Is Outsourcing To The Philippines Still Competitive?

Many new countries are emerging as top destinations for BPOs. But despite facing stiff competition, the Philippines’ position as a global outsourcing leader in voice and call services remains strong.

From Poland, South Africa and Brazil to Mexico, Malaysia and Argentina, there are multiple new outsourcing locations offering a highly skilled talent pool, well developed tech infrastructure and a positive business environment with outsourcing-friendly laws. 

A Growing Global BPO Market

All of these countries are seeking to capitalise on a growing global business process outsourcing market that’s projected to reach $525.2Billion by 2030. And while Asia has long dominated the outsourcing market, Eastern Europe and Latin America are starting to catch up.  

Certainly Latin America is attractive to American companies that want to nearshore operations, offering cultural affinity and similar time zones. Similarly, Eastern Europe is becoming a magnet for outsourcing software development with countries such as Poland, Romania and Ukraine known for producing some of the brightest IT talents in the world.

Other countries such as Portugal, and particularly its capital Lisbon, are also emerging as serious outsourcing providers, owing to language skills, a strong education system and government support.

There are, of course, many factors to consider when assessing what location is best for your business. But when it comes to cost savings, access to a wide talent pool and 24/7 hour service, it’s easy to see why the Philippines is so strong.

Furthermore, political instability in Eastern Europe, not least because of the war in Ukraine, along with higher cost considerations in Latin America, suggest Asia still has some inbuilt advantages. One of the key ones is that as outsourcing adapts to changing technologies and more complex business needs, few countries have as mature and sophisticated an outsourcing market as the Philippines.

Last year BPO industry revenues increased 10.3 percent to $32.5Billion and staff count rose 8.4 percent to 1.57million according to the IT and Business Process Association of the Philippines (IBPAP). This year, IBPAP said the industry’s workforce could reach 1.7million and revenue could hit $35.9Billion, providing healthy growth of 8.3 and 10.5 per cent respectively.

These impressive figures indicate the country is on course to meet ambitious targets of generating 2.5million outsourcing jobs and $59Billion in annual revenues by 2028.

With the sector accounting for almost 10 percent of the Philippines’ GDP, it commands strong support from the Government with tax breaks, investment in critical infrastructure and other incentives being delivered to help outsourcing continue to grow.

A Well Established Ecosystem

“It benefits from a big, mature and incredibly well-established ecosystem that would be hard to replicate elsewhere,” explains Ian Jackson, CEO and co-founder of Enshored, a California-based BPO with multiple sites in the Philippines. 

“If you’re looking elsewhere, you’re picking somewhere that’s probably a bit more risky given the Philippines’ history and capability in this space.  The Government has done a good job creating the right environment for BPOs and universities are also waking up to the opportunities for graduates to get good jobs in the sector. There’s now a big focus on BPO roles that students can get into and this helps deliver a strong pipeline of talent.”

A further advantage is that the Philippines is the world’s third largest English speaking country and has the second highest literacy rate in Southeast Asia. Filipinos’ highly desired accent neutrality is also attractive to U.S. companies seeking seamless customer support. And with nearly a third of the population under the age of 24, there is a young, vibrant workforce that’s  made up of digital natives who instinctively understand how technology can be leveraged to help business.

Furthermore, strong government regulations, a high performing culture and international data privacy standards all add to the Philippines’ competitiveness. Combine this with cultural similarities (as a former colony for Spain, Mexico, and the US at various points in its history, Filipinos are well exposed to Western influences) and there are very good reasons why the Philippines has become a go-to country for many fast growing U.S firms seeking a reliable outsourcing partner.

Although there is still room for improvement according to the Tholons Global Innovation Index, a benchmark most BPOs use when evaluating locations.Digital innovation and sustainability are two such areas where the Philippines could be more competitive.

But the fact that it continues to enjoy strong growth, is recognised globally as a trusted outsourcing partner and is ranked as a “big kahuna” nation in the 2023 Tholons Global Business Innovation Sustainability Index, shows it remains a BPO powerhouse.

And while competition is always healthy, it will only help the Philippines get better.