Outsourcing in the Philippines

The Philippine economy has been transitioning from one based on agriculture to one based more on services and manufacturing. In 2011, PricewaterhouseCoopers ranked the country as the 28th wealthiest urban agglomeration in the world, and the 2nd in Southeast Asia. Other important urban centers in the Philippines include Cebu City in the Visayas and Davao City in Mindanao.

Call Centers

The Call Center sector accounts for 80% of the total BPO industry in the country. Growth of this industry in the Philippines was led by a demand for lower labor costs and a highly skilled, highly literate workforce with a strong grasp of the English language surpassing India as the top call center BPO destination globally. As of 2011, the Philippines is the leading nation in BPO market in both call center services and the non-voice sector. Majority of the BPO facilities are found in Metro Manila and Cebu City.

Legal and Medical Transcription

This sub-sector in the country is also a growing player in the world transcription market. These organizations focus on doing medical and operative reports, summaries, and therapy and chart notes, among others, using software and equipment for the US.

The Medical Transcription Industry Association of the Philippines, Inc. (MTIAPI) lined up five action points to establish a qualified workforce and attract global interest: Skills Enhancement and Standardization, Technological and Process Innovations, Improvement of Operational Efficiency, and Aligned Business Matching Programs. .

Tourism

The Philippines has long been a premier tourist destination, boasting a buffet of activities, hotspots, and entertainment for all types of travelers. Apart from Metro Manila which is the main business and leisure hub of the country, other places to visit include the mountainous Davao, Cebu, Palawan, Marinduque, and Boracay Island which has been declared as one of the best beaches in the world. Other places of interest include national parks, cultural attractions and historical sites that celebrate the country’s Roman Catholic religion.

For 2012, the Department of Tourism pegged 4.59 million tourist arrivals. DOT has already recorded 3.83 million from January to November, an 8.73% increase from the same months in 2011. Korea continues to be the largest market with over 900,000 arrivals, accounting for 24.07% of the total volume.

Software Development and Animation

Filipino animators also do well in higher end outsourcing services such as Web Design, Software Development and Animation. An increasing popularity in animation and entertainment led to the growth of this sector, with major studios like Walt Disney, Marvel, and Warner Brothers having offices in the country.

Finance & Accounting

The Philippines is internationally ranked as #1 for the availability of high-end KPO (Knowledge Process Outsourcing) jobs that include Finance and Accounting. Filipino BPO workers are often cited for their comparative ability to handle irate customers well, and to solve complex problems in an average of only one to two calls. The Institute for Development and Econometric Analysis Inc, estimates that the fewer number of calls required to solve a BPO-related problem has contributed to the Philippines cost competitiveness.

The finance and accounting outsourcing industry is growing very rapidly because it is among the most promising KPO offerings in the Philippines. The country has more CPAs than any other in Asia, with approximately 7,000 accounting graduates every year. There is an abundance of finance and accounting talent in the Philippines trained in international accounting standards. Its accounting system is strongly influenced by US and international practices enabling them to tackle a wide variety of financial processes like payroll processing, bookkeeping, bank reconciliation, financial reporting, tax compliance, and audit services for overseas clients. The finance and accounting industry is rapidly growing and we are seeing an increasing number of large multinationals who are setting up a shared service center in the Philippines to handle their accounting, HR, and other back office processes.

Statistics and Forecast

With a current focus on increasing higher-end services, the Philippine outsourcing industry is a thriving environment that is constantly evolving and improving. Outsourcing to the Philippines accounts for almost 10%, or $10 billion annually of the global industry, and is set to grow even more vigorously over the next years. The country provides cost-competitive workforce and infrastructure, English-speaking, college-educated employees, plus effective incentives and a service-focused culture, making the Philippines become one of the top business process outsourcing (BPO) locations.

The Philippine boom has been led by call centers, which according to the Contact Center Association of the Philippines, make up for nearly 70% of the local BPO industry. India's Tata Consultancy Services, projected that Philippine outsourcing will grow into a $25 billion industry by 2016, providing work for approximately 1.3 million people.

Why invest in the Philippines?

According to the Business Processing Association of the Philippines (BPAP), there is currently an approximate of 650,000 employed in the BPO industry which accounts to an estimate of $11.3 billion in revenue. The key to the country's success include:

The finance and accounting outsourcing industry is growing very rapidly because it is among the most promising KPO offerings in the Philippines. The country has more CPAs than any other in Asia, with approximately 7,000 accounting graduates every year. There is an abundance of finance and accounting talent in the Philippines trained in international accounting standards. Its accounting system is strongly influenced by US and international practices enabling them to tackle a wide variety of financial processes like payroll processing, bookkeeping, bank reconciliation, financial reporting, tax compliance, and audit services for overseas clients. The finance and accounting industry is rapidly growing and we are seeing an increasing number of large multinationals who are setting up a shared service center in the Philippines to handle their accounting, HR, and other back office processes.

  • English language-proficient workers
  • Multicultural affinity and adaptability
  • A high degree of trainable, flexible and loyal workers
  • A high quality physical and telecommunications infrastructure
  • A cost-efficient structure that allows significant savings for outsourcing organizations

These advantages are a result of the government’s long-term commitment and support, the development of infrastructure, the existence of supporting industries, competitiveness among suppliers, resource management and a clear global positioning.

Business Climate

One of the most westernized nations in Southeast Asia because of its complex history, the Philippines has a unique East meets West culture. With an educational system, accounting and legal regulatory frameworks and processes aligned with that of the US, Filipinos are well versed with the US culture and values, including entertainment, lifestyle, and work environments. The third largest English speaking country with a 94.6% literacy rate, the Filipino workforce is one of the greatest advantages over other Asian countries.

Almost all sectors have an open economy which allows 100% foreign ownership. Multinationals with regional headquarters in the country are entitled to various incentives such as tax exemptions and duty-free importation of specific items.

The Philippines has a business-friendly regulatory environment for IT-BPO and GIC investors which have been identified as one of five priority development industries for the country. According to BPAP, Investors enjoy competitive fiscal and non-fiscal incentives. For more information on BPO investment in the Philippines, visit www.bpap.org.