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Outsourcing To The Philippines: Its Impact On Future Business


With the proliferation of features such as artificial intelligence (AI), automated financial investing, and proactive healthcare management, businesses around the world, irrespective of industry, are increasingly participating in a global marketplace that is fueled by technological innovation. Even a small business serving a small local market will inevitably take part in this globalization if only for the simple fact that it will continue to be in their best interests to outsource certain business processes to remain competitive from a cost-containment standpoint. And in this regard, the Philippines is the clear-cut leader in outsourcing services worldwide, even becoming known as “the BPO capital of the world.”

Offshore outsourcing is expected to grow at a compound annual growth rate of 13% through 2022, with large enterprise engagements growing at 18%. It is forecast that the Philippines will make up 15% of the total global outsourcing market and generate revenues of close to $40 billion by 2022. While cost-containment has historically been the most attractive feature of this industry, it will increasingly be driven by more companies choosing to offshore more higher-value business processes.

Companies worldwide are moving away from offshore outsourcing solely for lower labor costs and are increasingly choosing it to achieve operational excellence by tapping the Philippines’ highly talented workforce. The net effect of this is that more and more companies will continue to look to premium BPO vendors in the Philippines to provide services such as research and development, product development, or market research, as companies demand more business agility, flexibility, and higher levels of skill sets.

Improving operational excellence tops the list of offshore outsourcing initiatives to meet changing business needs in the future. A primary example of this is seen in the explosive rise of emerging technologies, which has put enormous pressure on companies to remain competitive – especially in the IT sector. “Artificial intelligence, blockchain, cryptocurrencies, and cybersecurity are all examples of technologies that companies are seeking cutting-edge skillsets to outsource effectively. The shortage of onshore engineering talent in places like the US and Australia will be one of the core reasons companies look to the Philippines to fill the gap,” says Ralf Ellspermann, CEO of PITON-Global, a leading contact center and back-office outsourcing provider in the Philippines.

The Philippines offers numerous advantages to companies looking to partner with an offshore service provider. Not only is there a significant cost-benefit of at least 50% savings, but Filipinos are known for high levels of English proficiency including cultural awareness, which is especially critical in any customer-facing role. In addition to this, leading BPO’s in the Philippines reinvest capital into developing world-class technology and infrastructure to continue to meet the growing demand for outsourcing services worldwide.

In the not-so-distant future, outsourcing will become a necessary function of business growth, as no other resource can provide such economic efficiency and value. Thus, more companies will look to develop strategic partnerships with trusted, premium BPO’s that they can build long-term relationships with, as opposed to the traditional model of simply relegating simple operational tasks.

This in turn will make the Philippine outsourcing industry more collaborative, yet also more competitive. Companies will look for BPO partners who are customer-centric and can offer a range of skill sets in new and emerging technologies. Companies will still look to cut costs but will also want a partner that provides value as well as shares risk and responsibility.

The future of outsourcing will enable companies to continue to outsource work to the Philippines while tapping into a highly skilled workforce for specific projects while maintaining flexibility. The movement towards outsourcing of more complex business processes is expected to gain traction in the coming years as more companies across multiple industries, such as financial services and BFSI, healthcare and life sciences, and telecom and IT, partner with BPO’s in the Philippines to meet these needs while still delivering attractive cost benefits. Ultimately, all of this portends significant growth prospects for outsourcing providers in the Philippines.