The Business Process Outsourcing Industry (BPO) In The Philippines

Published by Magellan Solutions at May 21, 2019

When did BPO start in the Philippines?

FACT: The BPO industry in the Philippines actually started in 1992 and not in 2000.

An international Global Resource Center in 1992 has instigated the beginning of the local BPO industry in the country. Three years later, Congress passed the Special Economic Zone Act. It paved the way for the creation of the Philippine Economic Zone Authority (PEZA). As a result, this has opened many doors for international BPOs in the country.

A multinational BPO and a US-based company, meanwhile, opened their Philippine branches in 2001 and 2003. It has generated jobs and increased the country’s GDP.

Based on the latest report from PSA, the country has 851 registered BPOs and 429 call centers. With these figures, the Central Bank of the Philippines expected a 10-percent increase in revenue. That’s approximately US$24.5 billion!

Meanwhile, the majority of the Philippines’ clients came from the United States, a Reuter report revealed. It has also a growing list of clients in countries such as Australia, New Zealand, and Europe.

BPO Industry in the Philippines Statistics 2018

Since the start of the business process outsourcing industry in the Philippines in 1992, it has already come a long way. With its nearly three decades of existence in the country, it has earned a prestigious reputation as one of the global leaders.

In terms of global significance, the country became the 7th top outsourcing destination in the world based on A.T. Kearney Global Services Location Index.
There are six cities in the Philippines that became a part of the 2018 Tholons Top 100 Global Outsourcing Destinations namely Manila at the second spot, Cebu that got to the eleventh, Davao at Seventy-fifth), Sta. Rosa made it to the eighty-seventh, Bacolod ranked eighty-ninth, and Iloilo at ninety-second ranking. The ranking is based on the digital transformation of the city, skills of the talent, and quality of the output and result.
The Philippines is one of the world’s undisputed business process outsourcing capital in Southeast Asia. They are the closest rival of India and have overtaken the spot with 16% to 18% of the global market share.
Most of the clients of the business process outsourcing companies in the Philippines are from the United States. They make up about 65% of the local BPO market. As a result, the companies catering business process outsourcing in the Philippines also serve a continuously growing range of clients from different parts of the world such as Europe, New Zealand, Australia, and many more according to the reports of Reuters.
The business process outsourcing industry in the Philippines is one of the top earners of foreign exchange. The sector is bringing the country a total revenue of about one billion pesos or more.
Based on the Philippine Statistics Authority (PSA) data. In 2018, there are more than eight hundred fifty (850) business process outsourcing companies that are registered in the Philippines. Reportedly, about 46.2% or almost 400 of these firms offer services that are related to information technology. More than twenty of the remaining companies are into medical transcription businesses and about nine are from animated film making and production houses.
In 2018, the President of the Philippines gave recognition to the business process outsourcing industry for its significant role in the growth of the country’s economy. It was cited as one of the largest contributors to the gross domestic product of the Philippines.
The growth of the business process outsourcing industry inspired the diversification of talents in the Philippines. This is thanks to the influx of outsourcing clients from the US, AU, NZ, and European countries. The BPO industry in 2018 contributed to a 14% increase of job opening according to the report by Jobstreet.
Most of the job positions that are in high demand in the business process outsourcing industry are those that are related to information technology, accounting and finance, customer service, telemarketing, and many more.

BPO Industry in the Philippines Statistics 2020

The year 2020 is a challenging time to almost every business industry around the world.

The global health crisis greatly affected many businesses including the business process outsourcing industry to the point that some decided to permanently close.

The pandemic also changed the way companies do business. The question now is how big is the effect of this health crisis on the BPO market? Let’s find out through the 2020 statistics for the business process outsourcing industry.

Despite the challenges associated with the global crisis, BPO companies in the Philippines continuously employ millions of workers because of the continued demand for skilled outsourced work globally.
The sector is said to be contributing at least nine percent in the growth of the gross domestic product (GDP) of the country.
As a result of the still in-effect community quarantine, BPO companies learned to adjust to the new normal. They implemented new flexible working practices where most agents are in a remote work set-up for the operations to continue.
Considered as one of the important sectors in the Philippines because of its significant contribution, the business process outsourcing industry was among the few industries that were given exemptions when the country implemented a strict community quarantine.
The BPO companies nationwide were allowed to operate given that they follow and observe the specific guidelines such as wearing of face masks and shields, adhering to the physical distancing, utilizing a skeleton workforce, and many more.
In the year 2020, it was found out that the average internet speed in the Philippines ranked 63rd out of 100 countries based on the Economist Intelligence Unit’s 2020 Inclusive Internet Index. The internet providers are continuously doing the best they can to constantly improve the service.
In the first half of the year, January to July, the investment pledges are at 37% higher than in 2019.
The pandemic significantly affected the headcount and revenue projections in 2020, said the CEO of IT and Business Process Association of the Philippines (IBPAP), Rey Untal.
Amidst the community quarantine, the IT-BPM continuously increased its capacity, especially with the support of various agencies in the government such as the Department of Trade and Industry (DTI), Philippine Economic Zone Authority (PEZA), and Inter-Agency Task Force (IATF) on Emerging Infectious Diseases.
Although the business process outsourcing industry is facing many challenges in the year 2020, the BPO roadmap to 2022 is looking bright according to Benedict Hernandez, the chairman of the Contact Center Association of the Philippines (CCAP).
Moreover, mentioned in the roadmap were contact center and business process outsourcing, information technology and software development, animation and game development, and global in-house centers. Meanwhile, the IT-BPM is projected to reach almost 40 billion dollars in revenue by the end of 2022.
While most sectors accepted the decline in their revenues due to pandemic woes, the business process outsourcing industry maintains its course to success. Today, BPO companies thrive as more investors come on board, to tackle the demand in outsourced work under the new normal.

BPO Industry in the Philippines Statistics

The Philippines has proudly held the title of “The BPO Capital of the World” since 2010.

The country has gained advantage in the BPO market because of its compatibility with the West. This is also one of the reasons why many businesses in the United States resort to the Philippines as their outsourcing destination.

They specialize in the areas of customer service, both voice and non-voice related services, and information technology support.

Today, the business process outsourcing industry in the Philippines is experiencing a nine percent growth. It is considered one of the ten high priority areas by the Philippines Development Plan.

Moreover, here are some of the points to note about the business process outsourcing industry:

The year 2015 is the time of peak for the business process outsourcing industry in the Philippines. It’s the moment when things are going smooth and bright for many companies.
However, in 2016, there’s a huge decrease of about nine percent. Quite a not so good year for the sector.
Meanwhile, in 2017, managing to reach a total of twenty-three billion dollars ($23B) amidst all the issues arising in the sector, it’s another great year for the BPO industry. The sector is greatly active again. In the early quarter of 2018, the country has three new BPO companies that are all ready to face the challenges in the industry. Because of this and more, they have seen that the sector is continuously growing.
The government is supportive in the growth of the BPO industry. They are creating various programs to attract more investors in the country. This includes tax holidays, tax exemptions, as well as easier export and import procedures. In terms of the people, many training programs by the Philippine government are available in different parts of the country for those who want to pursue a career in the BPO industry.
Despite the possibility of global recession, the Department of Labor and Employment (DOLE) in the Philippines is still seeing an increase in the demand of jobs that are under the business process outsourcing industry. In fact, many of the big BPO companies in the countries are already trying to fill many job posts to take action on the growing demand.
As of writing, many foreign investors are already seeing the potential of the business process outsourcing industry in the country. According to the reports of ANC News, the Philippines remains to be the top prospect of British investors and other foreign BPO clients. If this standing continues, experts are seeing that the country will continue to thrive in the BPO sector for the years to come.
In the next few years, the country will experience more emergence in the new technology, attracting more clients and investors.

Challenges faced by the Philippine BPO industry

Artificial Intelligence
Data Analytics
Cybersecurity

These three factors are among the top challenges BPO companies need to address to go to the next level of global outsourcing.

Artificial intelligence has been around for decades. Many businesses are now opting to use it for simple and mundane tasks. But it is not as reliable as always.

It is ideal to follow what Magellan Solutions and other BPO companies are doing. We utilize artificial intelligence together with the human workforce to improve efficiency while reducing the risks and accuracy.

And to address the trials in terms of data analytics, which is also becoming an even bigger thing, BPO companies like Magellan Solutions hire professional people to take care of the data analytics. Because of its uses and advantages, many companies give importance to huge data and information. This is a good reason for the country to provide services related to data analytics.

Cybersecurity has also affected not only the Philippines but all companies, brands, and corporations in the world. With the European Union implementing a stricter online regulation, BPOs have to pass stricter online security. What good will it bring? Clients and customers who are safe from online fraud and other online illegal transactions.

What Magellan Solutions do to prevent this issue from happening is ensuring the security of all the data, software, programs, and many more. We have proper certifications to prove that we implement and follow strict protocols such as the following:

Trustwave which is necessary for businesses related to e-commerce, PCI which is mainly for data account protection
GDPR which is important for European countries.
ISO 27001 that helps ensure that the outsourced company adheres to the strict standard information security measures. This is basically to assure that data and all other information of the client are safe.

Through the collaboration of various companies and the government, the Philippine BPO industry is here to stay.

Benefits of Hiring BPO in the Philippines

Now, let us talk about the advantages a company can get when they outsource.

Reduce costs / save money

The first thing is cost-reduction. Cost-effective services are offered all around the Philippines. Companies outsourcing from this country are more likely to cut their labor costs to 70% and can even go as high as 90%. This will benefit large corporations, start-ups, and small companies.

English proficiency

A huge percentage of the Philippine population is adept at using English with a youth literacy rate as high as 97.94%. Since grade school, Filipinos are already learning to speak in English. Through this, they develop a neutral accent. This makes a lot of sense because many clients are from English-speaking countries.

High-quality talent pool

The Philippines has a high rate of college graduates and job hunters every year. In fact, there are more than 700,000 graduates in 2017. As a result, the pool is good and is beneficial to the BPO industry in the country. Employees, especially fresh graduates, are also very flexible when learning.

Ability to adapt to different cultures

Due to its historical background, being colonized by different countries such as Spain, America, and Japan in the early years, Filipinos can adapt well to different cultures. The people are very open to western culture and know many things about it.

Tax incentives

The Special Economic Zone Act granted generous tax incentives to international companies. A smart move for the government. Through this act, many businesses can save more money if they choose the Philippines as their outsourcing destination.

Another strong sector of the BPO industry that the Philippines does well is call center support services.

What is call center support?

Call center support is the customer service part of the business. This is where direct customer transactions take place. An inbound call center, for instance, has a direct relation to customer service.

There are many different types of customer support services that are done through various mediums like phone, social media, live chat, and omnichannel support. This is where call centers or BPO solutions have different channels that are available to their clients.

For example, a company can use social media, email, live chat, and or phone to conduct customer service. It enables them to help more customers and make them happier with the business.

When you outsource a call center customer service, your company can basically: