The Philippines is known for its beautiful landscapes and its hospitable people, making it a well-known tourist spot. However, in recent years, the archipelagic nation has risen to become one of the premier destinations for IT outsourcing, customer service, and other business processes. 

It is a fact that is internationally acknowledged as more and more foreign businesses choose the country for this sole purpose. So much so that the Philippine News Agency (PNA) reported that outsourcing in the Philippines, particularly the Information Technology and Business Process Management (IT-BPM) sector, is still the go-to option even amid the height of the pandemic back in 2020.

But, how did outsourcing in the Philippines grow into what it is today? In this article, we will share reasons why outsourcing in the Philippines became such a hit.

10 Reasons why outsourcing became a hit in the Philippines

No cultural barriers

It is natural to encounter problems when it comes to cross-cultural communication between an in-house team and an outsourced team. Even if both sides speak the same language, usually in English.

Having said that, Filipinos are known for being friendly, hospitable, and adaptable.  These traits help minimise any possible cultural barriers when businesses are outsourcing in the Philippines.

Affinity with the Western culture 

Aside from Filipinos’ world-renowned hospitality and friendliness, the Philippines also has a rich past of colonial rule. The country has centuries of history of being a colony of Spain, Great Britain, Japan, and America. All these have assimilated and become part of the country’s culture and identity. 

Cost competitive 

Labour costs in the Philippines remain among the most competitive in the ASEAN region. It was even affirmed on Willis Towers Watson’s 2015-2016 Global 50 Remuneration Planning Report. This makes the country an attractive IT outsourcing destination compared to China or its neighbours. 

Many foreign businesses from Australia, America, the United Kingdom, and more leverage this fact for IT outsourcing in the Philippines. 

Employment rate 

Business Process Outsourcing (BPO) and IT outsourcing are significant contributors to the nation’s economy and job generation. So much so that these sectors are the go-to job option for a lot of Filipinos across the board for graduates and seasoned professionals.

In the case of IT outsourcing Philippines’ agencies and foreign businesses provide more professionals to join remote teams. 

High literacy rate 

The literacy rate in the Philippines is quite high. In fact, according to the 2015 World Population Review 2015, the country’s rate was 96.62%. It makes sense since the base requirement for Filipinos to land a good white-collar job is to finish their tertiary education. 

This implies that fresh graduates provide high-quality service given their existing skills, and more people are joining the workforce for IT outsourcing every year.  

Great command of English 

One of the key reasons why a lot of foreign businesses prefer IT outsourcing in the Philippines is because of the Filipinos’ great command of the English language. 

In fact, according to the EF English Proficiency Index, the archipelagic nation is ranked 22 out of 111 countries worldwide. In the ASEAN region, the country ranks second out of 24 countries. 

Furthermore, Filipinos’ English accent is generally neutral, making them easier to understand. All these just mean Filipino IT outsourcing teams can converse, collaborate, and establish a good rapport with their foreign counterparts effectively. 

Highly skilled and diverse Filipino workforce 

The labour force in the Philippines is considered one of the top-notch workforces in the world. This is because the majority of the working populace are all college graduates. 

That said, foreign businesses are not limited to BPO or IT outsourcing. Outsourcing agencies in the Philippines provide various services, including (but not limited to) accounting, marketing, human resources, software, logistics, and other business processes.

Progressing ICT infrastructure and skills 

The Information and Communication Technology (ICT) infrastructure in the Philippines is not the best nor anywhere in the top ten in the world. It is ranked 95th out of 138 countries according to the financial services group, Nomura. 

That said, in recent years, the country has slowly climbed the ranks with improvements in the ICT infrastructure and the digital competency and skills of the Filipino workforce. As a result, start-ups and corporations, even in the tech sector, choose IT outsourcing in the Philippines.

Philippine policies to protect data privacy 

Aside from the continuous efforts to improve all aspects of ICT in the country, the Philippine government has also taken steps. Particularly the Data Privacy Act of 2012.

Lawmakers have passed the law to come up to par with international standards on data privacy. It is a policy that “protects the fundamental right of privacy, of communication while ensuring free flow of information to promote innovation and growth,” according to the Declaration of Policy, Section 2, Chapter 1 General Provisions.

This means all types of data are protected and metes out punishments for criminal offenders of the law.  

Proven track record

Outsourcing in the Philippines started all the way back in 1992. Since then, after thirty years, the Philippines has risen to be regarded as one of the premier BPO and IT outsourcing destinations around the world.

Now, all outsourcing sectors contribute a large chunk of the Philippines’ economy. In fact, according to BruntWork, the country’s GDP growth is forecasted to increase up to 7% with outsourcing as one of the key contributors. 

The Philippines is naturally a good choice

All the factors we listed above are the hallmarks of an excellent outsourcing destination. For foreign businesses, this makes the Philippines a much more attractive alternative compared to other countries, like China and India. 

Furthermore, since 1992, the BPO industry has greatly helped the Philippine economy and Filipinos get secure jobs with good benefits. Since then, it has grown into one of the top options for capable and skilled fresh college graduates.

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