Outsourcing in the Philippines: A Complete Guide On How To Do Things Right
Outsource your business in the Philippines the right way
The difficulties of personnel management become more and more obvious as your business expands. Especially when your company grows, you want to hire the best employees while keeping a strict eye on your expenses. Offshoring is a great way to swiftly hire qualified people at a low cost, which is why so many business owners look to it as a solution.
One of the top locations for business outsourcing in recent years is the Philippines. Many skilled workers from a variety of industries reside in the nation. These Filipino employees are prepared to put in a lot of effort to support the success of the company they work for.
The government of the Philippines has made the outsourcing industry one of its main priorities, investing heavily in workforce training and incentive programs that entice owners of foreign companies to partner. And it’s not just the Filipino workforce that lends itself to outsourcing. This pro-outsourcing position has helped the Philippines rise to the top of the list of outsourcing destinations worldwide over time.
Understanding Business Processing Outsourcing in the Philippines
Business process outsourcing (BPO) is the practice of contracting out some of your organization’s business operations to a different enterprise. Southeast Asia’s top country for BPO outsourcing is the Philippines. The BPO sector has existed since the 1990s and has expanded ever since. The BPO sector in the Philippines brought in nearly $24 billion in revenue in 2017. About a million people worked in the sector in 2016. However, there are also numerous Filipino BPO firms that specialize in other tasks, such as IT, payroll processing, healthcare, and marketing services. The majority of the Philippines’ BPO industry focuses largely on call centers.
The Evolution of Filipino Outsourcing
Since the Philippines had a plentiful supply of laborers who could speak English, American businesses began recruiting Filipino workers to perform data entry for them in the 1970s, which is when Filipino outsourcing initially gained traction. Due to its high level of talent and affordable cost of living, the Philippines was a great location for outsourcing because it allowed American companies to give workers cheap salaries that they considered to be fair pay.
The need for English-speaking outsourced labor grew over time. This made it possible for outsourcing firms to begin appointing and educating more workers for these positions. In the 1990s, the outsourcing sector expanded dramatically, and the Philippines rose to prominence as a Southeast Asian BPO hub.
Multinational corporations began outsourcing their IT and customer support activities to the Philippines as the sector gained popularity in the 2000s.
The BPO industry now makes up a sizeable component of the Philippine economy, and significant outsourcing centers have been built there. Working with outsourced teams is much easier than it was during the early stages of outsourcing in the Philippines. A remote worker down the hall or halfway across the world is similar to a local employee in many aspects thanks to the COVID-19 epidemic, which allowed businesses to experiment with remote workers.
Education and Workforce Experience of Filipinos
A highly educated and particularly qualified talent pool is available in the Philippines. In actuality, according to UNESCO, the Philippines’ literacy rate as of 2019 was 98.4%, which is nearly comparable to the United States’ figure of 99%.
The majority of Filipino individuals have the chance to obtain a high level of education, frequently specializing in a particular area of interest, thanks to the nation’s more than a thousand colleges, most of which are public.
Numerous BPO education institutes offer specialized education and training for the future generation of outsourced workers, and many Filipino students choose to concentrate on BPO services. There are BPO service centers all over the nation, including in Metro Manila, Davao, Bacolod, Cebu, and other locations.
These BPO firms play a significant role in the Philippine economy, and the assistance of the Philippine government guarantees ongoing training and educational possibilities in the contact center sector.
Government support and infrastructure for outsourcing.
The infrastructure in the Philippines is another factor that makes it a prime location for outsourcing. A more connected nation with cutting-edge mobile phone and Internet networks is the outcome of the government’s sustained investment in sound technology infrastructure. This makes it simple for businesses, both domestically and abroad, to communicate with one another.
The IT Business Processing Association of the Philippines (IBPAP) is a powerful trade organization that has a number of more focused sub-associations under it, such as the animation council, to whom businesses like Disney could outsource work. Other councils exist in the fields of global in-house contact centers, health information management, etc. Because of their power, the government has created particular tax cuts and incentives for businesses engaged in business process outsourcing. Due to this, outsourcing in the Philippines is even more affordable for businesses than outsourcing to other nations.
Who uses the Philippines for outsourcing?
Many businesses outsource to the Philippines. The list goes long with the majority of the world’s top corporations included.
- Goldman Sachs
- Alibaba
- Basecamp
- TransferWise
- Amazon
- AT&T
- TransferWise
- Skype
- Slack
- Canva (I consulted for them)
- Citi
- Barclays Bank
How much does outsourcing to the Philippines cost?
Depending on the type of employees you hire, it should cost you between $500 and $1500 per month; clearly, someone like a full-stack engineer or senior accountant will cost more than a typical virtual assistant or customer service rep.
Salary rates in the Philippines in 2023 for recruiting virtual staff rounds to an average full-time monthly rate for 160 hours of work.
In general, part-time employees receive 50% of the illustrative monthly salary amounts above. The projected wage is, however, established by each person. For instance, if you want to outsource digital artwork or animation and hire a Filipino digital graphic artist with experience working for a large multinational company, their asking wage will be significantly greater than that of a recent graduate with little to no job experience.
The Outsourcing Conundrum in the Philippines
Whether to hire part-timers, full-timers, or freelancers will depend on your business size and needs. You can enjoy this cost-efficient flexibility and choose to engage freelancers on a part-time, full-time, or even project-by-project basis. Which method is optimal depends on the outcomes you hope to achieve with your outsourcing objectives as each option has benefits and drawbacks. In the end, each choice has a role in your broader outsourcing plan.
How to Choose the Best BPO Partner to Work With
After discussing the main advantages and factors to take into account when outsourcing to the Philippines, let’s look at the best practices for choosing an outsourcing partner.
- Take into account the services you intend to outsource. finding a partner that can offer you all the BPO services you require.
- Check to see whether a potential partner has the knowledge and expertise you’ve gained here, and ask them if they can describe how they approach or take advantage of the opportunities and problems mentioned above.
- Request a list of their current customers, some of whom utilize the same combination of BPO services you’re investigating and some of whom work in your sector. Call the clients and inquire about the positive and negative aspects of their interactions with the service.
- To make sure the partner you choose is a suitable match for you, ask any questions you may have regarding cultural differences or how they interact with their US-based partners.
Choosing the Right Filipino Outsourcing Provider: Mistakes to Avoid
Companies that have tried other outsourcing providers and are looking for a better one occasionally come to us. When we ask them what went wrong with our rival, the list of causes is frequently the same. The following oversights should be avoided while choosing an outsourcing partner.
1. Not taking into account cheap pricing factors.
As part of your price negotiation, a BPO provider might offer a reduced rate by using lesser-priced personnel, including entry-level reps, which could degrade the standard of the services rendered. Lower-quality work and less-trained reps are the results. Due to the labor availability in the Philippines, employers are probably going to hire workers with different levels of expertise in order to optimize their flexibility.
2. Ignoring work samples while evaluating quality.
When a BPO provider claims to be able to accomplish something, they may not actually be specialists in that field. Keep in mind that Filipinos are inclined to accept any duty you ask them to, even if they are not fully qualified for it, in order to avoid controversy. Make sure to look at work samples and evaluate quality.
3. Assessing suppliers in more depth than just their website.
Keep in mind that what is displayed on a website is typically a carefully chosen selection of that person’s or company’s best work and is not always representative of their weaknesses. Due to this, evaluating suppliers requires more than a quick web search. Join a series of Zoom calls, enquire about each candidate’s references, and do thorough reviews.
4. Not using a consultant for outsourcing.
There are hundreds of call center providers to choose from in the Philippines, so it may seem a little self-serving of us to say this, but it would be a mistake not to work with a consultant with decades of experience to help you evaluate and sort through the choices before recommending a short list of the best-fit BPO providers. especially considering that the chosen provider would usually cover the fees.
Key Takeaway
Due to its long history of success with well-known companies, and its wide range of skilled workers, the Philippines is an excellent choice for outsourcing business functions. With the simplicity of managing teams and the country’s significant cost savings, the country remains a sought-after destination for business outsourcing.
There are numerous opportunities for outsourcing to the Philippines while you benefit from Filipino labor which offers cultural advantages and considerations.
