Outsourcing & Offshoring: It Is No Longer A Question Of Why…But Where Or When?

Outsourcing & Offshoring: It Is No Longer A Question Of Why…But Where Or When?

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Why The Philippines, Why Now?

I visited the Philippines recently for my daughter’s engagement, and in preparation of her wedding. I was pleasantly surprised to see some very dramatic changes going on. For starters, they are in a growth economy which is expected to increase even more in the coming years. The Philippines is considered by most as a 3rd world country. So to see their economy doing so well is amazing especially since over here in the US, people are still questioning our own economic recovery ;o(

The real estate market is doing very well (no such thing as being upside down) with so many new high rise condominium buildings under construction.  Most noticeable change is the Skyline of the Makati and Fort Bonifacio areas. Are they selling? Yes! In fact, they are pre-selling!!! I was told that these new dwellings will cater to “Balikbayans” or returning Filipinos who choose to retire in the Philippines, and from a growing middle class made up of Overseas Workers and from an emerging industry called “Call Center Operations”. Many multinational companies choose to invest in a residential Condo than to have their expats stay in expensive Hotels.

The most significant change is the growth in the Philippine Call Center Operations. This industry is BOOMING! According to a CNN report back in 2012, the Philippines employs 600,000 workers in call centers that is even MORE than India.  This industry is estimated to be worth $11 billion and is expected to more than double by 2016. Within a short period of time, the Philippines has established itself as one of the top destinations for offshoring and outsourcing (O&O) operations. This is a result of several intrinsic strengths in its labor market, infrastructure, and business environment.

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Why the Philippines Call Center Business Is Booming

Foremost among its intrinsic strengths is a sizable and skilled labor force. The county produces nearly 500,000 college graduates per year across a range of industries that align with O&O industry. Nearly 150,000 graduate from business related programs, while another 100,000 are from Engineering or Information Technology (IT) programs. The Philippines is also one of the few countries in the world that can boast of a large percentage of English language-speaking graduates each year.

Here are a few other reasons why US companies are showing a preference toward Philippines-based call centers:

  • Soft accent and historical ties to the US makes it popular with US Companies
    • The culture is known for its hospitality; Filipinos demonstrate strong familiarity with the American culture, so adaptation is easier.
    • Considerable pool of generalist and specialist talent
    • World-class telecommunications
    • Abundant and low-cost real-estate in major urban areas
    • Conducive business environment
    • Among the lowest in labor costs. Entry level is only about $470 a month.
    • Good written and verbal English communication skills compared to other Countries traditionally known to provide this type of service.

We’ve seen how Globalization has changed the Business climate of today and how it has effectively made our world smaller.  With the help of Technology which is advancing faster than ever and with the availability of secured Networks, it is no longer a question of “why go into Outsourcing or Offshoring?”… but WHERE? For me however, the question I ask in WHEN? When I return for my daughter’s wedding, perhaps I’ll have a better answer!

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Joey Huang About the author