Outsourcing to the Philippines: Advantages and disadvantages
While the Philippines continues to be the number one outsourcing destination in the world, understanding first the advantages and disadvantages of outsourcing to Manila will allow you to choose the provider that best suits your needs.
The outsourcing industry in the Philippines has a long history, dating back to the early 90s when a business leader saw the potential of talent in the English-speaking country.
The Philippine government has enacted policies and major reforms to accommodate the outsourcing industry, and soon enough, it rose to become a major economic driver in the country.
In 2020, the outsourcing industry saw revenues climb to 1.4%, generating a total revenue of $26.7 billion despite the effects of the pandemic.
The outsourcing industry is poised for another wave of growth as it continues to expand from the capital to emerging cities in different regions.
Talent has also diversified significantly over the years as outsourcing providers in Manila have started offering high-value skills, such as graphic design, software development, gaming, and animation.
If you are thinking of outsourcing parts of your business to the Philippines, then now is most likely the best time to do so.
However, you must first understand the advantages and disadvantages of outsourcing to the Philippines, so you know the gaps you need to fill when choosing a partner.
World-class English proficiency
Filipinos are native-English speakers. In fact, English is one of its two primary languages used both in school and at work.
The Philippine education system puts a big emphasis on the quality of English, both in written and oral form, from kindergarten to college level.
Unlike other the workforce in other countries, Filipinos have a neutral English accent. They are highly trainable when it comes to specific English vernaculars that you need for your company.
If you are looking for people who can do the job exceptionally well and without any communication barriers, then the Philippines is the outsourcing destination for you.
The strong affinity of Filipino people to western culture traces back to its diverse cultural heritage, where there are strong Spanish and American influences.
The Philippines was under Spanish rule for over 300 years, before the Americans came and integrated their culture with the Filipinos.
Since gaining independence in the mid-20th century, many Filipinos went abroad to work – in the US, the UK, Australia, Saudi Arabia, New Zealand, and more – and brought back pieces of foreign culture.
Because of the amount of exposure to western culture, Filipino workers have adopted a high level of cultural adaptability not seen in other countries.
The ability to adapt to foreign cultures makes Filipinos one of the easiest people to work within the outsourcing industry.
Deep and diverse talent pool
The Philippine outsourcing industry has reached a level of maturity that enables it to provide a deep and diverse talent pool.
The first outsourcing boom in the Philippines produced high-quality professionals in the realm of customer support, making it the “Call Center Capital of the World.”
Today, call center roles continue to dominate the outsourcing market, but slowly and steadily a stream of new talent is emerging.
Companies from all over the world have started outsourcing roles like marketing managers, software developers, animators and graphic designers, certified accountants, and more.
Moreover, organizations are starting to see the deep talent of Filipinos, when it comes to Information Technology, which is very much in demand in this digital age.
The Philippine government provides huge tax incentives for the outsourcing industry as officials consider it a major driver of the country’s economy.
Aside from that, legislators continue to pass laws that empower players in the outsourcing industry to upgrade, expand, and provide better services.
One of the most recent legislation passed by the Philippine Congress is the “Ease of Doing Business” law, which aims to cut down all the bureaucratic red tape in running a business in the country.
The government has also amended the Public Services Act, which relaxes foreign ownership restrictions in telecommunications, railways, and transportation.
The strong government support makes the Philippine outsourcing industry one of the most stable and progressive industries in the world.
Despite the world economy fluctuating due to various reasons, the Philippines remains to be one of the least expensive countries when it comes to outsourcing.
By outsourcing to the Philippines, a company can still save more than half the cost compared to doing everything on its own.
The reason behind the low cost of high-quality talent in the Philippines is its low labor costs, which has something to do with the value of its currency, the Philippine Peso.
The minimum wage in the Philippines is around $10 a day, while the US minimum wage is around $58 per day – a huge difference that translates to the cost of talent in outsourcing.
In the Philippines, not only will you get experienced and trained professionals for your team, but you also get them for a much lower cost, along with the infrastructure and technology of your provider.
Disruptive weather patterns
Storms and typhoons are frequent visitors in the Philippines as the country is just sitting right beside the wide expanse of the Pacific Ocean.
Typhoon-triggered disasters such as flash floods and landslides are almost a yearly affair causing destruction to thousands of Filipinos.
The country also sits in the Pacific Ring of Fire, an area of active fault lines and volcanoes, making several places of the country prone to strong earthquakes and volcanic eruptions.
While disasters are common in the Philippines, you can still have a smooth outsourcing experience by choosing a partner situated in relatively safer places.
You may also want to look for a partner that offers remote work or multiple office arrangements, so when calamity strikes in one place, you still have one team working in the other.
Moreover, outsourcing firms in the Philippines have the best business continuity plans that are well-adapted to the country’s weather patterns.
The Philippines has 18 holidays every year, a bit higher compared to other countries like the US, the UK, or Australia.
In months like April and December, there can be as many as four 4 holidays, which equates to fewer working days.
While it is true that the Philippines love celebrating holidays, the law allows companies to let their employees work, albeit with additional pay.
Modern outsourcing models also allow companies to choose whether their team will follow their country’s or the Philippines’ holidays.
Loss of business control
One of the biggest fears of any company outsourcing to another country is losing visibility or control over some of their business functions.
While it is true that when you outsource, you allow a third-party entity to co-manage part of your operations in a far-away country, there are modern solutions you can adopt to maintain control.
In the Philippines, a lot of outsourcing firms have adopted modern industry models that allow you to have direct and real-time access to your team and their outputs.
The technology in the Philippines has always been up to par with global industry standards because of strong government support and the nature of competition in the outsourcing world.
When looking for a partner in the Philippines, choose a provider that will give you customized solutions from branding, team management, and security support.
Among the top concerns of companies hesitant to outsource is data security, especially since sensitive organization data is at risk.
Some businessmen think that outsourcing will expose their companies to data security breach and other cyber-security threats.
While this fear is not unfounded, the odd truth is that outsourcing can even be safer than doing things from scratch, alone.
For example, outsourcing providers in the Philippines invest heavily in data security because of the remote nature of the business.
This means outsourcing companies in Manila have all the latest technologies, tools, and infrastructure to secure information.
If you are planning to acquire these technologies alone, it can be too expensive and may delay your other business goals.
By outsourcing to the Philippines, not only would you get talent, but you also get access to these state-of-the-art technologies to protect you from data breach.
Just a pro tip: When looking for a provider, choose a company that offers customized IT solutions that will allow you to have the hardware, software, and IT systems tailored to your requirements.
Make outsourcing work for you
Understanding the pros and cons of outsourcing to the Philippines will help you choose a partner that can address the supposed disadvantages mentioned above.
But before you set out and look for a provider, make sure that your goals and reasons for outsourcing are clear, as they will serve as a guide throughout your journey.
Secondly, get the buy-in of the people in your company to avoid misunderstandings. Let them know why you are outsourcing and how it can help them in their roles.
Third, make sure to talk to multiple outsourcing service providers so you can compare and select the one that fits your business best.
Sometimes, the cheapest offers are not the best ones. You may be able to save costs at first, but if the outsourcing provider can’t deliver consistently, it will be much more costly.
To make sure there are no hidden charges, look for a partner that has reasonable and transparent pricing with flexible deal options.
Lastly, don’t be afraid to ask questions regarding the provider’s service, clients, track record, and certifications. The more you understand, the better your journey will be.
The Philippine outsourcing industry has helped many companies around the world achieve their goals. The mission is to get a partner that best works for your interests.