Are the Philippines set to become the world’s IT outsourcing capital?

Deloitte’s projections predict the Filipino BPO market share may increase to 20 percent of the global BPO market with $48 billion in revenue by 2020.  Manila, is currently the 2nd largest outsourcing city in the world. This speed of growth is closely matched by Cebu (the 2nd largest city of Philippines) with many IT business centers being created and expanding. Cebu city is closing in on Manila’s success in the software outsourcing race. If current growth of these two cities continues it is probable that the Philippines will become the IT outsourcing capital of the world.

 

STRONG BPO

The BPO industry is generally divided into the following sectors: contact centers, back office services, data transcription, animation, software development, engineering development and game development. According to the market predictions the Filipino BPO sector is expected to reach US$25.5 billion revenue and 1.4 million people employed by the end of this year.

The Philippines’ strong growth in the BPO market comes from increasing orders from all over the world, particularly from the United States. What attracts Western countries so much that they outsource their IT-oriented services in the Philippines? The key factors are relatively low cost of Living and young and well-educated Filipinos with good spoken English language skills. But there is more….

 

CORRESPONDING CULTURES 

Unlike India and China, the Filipino culture and religion is similar to Western countries. The effects of decades of US and Spanish colonizations have ingrained western values and behaviours into the population.  A significant Spanish legacy of the Philippines is the Roman Catholic Church. The Philippines is the 4th largest Roman Catholic country on earth, with about 90% of the population being adherents. Their faith obliges Filipinos to be honest and respectful people which positively influences the workplace environment. On the other hand, due to the American colonization the English language is one of the official languages in the Philippines. The legal system and political regime of this country are nearly one to one copy of the American ones which makes it easy for foreign companies to start and run business in Philippines. The systems are also very supportive of the BPO industry.

 

GOVERNMENT OUTSOURCING FAVORABLE POLICIES 

Recent Filipino governments are in general strongly concentrated on creating comfortable and predictable local environment for foreign investors. The police are also very active, creating a sense of security for locals and foreigners. The Philippines is in the  Top 10 safest countries in Asia, aside countries like Japan and Singapore. The Filipino government’s agency PEZA – attached to the Department of Trade and Industry – promotes investments and facilitates the business operations of investors in export-oriented manufacturing and BPO services. PEZA creates special economic zones and offers favorable tax policies for new companies to export around the world. This creates mass quality employment and has the benefit of raising living standards and income levels in the Philippines, it is a win win! To facilitate this growth the Philippine government has increased investment in national infrastructure including Telecommunications, transport and power generation.

 

IT-ORIENTED SOCIETY 

The average age in the Philippines is 23 years old making Filipinos a society that has grown up with technology. This population is growing up during a time where the BPO industry is truly flourishing which makes them recognize the BPO industry as one of the best employment options in the country. The software development services are especially attractive for young Filipinos because these jobs are well paid the disparity between web developer hourly rate and any other worker’s hourly rate is significant. This is why Filipinos are exceptionally motivated to learn the latest software technologies and high quality code.

 

HIGHLY-SKILLED WORKFORCE 

The access to education in the Philippines is easy with one of the highest literacy rates at about 95%. Top universities in the country produce highly skilled workforce every year to produce great results for global clients. As the BPO industry continues to grow in the Philippines, it offers significant opportunities for young Filipinos to gain experience and learn best-practises. The software talent pool in Cebu is expanding in quality and quantity. Many Blue chip companies have invested in the BPO sector in Cebu where a significant number of  IT Parks and business centres have been constructed to meet the demand of world organizations outsourcing requirements.

 

AFFORDABLE SERVICES 

Philippines is a low cost high quality country compared to other South-Asian countries. Whilst the daily wages are a fraction of those in Western countries the quality is similar, these are the two main factors in this BPO success story.

 

WINNER OF THE RACE? 

The West-compatible, technology-skilled, high quality workforce combined with a low hourly rate makes the Philippines a particularly strong competitor compared to other countries more commonly known so far for affordable IT outsourcing such as India or China.  If current growth of Filipino BPO services continues it is likely that the Philippines will become the IT outsourcing capital of the world.

 

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Sources:

http://www.aseanbriefing.com/news/2017/04/17/business-process-outsourcing-philippines.html

http://www.tholons.com/TholonsTop100/pdf/Tholons_Top_100_2016_Executive_Summary_and_Rankings.pdf

http://digitalmarketingphilipinnes.com

https://www.numbeo.com/crime/rankings_by_country.jsp

http://www.ibpap.org/it-bpm-industry-road-map-2016-public-version-download

http://www2.deloitte.com/content/dam/Deloitte/ph/Documents/about-deloitte/ph-about-2015-philippines-competitiveness-report-noexp.pdf

http://www.aseanbriefing.com/news/2015/10/21/the-philippines-the-new-bpo-capitol-of-the-world.html

http://www.peza.gov.ph/

http://icto.dost.gov.ph/new-data-privacy-bill-to-bolster-it-bpo-industry/

 

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