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The philosophy that drives Philippines outsourcing industry

By | January 12th 2010 at 00:00:00 GMT +0300

By Prof Ndende Amadi

Philippines, China, Vietnam, Brazil, and India are said to be the hotspots of emerging business process outsourcing (off-shoring) in the world today.

But the Philippines is also emerging as a favourite destination for BPO.

The country has six key sectors linked to business process outsourcing. They are contact centres, animation, data transcription, security and privacy, software application development, and engineering and design.

It also has a robust IT sector, built on lower operating costs, compared to other countries in the Asia-Pacific region. The Government offers incentives to companies located in information technology zones. This has lead to the rise of contact centres, which depend heavily on Information & Communication Technology (ICT), which is available, thanks to the infrastructure already in place. And the numerous cyber parks in the country provide the people with international connectivity.

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Rich talent pool

A survey, dubbed the "Philippine Information and Communication Technology (ICT) Workforce Demand Survey 2004", confirmed the rich IT talent pool of the Philippines.

In addition, the survey ranked Philippines high in customer service provision, and other personal skills, such as confidence, ability to handle stress, self-motivation, and ability to learn quickly.

In a recent study, Philippines was ranked 14th out of 48 countries in the Asia-Pacific region in IT skills.

Moreover, proficiency in English gives the country an edge over other Asian competitors (Philippine is ranked the third largest English-speaking nation in the world).

The quality of education in its tertiary schools is patterned after the Western style of education.

The Philippine Government, its legal systems, as well as the accounting systems are also fashioned after those in the US. The Filipino’s exposure to the Western culture is broad and deep, giving them the capacity to understand the needs of the customers from the other side of the globe. In fact, Filipinos are considered the most Westernised people of all the Asian cultures.

Strategically placed

The country is placed strategically in Asia-Pacific region, as a gateway of international shipping and air transport. Moreover, it is only a few hours away from other Asian capitals such as Beijing, Tokyo, Singapore, Taipei, and Seoul, making it highly accessible to other economies in the region.

In addition, it is a critical entry point to the over $500 million ASEAN market. Major airlines, courier service providers, and air cargo companies have offices established in the country.

The Philippines has a skilled labour force of 29 million people, and a literacy rate of 94 per cent. Labour costs in the country are approximately one-fifth lower than those in the US and Europe, making it an attractive destination for their outsourced operations. The average basic pay of a Filipino is $250 (Sh18,750) a month, compared to $1,120 (Sh84,000) for a US worker.

Hospitality is considered an endearing quality of the Filipinos. They are known universally as a very hospitable people.

Its workers are renowned worldwide hard working, easy going, and helpful. They believe in a friendly smile, a warm embrace, a welcoming home, and rich, delectable food to share. They believe in making their friends and visitors feel at home. Because of this, BPO industry in the Philippines has grown 46 per cent annually since 2006. Industry estimates put the number of people employed by the BPO sector by end of 2008 at 435,000, compared to 372,000 in 2007. The BPO output for 2008 was $6.1 billion up from $4.5b in 2007. In 2008, BPO sector contributed almost $5 billion into the country’s revenues. It is expected to hit $7.5 billion in 2009.

Third largest

This makes the Philippines as the 3rd largest BPO destination, holding 15 per cent of the market, after India, which has 37 per cent, and Canada, with 27 per cent.

The country received the Best Offshoring Destination of the Year Award for 2009 for its BPO sector.

The award in recognition of the healthy economic environment that attracts foreign business to locate their operations in the country. This is the second time that the Philippines won the award.

Overall, Philippine BPO is forecast to earn $11 billion and employ one million people by the end of this year.

For enquiries please contact the author at [email protected]

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