The Philippines has been considered one of the leaders of outsourcing thanks to the young population and cheap labor. However, in a recent report made by the advisory firm Tholons the position of the Philippines BPO industry as an Outsourcing empire is now under threat with China ranking ahead of the country.
China is funding colleges to offer courses for outsourcing at the same time they are also building new technology parks, for the country is aiming to have $100 billion of outsourcing revenue by 2020.
“The other countries know how big this IT business process outsourcing pie is globally and they want to increase their share. This is not a static world.” Rey Untal, head of the Philippines Association of Outsourcing Companies, said in an interview in Manila last July 28.
“We need to put our act together,’ Mr. Untal added. “It really is a significant wake-up call,” he further said.
Even though Mr. Untal is eager not to let China win he is looking at the bright side of things he added, “It’s good in a way. Sometimes you need to be jolted. Many of the countries that compete with us directly are enhancing all the parameters that make them competitive — talent, infrastructure, incentives.”
Philippines BPO
While China is targeting $100 Billion of outsourcing revenue by 2020, the IT Business Process Association of the Philippines is only aiming for $39 Billion of revenue by 2020.
The Philippines BPO industry is bracing itself for both the competition and the government as well since they plan to reduce some tax incentives. On top of that, there is a rising security risk in the south that hinders the expansion in the provinces.
Michael Enriquez, chief investment officer at Sun Life of Canada Philippines Inc. in Manila said, “Business process outsourcing is very important for dollar supply, especially now that the country might slip into a current-account deficit”.
“The challenges we have are already significant,” Mr. Untal said. “We don’t need additional challenges.”
Philippines BPO Today
The Philippines BPO has emerged as a major hub for customer service outsourcing. Here are some key points about the Philippines BPO industry today:
Major Player
The Philippines is one of the largest and most established BPO destinations in the world, second only to India in terms of the size of the industry.
Large Workforce
The Philippines BPO industry employs over 1.3 million people, with a significant portion of them working in customer service roles for various companies across the globe.
Cost Advantages
The relatively lower labor costs in the Philippines, combined with a large English-speaking workforce, make it an attractive destination for companies looking to outsource their customer service operations.
Industry Growth
Despite the COVID-19 pandemic, the Philippine BPO industry has shown resilience and continued growth, with revenues reaching $28.8 billion in 2021, according to the IT and Business Process Association of the Philippines (IBPAP).
Customer Service Focus
Customer service outsourcing, including call center operations, technical support, and back-office processing, remains a major segment of the Philippine BPO industry.
Skill Development
The Philippine government and private sector have invested in training programs and initiatives to enhance the skills of the BPO workforce, particularly in areas like language proficiency, customer service, and technical expertise.
Diversification
While customer service remains a core segment, the Philippine BPO industry has also diversified into other areas like healthcare information management, finance and accounting services, and software development.
Global Clients
Philippine BPO companies serve clients from various industries and regions, including the United States, Europe, Australia, and other parts of Asia.
Challenges
Despite its success, the industry faces challenges such as attrition rates, competition from other low-cost destinations, and the need to continuously upskill the workforce to meet evolving client demands.
Overall, the Philippines remains a significant player in the global customer service outsourcing market, leveraging its skilled workforce, cost advantages, and continued investment in the BPO sector.
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