How to Outsource in the Philippines: Tips to do it right

This article will provide you with a complete guide on outsourcing in the Philippines and give tips that will surely help your company establish a strong footing in the industry.
5 min

The History of Outsourcing in the Philippines

In the late 1990s, the Philippines began carving out a significant presence in global outsourcing. This emergence was driven by various factors, including a highly skilled workforce adept in multiple fields, a business-friendly environment conducive to outsourcing ventures, and its strategic location. These elements laid the groundwork for the country to become a key player in the outsourcing landscape.

The pivotal moment came in 2004 with establishment of the Information Technology and Business Process Association of the Philippines (IBPAP). This organization catalyzed the industry's rapid expansion, providing a unified voice for outsourcing firms and advocating for policies that further bolstered the sector's growth. With IBPAP's support, the Philippines solidified its reputation as a premier outsourcing destination, attracting businesses from around the globe seeking cost-effective solutions and top-notch service quality.

Today, the Philippines stands at the forefront of the outsourcing industry, renowned for its skilled workforce, cultural affinity with Western markets, and robust infrastructure. From customer service and IT support to finance and healthcare outsourcing, the country offers services tailored to meet clients' diverse needs worldwide. With its rich history and ongoing commitment to excellence, the Philippines remains a preferred choice for businesses looking to outsource critical functions and drive efficiency in their operations.

Advantages of Outsourcing to the Philippines

Outsourcing to the Philippines offers many advantages for businesses seeking to optimize their operations. 

Cost savings: Outsourcing to the Philippines often results in significant 50-70% cost saving than hiring in-house for businesses due to lower labor costs than in Western countries.

Access to a vast talent pool: The Philippines is home to many skilled professionals across various industries, providing businesses with access to diverse talents and expertise.

Proficiency in English: The Filipino workforce is highly proficient in English, the global language of business, which facilitates effective communication and ensures clarity in project requirements and deliverables.

Cultural compatibility with Western countries: Filipinos are known for their strong cultural affinity with Western countries, making them well-suited for handling outsourced tasks that require an understanding of Western culture and norms.

Industries and Companies that Outsource to the Philippines

Below is a curated list of additional international and well-established companies that actively utilize outsourcing services in the Philippines. These companies represent diverse industries, demonstrating the country's various outsourcing landscapes and attractiveness as a strategic destination for global business operations.

  • Amazon: Amazon, the multinational technology company, outsources various business processes and customer support functions to the Philippines to support its global e-commerce operations.
  • Google: The technology giant Google outsources specific business processes and IT services to the Philippines, benefiting from the country's skilled workforce and English proficiency.
  • Microsoft: Microsoft Corporation outsources IT services, software development, and technical support functions to the Philippines, leveraging the country's talent pool and favorable business environment.
  • Uber: Uber, the multinational ride-hailing company, outsources specific business processes and customer support functions to the Philippines, enhancing its operational efficiency and service delivery.
  • TeleTech Holdings, Inc.: TeleTech, a global customer experience technology and services company, operates multiple outsourcing centers in the Philippines, providing customer support, technical assistance, and digital solutions to clients worldwide.
  • Sykes Enterprises, Incorporated: Sykes is a leading provider of multichannel demand generation and customer engagement services, with outsourcing operations in the Philippines. It caters to clients across industries.
  • TaskUs: TaskUs provides outsourced digital services and customer support solutions. Its operations are in the Philippines, serving clients in the technology, healthcare, and e-commerce sectors.

More well-established companies still entrust their business functions to the undeniably talented workforce of the Philippines. This shows how this country can offer excellent results for continuous growth to any business, regardless of industry.

Cost of Outsourcing in the Philippines

Outsourcing to the Philippines presents a compelling proposition for businesses seeking cost-effective solutions without compromising quality. The country's competitive labor rates, significantly lower than those in Western countries, contribute to substantial cost savings across various outsourcing functions. Also, the favorable exchange rate amplifies the cost-efficiency of outsourcing operations, allowing businesses to stretch their budget allocations further and invest in other critical growth areas.

Moreover, the Philippine government offers incentives and tax breaks for companies engaged in outsourcing activities, further enhancing the financial benefits of outsourcing to the country. These incentives and the country's skilled workforce, robust infrastructure, and favorable business environment solidify the Philippines' position as a premier outsourcing destination. Businesses can leverage these advantages to streamline operations, increase efficiency, and achieve sustainable growth while maintaining a competitive edge in today's dynamic market landscape.

Key Factors to Consider Before Outsourcing in the Philippines

Before diving into outsourcing ventures in the Philippines, it's imperative to assess several critical factors meticulously. These considerations lay the foundation for a successful outsourcing journey, mitigating risks and optimizing outcomes. Below, we outline key factors that warrant careful consideration before outsourcing activities in the Philippines.

- Cultural Compatibility: Evaluate the compatibility between your organizational culture and the Filipino workforce to foster seamless collaboration and mutual understanding.

- Language Proficiency: Gauge the English proficiency of potential outsourcing partners to ensure clear and effective communication channels, which are vital for project success.

- Data Security Protocols: Prioritize outsourcing partners with robust data security measures in place, safeguarding sensitive information and ensuring compliance with regulatory standards.

- Intellectual Property Protection: Establish stringent protocols for protecting intellectual property rights and safeguarding proprietary information from unauthorized access or misuse.

- Reputation and Track Record: Thoroughly research potential outsourcing partners' reputation and track record, considering client testimonials and industry certifications to ensure reliability and quality service delivery.

- Scalability and Flexibility: Assess the scalability and flexibility of outsourcing arrangements to accommodate future growth and adapt to evolving business requirements seamlessly.

- Communication and Project Management: Establish clear communication channels and robust project management processes to promote transparency, accountability, and timely completion.

- Cost-effectiveness: Conduct a comprehensive cost-benefit analysis to ascertain the cost-effectiveness of outsourcing to the Philippines compared to alternative solutions, ensuring optimal resource allocation and budget management.

Tips for Finding the Right Outsourcing Partner 

Finding your ideal outsourcing partner requires careful consideration and strategic planning. Here's a step-by-step guide to help you navigate the process effectively:

1. Define Your Needs: Clearly outline your outsourcing requirements, including the specific tasks or services you need, project timelines, and budget constraints.

2. Research Potential Partners: Conduct thorough research to identify outsourcing companies that specialize in your industry or offer your required services. Consider factors such as reputation, experience, and track record.

3. Evaluate Capabilities: Assess the capabilities and expertise of potential outsourcing partners, including their technical skills, infrastructure, and workforce qualifications.

4. Consider Cultural Fit: Evaluate the cultural compatibility between your company and potential outsourcing partners to ensure seamless collaboration and communication.

5. Review Client Feedback: Seek feedback from past or current clients of potential outsourcing partners to gauge satisfaction levels and reputation for quality service delivery.

6. Assess Communication Channels: Evaluate potential outsourcing partners' communication channels and project management processes to ensure transparency, accessibility, and timely updates.

7. Discuss Data Security: Prioritize outsourcing partners with robust data security measures in place to protect sensitive information and ensure compliance with regulatory standards.

8. Negotiate Terms: Discuss and negotiate terms of engagement with potential outsourcing partners, including pricing, service level agreements, and contract terms.

9. Pilot Project: Consider starting with a small pilot project to test the outsourcing partner's capabilities and compatibility before committing to a long-term engagement.

10. Establish Clear Expectations: Communicate your expectations, project goals, and deliverables to the outsourcing partner to ensure alignment and minimize misunderstandings.

Final Thoughts: The Philippines as an Outsourcing Destination

The Philippines has become a significant outsourcing destination due to its competitive labor costs, highly skilled workforce, and favorable government policies. The country's outsourcing industry is expected to grow in the coming years, driven by the increasing demand for business process outsourcing (BPO) services. With its strong English proficiency, cultural affinity to the West, and strategic location, the Philippines is well-positioned to provide high-quality and cost-effective outsourcing solutions to businesses worldwide. Despite some challenges, the Philippines remains a top choice for companies looking to outsource their operations and take advantage of the country's many benefits.

If you enjoyed this article, share it with the world.

Join the Better Support Community

Subscribe for business growth and outsourcing insights. Stay ahead with our curated content to update you on the latest news and best practices.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.