In this article, we will tackle the pros and cons of outsourcing to the Philippines so your business and your team can get the full picture before you plan your business continuity. The Philippines is one of the fastest-growing nations in the outsourcing industry, with a staggering 30% growth within the last decade alone. In fact, business process outsourcing (BPO) accounts for one of the biggest boosts to the Philippines’ economy and currently employs more than 2 million people in several sectors, boasting a net worth of $24 billion. The BPO industry in the Philippines already has several key advantages as the top outsourcing destination – low cost of labor, an English-proficient and highly skilled workforce, as well as cutting-edge technology and infrastructure, are strengths that will continue to give the country an edge in the future. These are highly valued attributes to the world’s largest process outsourcing companies in places like the US, Australia and the UK that rely on outsourcing. However, like most things, there are advantages and disadvantages.
The pros of outsourcing
Larger talent pool
The Philippines provides an exceptionally high standard of education. Microsourcing cites that more than 680,000 Filipinos complete university each year and with more than 41 million highly trained people in the workforce, the diverse talent pool in the Philippines is so deep and rich that you are guaranteed your business needs will be met. When it comes to offshore staffing in the Philippines, you can offshore almost any position from customer support agents to mobile app designers, and you can also fill roles vertically, from entry- and mid-level right up to senior and executive levels.
Around-the-clock service
The outsourcing workforce in the Philippines provides 24/7 services. BPO centers have staff working multiple shifts so multiple time zones are covered. The Philippines also has a highly specialized and diverse talent pool with employees who have worked for large multinational and business process outsourcing companies. And considering that the Philippines shares a similar time zone with Australia (the same as Perth and only two hours behind Sydney), this offers plenty of benefits and higher value services for companies Down Under and those further afield looking to expand their 24/7 customer service offering.
English proficiency
Being a former colony of Spain and the United States, the Philippines has a strong affinity to Western culture and is the world’s third-largest English-speaking nation. In a report by Global English Corporation, the Philippines was named as the world’s best country in business English proficiency with almost 60 million English speakers. Most of the Philippine workforce graduate from schools that adhere to western standards when it comes to English.
Affordable than full-time employees
connectOS emphasizes how employee costs in the Philippines are generally 30% of an equivalent role in Australia or the US. For every role you have in Australia, you can typically hire three people in the Philippines for the same cost. This is achievable due to the Philippines having one of the lowest costs of living among its regional neighbors. Offshore staffing is highly sought after – an employee working in an outsourcing/offshoring role earns, on average, more than double the minimum wage – AUD$770 – AUD$930 per month.
Cost-effective solutions
According to Select Voicecom, the hundreds of established agencies settled in the Philippines has an expected annual growth rate is around 7% to 9%, which is higher than the expected global growth. Prime Outsourcing also elaborates how the Philippine BPO industry has contributed $30 billion to the country’s economy annually. Furthermore, a buoyant outsourcing industry bodes positively well for the real estate sector as a result of increased demand for office space and residential condos, in addition to its benefits for the transportation, telecommunications, hospitality, and retail sectors, as Colliers stated.
Flexible and scalable
As employees, Filipinos always strive to deliver results because they have quality-driven single-mindedness and perseverance like no other. They are also highly trainable, so they can keep up with new tasks and job specifications quickly and effectively. The Philippine workforce is also well-known for the type of resilience that makes them resourceful during times of abrupt changes – a skill you can most likely see at work as resiliency in the Philippines always goes hand in hand with adaptability.
Save on your time
Filipinos are known for their excellent work ethic, resiliency, and professionalism. Aside from its diverse talent pool, rich culture, high literacy and communication, what makes the Philippines an ideal staffing destination is how the country has a strong western influence that makes it easier for foreign investors, particularly the US, to conduct business operations that saves plenty of time and resources, especially when understanding tasks, communicating with clients, and interpreting important assigned documents.
Better quality candidates
The Philippines boasts a highly-skilled workforce with a huge pool of professionals who are university-educated – hundreds of thousands of university graduates enter the workforce each year with western-influenced training, excellent communication skills, and the unique resourcefulness only Filipinos can deliver. Colliers also adds that the Philippines is considered a top-tier destination for the BPO industry; it is a market leader in terms of voice-related services, and it is rapidly expanding its capacity to provide non-voice Business Process Management (BPM) and IT services for the expanding list of global clientele.
Greater focus
Outsourcing has been a significant part of most business operations for a long time (even as far back as the 1960s) because of its cost-efficient promise and how it raises customer satisfaction, achieves high performance, extends service offerings, and provides access to the best people, skills and technologies. According to a 2021 study by ManpowerGroup, 69% of US employers struggled to find necessary talent inside the country. Outsourcing to the Philippines addresses this problem by giving you access to a diverse talent pool of highly-skilled professionals who can lessen your in-house workload since you can have non-core business functions delegated, therefore freeing up time you and your team could use to be more productive. This increased efficiency can also contribute to a better customer experience and increased customer satisfaction.
Reduce labour cost
According to Statista, the average US citizen would need between 58K to 99K USD per year, while the average Filipino citizen can live comfortably with between 9.6K to 14.5K USD per year. Therefore, statistically, you will always have to pay more for local talent compared to outsourced talent to keep your business running and provide what your business needs.
Improved effectiveness
Outsourcing to the Philippines automatically raises the standard of work. When you have access to more time and a diverse talent pool, naturally these factors will build and strengthen your brand – you get better concepts and better content. Having offshore staffing can enable quick development and delivery of ideas and products into the competitive market especially in terms of making your business accessible and attractive to the public.
The cons of outsourcing
Time zone difference
According to Wage Point, time zones affect businesses in a number of ways, from meeting with other global companies, to planning work around travel, to coordinating with your own remote team. You may only think of time zone differences as a vacation nuisance or that unfortunate sponsor to your jet lag. However, when you outsource to the Philippines, you can find plenty of available offshore staffing no matter what time zone you come from.
Possible loss of control
As a general rule, you’ll have less control over a project once you outsource it. But outsourcing to highly-competent countries like the Philippines gives you more expertise and access to a more diverse talent pool. Ultimately, the outsourcing company you hire will become an extension of your brand, so you’ll need someone stable and reliable that will not only provide you excellent services, but also someone who can share the same values as you. Trust is an essential factor in every relationship, and if it goes both ways, there’ll be no other way to go but forward.
Cultural differences
Hiring outsourced work has tremendous benefits both for the employer and the employee. However, just like any other good thing, certain challenges come along with it and one of these is the barrier caused by different cultures. Every country and race has stereotypes, and the Filipinos are no exemption. But it is worth noting that the key reasons why a lot of foreign investors and entrepreneurs find the Philippines so attractive when looking for an outsourcing location are the cost-efficient labor costs and the deeply-rooted values they uphold in their personal and professional lives – there is an unmistakable, genuine sense of cultural compatibility that you can only find in the Philippines. These factors made the Philippines as the top outsourcing destination for USA, Australia, Britain, and other parts of Asia, and still counting.
Strict labour laws
Philippine laws on outsourcing are very important and strict due to the high demand for Philippine-based outsourcing companies over the years. According to the KDCI, the Philippine labor code requires organizations in the Philippines to pay employees an additional 13th month and 14th month pay annually, and an employer cannot fire an employee at will in the Philippines – a justifiable cause and proper documentation are required to terminate any Philippine employee. However, the Philippine government has passed essential data privacy acts and laws that protect, support and strengthen the BPO industry like the Data Privacy Act of 2012 (RA 10173), and Republic Act 10844: Department of Information and Communications Technology Act of 2015, therefore making BPO activities in the Philippines more convenient.
Loss of personal touch
Clearly there are always risks involving other people in your business. This is true regardless of whether the people will work in-house or form part of an outsourced provider. But the best outsourcing companies not only have technical, creative, and administrative talent and employees that are more than well-equipped to handle all kinds of tasks at a faster rate, but they also have an outstanding reputation that speaks for itself. Choosing to outsource to the Philippines means partnering with a diverse talent pool of highly-skilled people who can perfectly embody your business’ mission and vision without a hitch.
Frequently asked questions
Why should you start outsourcing in the Philippines?
According to Connext, the Philippines is the top outsourcing destination for investors looking to outsource operations as it ranks 18th among the 2021 Top 50 Digital Nations Global Innovation Index by Tholons, a leading consulting firm. The Top 50 Digital Nations is an annual list which ranks top countries by Innovation / Digital, Super Cities, Population, Diversity & Inclusion. In addition, the Philippines has several highly urbanized cities, six of which placed in among the Top 100 Super Cities in the Tholons’ Global Innovation Index for 2021. Santos Knight Frank, the world’s largest independently owned property consultancy, also states that investors are “eager to capitalize on the Philippines’ sound macroeconomic fundamentals, excellent pool of low cost-skilled labor, outstanding customer service, continuous infrastructure development and one of the cheapest rental rates in Asia.”
How cost-efficient is it to outsource in the Philippines?
According to The Scotsman, saving money is the main reason the Philippines continues to be the top outsourcing destination. Outsourcing can reduce the cost of material expenditures such as office space, infrastructure, technology, and other equipment, as these become the BPO provider’s responsibility. In addition to that, companies also save on employee costs like salaries, health care, and other benefits. All in all, companies outsourcing to the Philippines can save up to 60% on labour and 40-50% on operating costs, savings that can go towards resources that will contribute to healthy and substantial growth.
Do you think outsourcing is good for the Philippines?
The Philippine BPO industry exists as the resilient economic driver of the country with over 11% contribution to national GDP and employing over 1.3 million Filipinos in more than 1000 BPO companies – with that figure growing at an annual rate of 8-10%. According to USource, 27% of the BPO sector’s workforce disperse across the countryside. Emerging and established hubs expect to erect their offices in provincial areas. This means that the BPO industry offers valuable opportunities to Filipinos for their welfare and the country’s overall economic growth.
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If you’re a business owner looking for the ideal partner to push your business to even greater heights, you don’t have to sweat looking for the best service providers or the right partner to provide you cost-efficient service when you can turn to a reliable outsourcing provider like The Outsourcer who can deliver you everything that you’ve been looking for (and more) with their cutting-edge team of Filipino virtual assistants.
The Outsourcer has only the best talent for whatever job you need to be done and will work on continuous training and coaching them to give you better results. Save on recruitment and training expenses, while maintaining successful operations as your business grows by scheduling a free consultation with us today.