In the latest IBM Global Locations Trend report released in 2010, the Philippines has already spearheaded the rankings and overtaken India as the top choice for Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) all over the globe. Aside from the rapidly increasing number of call centers nationwide, the enormous achievement was also contributed by the equally prospering high-end services, such as web development, software development, legal services, medical transcription, animation, and writing services.So what made the Philippines the new trailblazer and the foreign companies’ number 1 choice in outsourcing services?
# 1: Low Production Cost and Maximized Profit
Due to the global financial crisis, which triggered businesses worldwide in 2009, more companies were forced and still continue to search for low-cost places to set up their operations on outsourcing. The Philippines, considered as one of those countries that have lower wage, communication, electricity, and rental costs, has been highly benefited by this huge move. Most especially that salaries in developing countries are 50 to 80 percent lower compared to those in the U.S. and U.K., many companies take advantage of the opportunity; thus, resulting to widened profits.
# 2: High-Quality Service and Production
While production costs are low-priced in the eyes of foreign companies, for the skilled and knowledge graduates and workers of the country, salary and remuneration offered by BPO/KPO companies are more than exceptional. Hence, a large pool of graduates with outstanding English communication skills and programming dexterity fill up the seats of employment in various call centers and outsourcing firms. At present, the Philippines currently house a total labor force of approximately 29 million, with close to 380,000 to 450,000 college graduates every year.
Moreover, being the third-largest English-speaking nation in the world, the country also has 75 percent fluency rate among its citizens, with neutral accents easily understood by foreign clients. In fact, the United Nations recorded that the Philippines has 60 million fluent English speakers, equating to 75% of the population; whereas India has only 40 million fluent English speakers, equating to approximately 4% of their population. It is also because of this that the Philippines has finally overtaken India and other rival countries in the customer care sector.
# 3: Cost-Efficient Locations,Stable Power Supply, and Solid Telecoms
In the 2008 special report of Mr. Rob O’Malley, considered a thought-leader in the field of call center outsourcing, he noted the country’s affordable and state-of-the-art telecommunication facilities, adequate and uninterrupted power supply, and cost-efficient Class A office spaces, which are all contributors to the country’s latest success in outsourcing. With the government’s continuous effort to establish an IT-enabled economy, the Philippines maintains its intense computer security and building monitoring systems, as well as complete office services in the field of Information Technology.Compared to other developing countries and nations in the AsiaPacific region, the Philippines proves to be perfectly suited for the highly demanding work provided by the industry.
#4: Open and Business-Friendly Economy
Another significant factor that makes the Philippines the top choice in the BPO/KPO industry is its Build-Operate-Transfer (BOT) investment scheme, which allows 100% foreign ownership in almost all sectors. BOT is a type of concession involving finance, construction, and maintenance of a facility for an identified period of time until the ownership is transferred usually to a public authority. In relation to the BPO/KPO industry, the process indicates that the client has a right to own the facility, while the third-party vendor constructs the facility, hires the employees, gets the operation running for a certain period of time, and hands over the operations to the client after the said period. During the concession contract, the third-party vendor and the client work closely with a senior client representative in monitoring the operations.
Most foreign companies choose the BOT model because it enables them to reduce the business and legal risks involved in entering a new country. It also helps in gaining and retaining specialized resources, and in the fast formulation of end-to-end solutions. These said pluses make the scheme flawlessly suitable in the BPO/KPO industry where large organizations commence business in a country where it does not have an existing operation. Likewise, it also fits small and mid-sized organizations that do not have the expertise in the local business processes.