Business Process Outsourcing in the Philippines

 business process outsourcing (BPO) remains a strong trend among organizations regardless of the size.In 2010 60% of the world's enterprise CEOs believed BPO played an important role in supporting their business strategies (Forbes Insights Survey). Most businesses today outsource a part of their business. Oxford Business Group predicts that the global business process outsourcing sector will reach more than $250 billion in two years. Business process outsourcing in the Philippines accounts for between 10 and 15% of the world's BPO market, where the local BPO sector has grown at an average annual rate of 10% over the past decade. The Philippines always ranks among the top five outsourcing destinations.

 

Datamark ranked Philippines as the top offshore BPO location in 2016 citing its consistent and rapid growth. Tholons ranked the Philippines number three in its 2017 TSGI (Tholons Services Globalization Index). Top 20 Digital Nations. The index scores, assesses and provides location strategies for countries as well as corporations, governments, investors, and agencies. Tholons looked at the digital revolution and innovation for the first time to determine if cities or nations are competitive.

 

The Philippines' BPO sector is the country's largest private employer with a total of 1.3million direct jobs in 2017. In the next few years, the number of direct jobs will increase to 1.7 million. Despite the slowdown in BPO, many foreign investors continue to come to the Philippines to establish or expand their business.

 

 

What is Business Process Outsourcing?

The outsourcing of business process management is the use of a third-party agency or professional to carry out certain tasks and activities that are not traditionally performed within an company. BPO can be performed in a local, national, or offshore. Non-core tasks like back office work and highly skilled technical services, from data analytics to consulting, are contracted out by companies.

 

Manufacturing companies were among the first outsourcing business processes. They used external service providers to manage large parts of their supply chains. Global BPO took off with the advent of the Internet and advances in global communications, which allowed firms to hire easily from a nation with lower labor.

 

In the beginning, control was a major concern for organizations. Many executives were concerned about the risk of delegating crucial tasks to people from different countries. This concern has been addressed by outsourcing companies that employ innovative methods of management and oversight.

 

Globalization and technological innovation continue to impact how businesses are conducted around the world. This is true also for BPO workers, service providers as well as BPO employees. BPO is constantly changing. BPO is today a key strategy for a lot of companies.

 

While successful BPO initiatives continue to bring down costs, veteran outsourcers and executives have learned to see beyond the bottom line and focus on business change. Managers are evaluating BPO projects based on short and long-term business value, including enhancements in efficiency and technology, as well as agility, and satisfaction with customers.

BPO services can be classified into both back office or front office activities. Back office was initially described as the part of an office where employees do not interact directly with customers. Back office BPO services are the most sought-after in finance, accounting and human resources.

 

Because the work is not considered core competency, it is possible to outsource it from the back office. Back office BPO has many advantages, including lower labor costs, overhead, rent, increased productivity, and access to talent that is not available in the local labor force.

 

Front office outsourcing involves subcontracting services that involve clients. This includes call center services. Although customer service can be considered to be a core business function by some organizations, it is one of the world's most sought-after outsourcing tasks. Many people associate BPO with call centers in offshore locations because of this. Because of their low cost of labor and huge pool of talent, India and the Philippines are top of the line in outsourcing voice services around the world for decades.

 

Outsourcing Opportunities

 

The Philippines was once an agriculture-based country. However, the focus has shifted slowly towards manufacturing and other services. This has allowed for more opportunities for entrepreneurs as well as expanded job opportunities. Foreign investors view the Philippines as a desirable offshore outsourcing location primarily due to low labor costs, the low cost of living, and a talent collection of educated, young, customer-oriented and English-speaking workers.

outsourcing in the Philippines presents a lot of possibilities. While artificial intelligence is threatening to replace lower-skilled jobs within the BPO sector, more medium to high-skilled positions are anticipated to be created, as long as the workforce adapts and upgrades its skills. Since the beginning, government support for the BPO industry has been consistent. The government and private sectors are working together to maintain industry expansion by implementing training programs as well as similar initiatives that benefit from AI and automation.

The Philippine Development Plan by the government considers the BPO sector to be essential to the nation's top ten priority areas for development. Programs by the government that encourage investment include tax breaks, tax exemptions and simplified trade procedures.

Outsourced Voice and Non-Voice Services

BPO Call Center Industry in the Philippines

The Philippines has overtaken India as the world's largest call center capital. Call center companies continue to improve in terms of service quality (with an emphasis on customer experience across all channels), delivery, scope of work and technology. Companies from around the world are establishing BPO operations in the country for the first time or expanding existing ones. Recent investment commitments from companies located in Europe and Asia Pacific are also expected to further increase BPO growth. Voice will keep on its strong growth trajectory according to economists.

The Philippines Outsourcing Sector's Non-Voice Segment

The voice services segment continues to generate the highest revenue but the non-voice segment, that includes health care, back office, game development and animation is rapidly catching up. The non-voice sector is expected to see growth due to increased demand for higher-level skill.

What is it that makes BPO the fastest-growing sector in the Philippines?

Companies have shifted their processes to the Philippines due to various reasons.

Compatible Cultures

An outsourcing project that is successful can be achieved through effective communication between the outsourced staff and local customers. Along with excellent communication skills, the employees who are outsourced must have a an innate sensitivity to local culture. This is an area in which Philippines surpasses other outsourcing destinations.

Low Costs

It is the lower cost of business that fuels the outsourcing industry in developing countries. In the Philippines there are other services and products such as professional services or office rentals accommodation, food and meals are also available with very low costs for labor. Health care costs and taxes are also much cheaper than in developed countries.

Highly skilled, highly educated Staff

Each year, 3 million graduates of the Philippines' top-notch higher education system are able to enter the job market. In addition, Manila offers a strong professional certification system and continuing education. You can find staff in nearly any field within the Philippines.

Stability and Economic Growth

The Economist stated that there have been positive developments in The Philippines, which suggest continued economic growth.