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Outsourcing Business Processes in the Philippines
October 31, 2006


Why Outsource in the Philippines

Cross-border business process outsourcing is an emerging field in which the Philippines has moved forward aggressively. All around the world, however, countries now compete to offer BPO services to large multinational organizations.

The most compelling reason that companies outsource and offshore relate to cost. By now everybody will have heard about Labor arbitrage, which is the difference in the cost of labor from first world countries to developing nations like the Philippines. (Arbitrage is where you buy and sell in two different environments and profit from the difference)

Fortunately, the Filipinos are able to display a high degree of flexibility in adapting to the high demands of such progressive changes. Hence, “providing knowledgeable and quality-focused labor” is already given greater emphasis in the marketing activities of call center and Business Process Outsourcing (BPO) companies, putting a premium on human capital.

Many US firms have shut down and laid off their American call center employees and transferred the jobs offshore to developing countries. The Philippines was the second largest recipient of outsourcing with almost 30% of the market. Aside from the US, Australia and the UK were the other countries targeted for BPO services (Aquino 2004).

Being the world’s third largest English-speaking country, the Philippines attracted many college graduates to the new industry by offering higher salaries than most other jobs. In fact, the expansion of the BPO industry sub-sector has been described as moving at a blistering pace. The Philippine government also is backing the industry through tax incentives and the direct involvement of President Gloria Macapagal-Arroyo.

According to the association, the Philippines offers a skilled labor pool of 29 million people and about 325,000 university graduates yearly. More than 95% of the population is literate. At the same time, labor costs are a fraction of what they are in the US. The association says the monthly rate for a project manager is between $700 and $1,150 a month in the Philippines, versus $3,600 and $7,100 in the United States.

While companies have long outsourced manufacturing operations and other tasks such as IT maintenance or software development, the trend of global back-office operations or cross-border outsourcing business processes in the Philippines, has now expanded to include other kinds of business processes such as customer contact, programming, media management, writing, graphic design, data entry and quality assurance. Companies are moving such work to locations in the Philippines and other developing countries, arguing that they can cut costs by 20% to 40%. As a result, cross-border business process outsourcing has grown into a massive market.

As an end-to-end provider of offshore solutions, Offshoring, Inc, the leading staff leasing firm in the country, provides a wide range of products from outsourcing business processes in the Philippines to contact center and ancillary services. Offshoring, Inc has built a relation between technology and art as it uses best-in-breed technology, proven expertise, and highly competent and motivated teams.

Offshoring, Inc, an American owned and managed offshore staff leasing company based in the Philippines offers a unique proposition to its clients. The clients maintain complete control over the development of their projects from start to finish through cost effective digital communication, like email, instant messaging, Skype or Voip.
The clients resort to outsourcing business processes in the Philippines and some of their business operations to Offshoring, Inc because the company is known for hiring only highly qualified, well-trained, and experienced professionals who mostly have advanced degrees and practical training in the workforce.

Such extended organizations with digital ties that straddle the world are being formed at a rapid clip as global multinationals in the West rush to move their back office processes overseas. The advantages that such organizations offer appear to be clear – greater flexibility and efficiency at lower costs. In addition, managing an extended organization in which a third party firm providing an outsourced service that is able to seamlessly represent itself as the client company.

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