10 Reasons to Outsource to the Philippines
The Philippines has been a top destination for corporate buyers of information technology and business process outsourcing services. The reasons may vary, but for those companies that outsource to the Philippines, the cost-effective talent pool is a major attraction.
It’s not just cheap labor they’re looking for, but reliable, skilled workers who can produce stellar results for their clients. If you want an outperforming team of your own, consider these ten other reasons why the Philippines is your number one source of outsourced agents.
1. Filipinos are highly proficient in speaking and writing in English.
The English Proficiency Index, published by a Swiss language institute, shows that the Philippines ranks 14th out of 88 countries that use English as a second language. In Asia, the Philippines ranks second after Singapore.
While Filipinos grew up learning English formally in school, their introduction to the language already began at an earlier age. Children as young as two years old are taught to count “one, two, three…” — at the same time, they’re learning to count in their native language.
Their exposure to English goes beyond textbook lessons, too. News reports and newspaper articles are delivered in English. Teachers speak a mix of English and the native language when communicating with students. Offices in the public and private sectors use English in official documents and during events and meetings.
2. Overall, the adult literacy rate for the Philippines is 96.3% as reported by UNESCO.
Among the youth, aged 15 to 24 years old, the literacy rate is around 98.1 percent. For adults older than twenty-four, the average literacy rate is 96 percent. Children as young as 3 years old attend pre-school classes in daycare centers. Then, they start their formal schooling at 6 or 7 years old in Kindergarten.
When formal education is not an option, out-of-school youths and adult learners may finish their studies through non-formal education. Classes are held in community learning centers and public halls. Short courses are also provided by TESDA.
3. Filipino customer service agents try to maintain smooth interpersonal relations with clients and their customers.
This is because of the Filipino cultural value known as pakikisama. Filipinos place great importance on maintaining good interpersonal relations with friends, neighbors, and coworkers. Such behavior guarantees that your agents will avoid conflict as much as possible. They will choose diplomatic options to reduce friction.
4. Filipino culture has assimilated well some (if not all) parts of American pop culture.
It’s easier for Filipino agents to communicate with Americans. One reason is that they speak English well, but more than that it’s also because they embrace American culture.
Filipinos watch Hollywood blockbuster movies and listen to Billboard Top 20 songs. So, it’s easy for them to understand pop culture references and common idiomatic expressions.
5. Employee attrition rates are lower in IT-BPO companies in the Philippines compared to contact centers in the US and India.
Most Filipino workers see a call center job as a primary source of income. It’s difficult for them to let go of a well-paying job when their whole family benefits from it.
That’s why the turnover rate for customer support positions in the Philippines is only 20%, on average, compared to 28% for the same jobs in India. In the United States, the turnover rates for call center workers range between 30% and 45% on average.
6. Usually, the time difference between the Philippines and the United States is any time from 9 to 12 hours.
The time difference guarantees there’s business continuity for businesses that cater to consumers 24/7. While customer service reps in the US sleep, a team of agents in the Philippines take over in providing support and guidance to consumers.
The flexibility of outsourced teams presents a secondary benefit to you. You don’t have to worry when your employees at home are on holiday or sick, or when they had to retire, move away, or change jobs. With a team of trained workers at your disposal, you can fill the gaps in your work processes without putting your operations on hold. You may lose people due to major life events, but your business will continue to run like a well-oiled machine.
7. Every year, state universities and colleges in the Philippines produce, on average, more than 200,000 graduates with baccalaureate degrees in business and medical courses.
Most college graduates have a business or medical degree. Some have IT-related degrees while others have baccalaureate degrees in science and engineering.
According to the Commission on Higher Education (CHED), a government agency in the Philippines, the top five fields of study that college students go into are the following:
- business administration
- engineering and technology
- information and technology
- medical studies
Of the more than 2.2 million students enrolled in these subject areas, about 41 percent chose business administration and almost 33 percent pursued education studies. Engineering, information technology, and medical studies accounted for 20 percent, 18 percent, and 9 percent, respectively.
8. The Philippine government continues to support the IT-BPM industry through its K-12 program.
You may consider the ICT strand in the K-12 education system as a turning point for the youth. Once the Senior High School graduates leave school, those who were enrolled in the Information and Communications Technology (ICT) strand will have the technical and communication skills required for a job in a BPO or KPO company. They can be call center agents, web designers, data encoders, radio technicians, graphic designers, or junior programmers.
9. The government also provides fiscal incentives to registered enterprises that provide IT service activities.
The Philippine Economic Zone Authority (PEZA) considers the following IT Service activities as eligible for incentives:
- IT-enabled services such as business process outsourcing, call centers, data encoding, transcribing and processing, etc.;
- software development and application, including programming and adaptation of system software and middle-ware;
- for business, media, e-commerce, education, entertainment, etc.;
- content development for multi-media or internet purposes; and others.
Registered IT enterprises may enjoy 4 to 6 years of income tax holiday or 100% exemption from corporate income tax from the start of their operations.
10. The Philippines has a comprehensive and strict data privacy law.
The Philippines has passed the Data Privacy Act of 2012, which was created “to protect the fundamental human right of privacy, of communication while ensuring free flow of information to promote innovation and growth.”
The law has extraterritorial application, applying not only to businesses with offices in the Philippines, but when equipment based in the Philippines is used for processing.
These are just ten of the many reasons that companies may choose to outsource to the Philippines. Other reasons, such as proximity to their target market, were not included in the list, but they remain as valid as these ten.