Business Process Outsourcing to Philippines

One of the most dynamic and fastest growing sectors in the Philippines is the information technology–business process outsourcing (IT-BPO) industry. The industry is composed of eight sub-sectors, namely, knowledge process outsourcing and back offices, animation, call centers, software development, game development, engineering design, and medical transcription. The IT-BPO industry plays a major role in the country's growth and development.

The Philippines has gained recognition as one of the world's leading outsourcing destinations, particularly for business process outsourcing (BPO) services. There are several factors that have contributed to the Philippines becoming a significant outsourcing hub:

1. Skilled Workforce: The Philippines has a large pool of skilled and educated professionals, including a substantial number of college graduates and English-speaking workers. This talent pool is well-suited for various BPO functions, such as customer service, technical support, and data entry.

2. English Proficiency: English is one of the official languages of the Philippines, and a significant portion of the population is proficient in English. This linguistic advantage is crucial for providing outsourced services to English-speaking countries, especially the United States.

3. Cost-Effective Labor: Labor costs in the Philippines are competitive compared to many Western countries. Businesses can achieve cost savings by outsourcing operations to the Philippines without compromising the quality of service.

4. Government Support: The Philippine government has been supportive of the outsourcing industry, providing incentives and promoting policies that encourage foreign investments and the growth of BPO companies.

5. Time Zone Advantage: The Philippines' time zone is advantageous for companies that require 24/7 customer support or operations. It aligns well with the working hours of Western countries.

6. Infrastructure and Technology: Major cities in the Philippines, particularly Metro Manila, are equipped with modern infrastructure and reliable telecommunications networks, supporting the needs of BPO companies.

7. Cultural Compatibility: The Philippines has a culture that is often seen as compatible with Western business practices, making it easier for companies to integrate their outsourcing operations seamlessly.

8. Diverse Range of Services: BPO companies in the Philippines offer a diverse range of services, including call center services, IT outsourcing, finance and accounting, human resources, and healthcare support, among others.

9. Global Presence: Many international BPO giants and multinational corporations have established a significant presence in the Philippines, further reinforcing its position as a global outsourcing leader.

10. Resilience and Adaptability: The Philippine outsourcing industry has shown resilience and adaptability, even during challenging times like the COVID-19 pandemic, when remote work became more prevalent.

While the Philippines has become a prominent outsourcing destination, it faces competition from other countries, such as India, in the global outsourcing market. To maintain its position as an outsourcing capital, the Philippines continues to invest in education and training programs to develop a skilled workforce, adapt to changing technology trends, and diversify its services to meet the evolving needs of global clients.

BPO setups (captive markets and offshoring/third party outsourcing)

Due to the lower cost of producing specific goods or services in another country, outsourcing has become a common business strategy for many multinational firms. There are two common practices of outsourcing, and these are using third-party outsourcing or a captive market. These two differ based on the level of risk management, cost effectiveness or the need for managerial control.

In the Philippines, Captive Markets seem to be gaining some growth although the economic landscape still has third-party outsourcing holding the majority industry presence. This is due to the fact that in recent cases of crises there have been observations on positive growth for third-party outsourcing firms as opposed to captive markets.

This event led to the perception of captive markets as being less efficient than third-party outsourcing. Convergys callcenter in Baguio (example of a third party outsourcing firm) Third-party outsourcing Outsourcing gives a perfect job environment for the people in other nations and significantly the states with the economic issues. Additionally, it would aid the companies to save more cash. Therefore, it can also aid the interior economy.

Outsourcing is explained as turning over a project to an exterior provider that will execute the project on behalf of the central companies.

Project-based outsourcing

This is primarily used for business activities with irregular frequencies or one-off projects. The usual costing method makes use of time and material costs as variable costs and fixed costs.

Dedicated development center

This is primarily used in business cases when there are hanging requirements. In this specific model it could be used for some long-term goals for developing technology or software.

This is preferred when resource requirements are lower in the outsourced country than the home country, hence developing a comparative advantage.

The customers (that can use english or finnish as service language ) are charged for fixed fees, which are the wages of full-time employees.

This setup is preferred when core or crucial business activities are needed to be run at cheaper costs.

The rationale for employing such a setup is to cater to long-term strategic plans involving high managerial control.

Build-operate-transfer model

In this model, the practice is to contact a third-party vendor in order to develop a contract in which the vendor is the one who develops the property, sources the employees and manages the BPO center for the first designated period or amount of time. Thereafter, the company who contracted the vendor comes in and takes over the operations.

The common practice is to have managerial and training staff of the company join at some midpoint of the period of the vendor's development to have specialised training in order for the employees to meet company standards.

This model is preferred by companies that do not have any specialised expertise in the new country of operations, hence needing a local partner or vendor to assist with market entry strategies.

Digipool and its staff has been part of building multiple outsourcing facilities and have wide co-operator network at the area. Be sure to ask our partnership before starting, we know what we are doing.

more info from www.digipool.fi

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