Why do businesses outsource to the Philippines?
Outsourcing is a common term in business and refers to contracting with an external agency in another country to perform some task that your company would usually handle. One of the main reasons companies choose outsourcing abroad for their operations is because it reduces costs. It's estimated that there are several million Filipino workers currently employed in various outsourcing roles.
Companies usually outsource to the Philippines for several reasons. This article looks into some of them and tries to explain why outsourcing is more beneficial than doing it in-house.
Outsourcing and offshoring is a common practice in the Philippines and many companies have benefited from outsourcing their business processes to this country. Outsourcing entails contracting third-party service providers on an as-needed basis which allows businesses to focus on core competencies and expand without having to hire additional workers or increasing workforce expenses.
This article will discuss why it is cheaper to outsource some business functions such as support services, customer relations, call centre operations, back-office processing, etc. to the Philippines than to do it locally.
It is cheaper to outsource to the Philippines because of lower labour costs
Like most countries with a cheap labour force, wages are generally much lower for Filipino employees compared to those of a similar occupation working in a developed economy like Singapore or. In the Philippines, the minimum wage is calculated on basis of localities, areas and the type of industry.
For example, in Metro Manila, workers are paid a minimum wage of PHP 700 (USD 14) per day for non-agricultural work while PHP 521 (USD 10.5) is considered as a daily salary for workers in the agricultural or related fields.’
Currently, there are more than 30 million Filipinos working abroad with at least 3% being professionals who work as managers, traders, consultants or skilled technicians. The Filipino labour force is one of the most mobile labour forces among Asian countries because most Filipinos find jobs that pay them salaries they can send to their families back home.
However, many people believe that outsourcing work to the Philippines will only result in "jobless growth" (or simply destroying jobs). That is not really true because outsourcing can provide local businesses with more work opportunities and at the same time, allow them to increase revenues.
Filipinos have a high level of education and fluency in English
The Philippines is a country that has great communication skills and English language proficiency, offering outsourcing companies an opportunity to outsource their customer support jobs to the Philippines.
The Philippines is the highest English-proficient nation in Asia  [the article also states that 5% of Filipinos speak more than four languages - indicating that many of them speak multiple European languages]. The US Department of State classifies the Filipino language as "similar to other Malay-based Austronesian languages" and Tagalog as one of 17 major languages of the world.  This makes it easy for Filipinos to learn new languages and communicate with people from all around the world.
Filipinos are hard-working and hospitable
Filipinos are generally hard-working and hospitable people. This is one of the reasons why many companies outsource their business processes to the Philippines. There are also other factors why outsourcing has become popular in this country; these include lower labour costs, an educated workforce, and skills in English.
One of the main reasons outsourcing to the Philippines is constantly growing in popularity is because Filipinos are hard-working and hospitable. Once you work with them, they will do everything they can to make sure that their jobs are done correctly. Many companies claim to have hardworking employees, but Filipino workers excel in these departments.
The Philippines is a country that has been admired for its hard-working and hospitable people. Outsourcing to the Philippines would mean access to the high levels of both qualities, making it an attractive destination for outsourcing services.
Philippine culture highly values extended family ties. Filipinos give priority to their families over themselves, which means they are likely to put in more effort at work if their family members have no financial difficulties. For companies looking to outsource, employing workers from the Philippines can result in increased productivity and better quality of work.
The Philippines has a huge talent pool
For years, the Philippines has been known for outsourcing (or offshoring) services to companies in North America. But some Filipino entrepreneurs are now finding demand in the US and even Europe for their local talent pool.
Filipino executives like Edgar Sia II, CEO of Manila-based Xurpas Inc., one of Southeast Asia's largest mobile content providers with offices in San Francisco and Silicon Valley, see this as an opportunity to generate more jobs at home while tapping an overseas market.
"Our long term business plan is really to create a larger footprint outside what we have locally here," says Mr Sia, who set up shop in Silicon Valley because it is "the heart of innovation." He does not give figures on how much revenue Xurpas earns overseas, but it is expected to be around 5% in the next five years.
Xurpas has recently acquired two American tech companies that serve as a springboard into North America's $18 billion mobile apps market (outside of Apple). One of them, Apptega, helps developers manage applications for Android devices. The other, Airbitz, specializes in cloud-based security for data stored on smartphones or tablets.
Sia sees local tech entrepreneurs like him gaining ground at home and abroad. "People are getting more familiar with Filipino tech talents," he says, noting their reputation for hard work and dedication. "Before people used to think Filipinos will not do coding because it's very technical."