers. The overall industry, employees more than a million of Filipinos and has earned $23 billion in revenue in 2016. The growth of the industry is unstoppable. According to the Contact Center Association of the Philippines, the BPO industry is forecasted to grow by 7 to 9 percent in future. And by 2022, the industry is projected to make $40 billion in revenue.

Philippines call centers mainly cater to Australia, UK, and USA accounts. However, the United States is the country’s biggest outsourcing clients. About 65% of the total BPO business comes from the USA. In addition, the BPO companies have acquired clients from Europe and New Zealand in large numbers, too.

By the end of 2018, there are about 851 registered BPO companies and more than half of them are call centers. President Rodrigo Duterte has declared the industry as the largest contributor to the country’s GDP. According to the latest data, about 575,600 Filipinos have jobs in BPO sector. Out of which, about 87% percent is in call centers. The remaining numbers have found employment in the IT related BPO sectors. As per the latest trends, it is forecasted that almost 700,000 additional job opportunities will be created by 2022.

The industry continues to widen its scope by basking into the opportunities provided by new technological innovations like automation, artificial intelligence, and robotics. From basic back-office jobs, the business process outsourcing in the Philippines is aiming to add higher-skilled operations to its list of third-party services. The companies are also looking forward to creating changes in the industry by adapting to new technologies and hiring mathematics professionals and engineers for the data analytics field.

In the era of technological innovations, the BPO industry is expected to undergo a major shift. As the industry expands, the foreign clients wish to invest in the Knowledge Process Outsourcing (KPO) sector. This sector is information driven sector and it functions through the process of outsourcing of knowledge and related activities. The responsibilities include gathering, managing, and analysis of huge data and knowledge. Some of the primes services in this sector includes data analytics, insights, market research, data management, data integration, legal processes, actuarial science, and more.
Nonetheless, the BPO industry continues to grow by leaps and bound. A slight slowdown was experienced in the year 2017, but it has shown significant improvement in the year 2018.

The Importance of The Philippines’ Call Center Industry in The Outsourcing World

 Businesses around the world have admitted the benefits of offshore outsourcing. Business Process Outsourcing is the new way to do the business and it is being adopted by big and small, all kinds of businesses. In simple words, outsourcing is a process of acquiring services from an outside supplier mostly on a contract basis. The outsourcing partners usually belong to a different country and they are assigned some of the important tasks or roles that are to be performed with equal expertise in order to save money while the company continues to achieve the primary goals and perform core functions of the business.

 Over the last three decades, the BPO industry globally has grown by leaps and bounds. Countries like China, India, Indonesia, Philippines, Singapore, Malaysia, Myanmar, and other South East Asian regions are a part of this enormous industry. These countries provide a variety of services like payroll, human resources (HR), accounting and customer/call center relations, IT-based services, back-office services, software and game development, contact center, virtual assistance and much more. In a short period of time, the Philippines has emerged as the glorious leader of the BPO industry around the world. Due to innumerable factors, Philippines call centers are considered the best by foreign investors. It is now called the capital of call center industry. The Business Process Outsourcing in the Philippines has a lot to offer the world which is why it is the much-preferred call center destination of today’s time.

1.    Superior Expertise at Effective Cost: The primary reason why foreign companies invest in offshore outsourcing is to save money. The Philippines workforce is available at a much lower cost when compared to labor from western countries. Experts suggest that the labor in the Philippines costs at least 50% lesser than the other countries. This is due to the low cost of living. Even the most specialized worker's salaries are quite cost-effective.

2.    Lower Operational cost: Along with the salaries, the general expenses of call centerservice provider in the Philippines are lower than the countries like USA, UK, and Europe. General business expenses like infrastructure, rentals, daily utilities, machines, and supplies are available at cheaper price. Hence, the overall low operational cost of the Philippines call center contributes to more savings and cost advantage.

3.    Strong Government Support: The BPO industry of the Philippines is one of the biggest contributors to the economic growth of the country. Additionally, it has become one of the largest sources of income and employment for citizens. The government has realized the industry’s contribution and exhibits strong support. Over the period of time, the country has initiated programs and laws to promote the industry. Laws have been passed for the welfare of BPO professionals as well as to encourage foreign investors.

4.    Skilled and Educated Workforce: With 95% of literacy rate, the Filipinos are one of the most sought-after professionals. With a strong education system, every year there is a huge stream of the young educated lot passing out from colleges, seeking employment. The good education system is the first step to creating a highly skilled workforce.

5.    Brilliant Communication Skills and Accent Neutrality: This is one of the major reasons why The Philippines has emerged the top player in the outsourcing world. English is the official language of the company which makes it a part of a school and college curriculum. The Filipinos are proficient in verbal and written English and this makes them effective communicators when dealing with clients from US, UK, and European countries. At the same time, the Filipinos possess English accent which is quite neutral and makes them better communicators when compared to other countries like China and India.

All of this and more, when combined with specialized expertise can result in greater success for the company. Besides, The Filipinos are known for excellent work ethics and possess great team spirit. With so much talent and dedication, they blend well with US-based companies and allows the company to focus on their core competencies and accomplishing the main goals.