When businesses discuss outsourcing initiatives, it always comes down to markets specializing in BPO services like the Philippines. As the top call center country of the world, the Philippines continuously impress global leaders because of its educated workforce, efficient labor practices, industry expertise, low labor cost, and strategic location.
The Philippines has always been in a tight race with India as the best BPO services provider in the world. However, India started losing ground to the Philippines when fraudulent activities of Indian call centers were exposed in 2016. With the rise of such malpractices in the country, their BPO industry has lost call center businesses to the Philippines over the years.
The Philippines has done so much to cement its dominant status in the call center industry. One of which is building more business zones and districts to rapidly expand the industry.
Moreover, the local government improved the security and IT service management of call centers to increase business opportunities and attract more foreign investors. With such relentless efforts, the industry’s projected total income range would reach $29.09 billion by 2022.
However, like any success story, the Philippines also has its fair share of humble beginnings before it became an undisputed leader in the BPO sector. Below is a timeline that sums up the key developments of how the call center industry in the Philippines evolved to what it is today.
1992: In this year, Frank Holz established the first contact center in the country under the Accenture group. According to the Contact Center Association of the Philippines (CCAP), call centers began as providers of basic services such as email response and service management.
1995: The Philippine Economic Zone Authority—the government agency that promotes investments and facilitates business operations of investors in export-oriented manufacturing— was instituted under former President Fidel V. Ramos’ term. This paved the way for the Philippine Congress to pass the Special Economic Zone Act—an act that seeks to attract foreign investments to generate employment and bolster economic growth.
1999: Former employees of a multinational management consulting company Jim Franke and Derek Holley founded eTelecare—the first call center company in the country.
2000: The BPO industry contributed 0.075% to the country’s GDP.
2001: The Contact Center Association of the Philippines (CCAP) was established during Mar Roxas’ term as the DTI Secretary. According to the association’s website, CCAP is the umbrella organization of the Philippine contact center industry which aims to promote the Philippines as a global leader in the IT-BPO industry.
2005: The Philippine BPO industry contributed 2.4% of the country’s GDP and gained 3% of the global BPO market.
2006: The BPO industry started to witness a 46% annual growth.
2008: The majority of the top U.S. BPO firms already had operations in the Philippines. In the same year, the country has surpassed India as the number one BPO destination in the world.
2010: The Philippines was officially declared as the world’s BPO capital where 525,000 employees are already working in call centers. The call center industry generated $8.9 billion in revenue, which was expected to increase with a five-year CAGR of 38%. As expected, the country remained an attractive location for foreign investors.
2011: A total of 638,000 Filipinos are working in the BPO industry—400,000 of which are working in call centers—making it the biggest and fastest-growing job providers in the private sector. Also, the BPO industry generated $11 billion in revenue and contributed 4.9% to the country’s total GDP.
2012: The revenue of the BPO industry comprised 5.4% of the country’s total GDP. In the same year, an estimated 700,000 Filipinos are working in the BPO sector. It also became a lifeline to a growing middle class.
2013: In this year, around 900,000 Filipinos were reported working full-time in the industry. Meanwhile, the industry’s revenue increased to $15.5 billion.
2016: The industry is expected to generate 1.3 million jobs and is projected to reach a 17% annual growth and $27.4 billion in revenue.
2018: CCAP data showed that the number of BPO jobs grew by 5.1% to 1.23 million. However, it is slower than the industry’s annual target of 8% until 2022.
2019: According to the IT and Business Process Association of the Philippines (IBPAP), the local BPO sector reported $26.3 billion in revenues with 71,000 new workers.
2020: The Covid-19 pandemic dramatically impacted the Philippine contact center industry, which forced local agents to opt for a work-from-home set up to create a socially-distanced work environment. It is estimated that 30-60% of contact center workers will continue working from home for the foreseeable future until there’s more certainty about the coronavirus vaccine.
So what makes call centers in the Philippines the fastest growing industry in the BPO sector? Let’s walk through a number of factors that have contributed to the exponential growth of the Philippine call center industry:
The Philippine call center industry is full of workers who can speak English fluently with a neutral accent. In fact, the International company Education First ranked the Philippines 27th in its 2020 English Proficiency Index (EF EPI), with the country garnering a score of 562 out of 700.
Filipino call center agents are proficient in their intermediate vocabulary skills and oral communication skills. In fact, Americans may not even notice that they are talking with a Filipino representative over the phone because the English fluency of Filipino agents is similar to the US.
Foreign countries prefer to outsource jobs to the Philippines because it is receptive to western culture. Due to Spanish and American colonization, western influence has left its mark on the lifestyle and purchasing decisions of many Filipinos.
Filipinos’ exposure to popular culture in the U.S. and Europe, as well as their consumption of Western media through TV shows, films, songs, and books, makes it easier for them to relate to foreign customers. In fact, the Philippines is one of the top consumers of streaming platforms all over the world.
For the last two years, the country had already spent US$286 million on video games, video-on-demand services like Netflix, digital music streaming and downloads, and subscriptions to digital news and magazines.
Cheaper labor and operational costs
The Philippines offers top-notch voice-enabled services at a lower cost as compared to the ones provided by other countries. In fact, the cost of labor in the Philippines is almost half of that in the US or UK. Businesses take advantage of their cheaper labor rate to save on other tertiary costs by not splurging on rent expenses and office equipment.
Moreover, outsourcing to the Philippines helps businesses cut employee benefits that add up to their payroll expenses. This enables them to work with professionals without recurring benefits. Also, call centers in the Philippines take care of the expensive and tedious processes of hiring and training the agents.
The Philippine government has brought the Data Privacy Act into effect to oblige call centers in the Philippines to ensure the protection of personal data from unauthorized access.
Anyone found guilty of violating privacy regulations can be jailed for up to 6 years and fined an amount of $20,000 to $100,000, which is around 2 to 13 times the average annual salary of a call center agent.
With the creation of this act, it prompted foreign investors to grow their outsourcing initiatives in the Philippines.
The Philippine government has extended its support to the local call center industry by offering incentives such as tax benefits for foreigners looking to invest in the country. Under the Special Economic Zones Act, foreign companies that facilitate businesses in the Philippines can enjoy the following incentives:
This governmental support does not only attract foreign investors, but it also develops more jobs and opportunities for many Filipinos.
Although call centers in the Philippines started in Metro Manila, it is not the only place today that is capable of catering to the demanding, increasing needs of the BPO industry. Aside from Manila, other established BPO hubs include Metro Cebu, Metro Clark (Pampanga), and Bacolod City.
Apart from the above-mentioned cities, businesses should also check out these New Wave Cities as announced by the Department of Science and Technology – Information and Communications Technology Office (DOST-ICTO) and IBPAP:
Meanwhile, the following cities have shown high potential in terms of talent, infrastructure, cost, and business environment. Therefore, they were announced as New Emerging Cities—or places that are likely to become Next Wave Cities:
With the rise of many promising BPO destinations in the country, businesses would normally ask “What is the call center industry’s most outsourced services in the Philippines?” Here in Magellan Solutions, we have been providing the following top-notch call center services all over the world for 15 years:
Do you need help in outsourcing your call center services? Contact us today or fill out the form below for a free consultation!
Contact us today for more information.