The Philippines has been known to be one of the most attractive locations for Outsourcing during the past years. Having a good reputation, the country was able to pursue a lot of investors with the result of acquisition of more accounts and clientele.
Some of the many advantages of the Philippines were:
- the affordable quality human resources which had been known to be a pool of highly skilled workers with a literacy rate of 94%
- strong affinity to western culture resulting to world-class English proficiency
- the Philippines have had increasing domestic network of low-cost, well-developed communications infrastructure linking the three major islands
- the country’s communications infrastructures had been fast expanding as it had been known for its high quality and low-cost bandwidth
- the Philippine government has encouraged the development of dedicated IT parks through investment incentives
- similar form of government and the media that built on a strong familiarity with Western culture
Also, Philippines as being a strategic location is the gateway of Information Technology and trade in Asia. And it seems to be a critical entry point to the ASEAN market for the 500 million market in Southeast Asia. Truly, the Philippines is accessible, central and integrated into the regional and global economies. Moreover, the country can provide unlimited business opportunities, as more economic integration through the ASEAN Free Trade Agreement (AFTA) expands trade opportunities.
The Philippines three years before expected only to rake in almost $2 billion in revenues a year and engage at least 50,000 new workers. But much to their surprise, the kind of industry boomed and quickly spread throughout the nation. The enormous growth was observed to be due to the Filipinos being skillful and highly competitive in the outsourcing industry.
The Philippines expects to draw in about about 3.7 billion dollars in revenues this year or a 52% growth over 2005. Information technology-related projects registered with the BOI Board of Investments have increased in 2005 and are projected to increase by over 50% in 2006. And even a report showed about 80,000 new jobs created in 2005, a 53% growth from 2004 figures.
The BPO industry helped boost the office rental businesses as well. It occupied spaces in high-rise office buildings in the Makati Business District and Ortigas Center (the main locations for BPO operations in Metro Manila) that have had many vacancies and or large amount of spaces empty for some time. To add to this, provincial sites such as those of Baguio, Cebu and Davao are now occupied by some branches of call centers and start-up outsourcing companies.
Many incentives were also offered by the government that attracted more investors and drew them to the country. They were presented the advantages they can get in Outsourcing in the country. That which is one of the many reasons why the industry suddenly boomed and continued to grow in the country.
One of the many advantages of the Philippines was the affordable quality human resources which had been known to be a pool of highly skilled workers with a literacy rate of 94%. Another was its affinity to western culture resulting to world-class English proficiency, similar form of government and the media that built on a strong familiarity with Western culture. Next is its strategic location, it is located in the fastest growing region of IT technology, the gateway of international shipping and airlines and the critical entry point to the ASEAN market. Lastly, the country’s communications infrastructures had been fast expanding as it had been known for its high quality and low-cost bandwidth.
Does your internal business process seem so sluggish? Does your manpower lack expertise with the tasks they are asked to perform? This might be the time for you to outsource! But do you know what that means?
It is evident in the present day living that technology is becoming more and more advance. And the economy as well is becoming remarkably globalized because of the many investments brought about by the Outsourcing Industry in the local market.
Globalization, Technology Advancement, Exceptional High Customer Care services, all of these are in the scope of outsourcing. And these are raw factors that significantly boosts competition in nearly all markets locally and internationally. It is also, the agitator of basic change on how businesses view their sourcing tactics and which pushes them to seek for better ways to get over with their undertakings and be more competitive.
Outsourcing companies are able to help businesses set eyes on the value and better use of their resources. As it simply correlates to cost savings, competency and efficiency. Outsourcing helps achieve combative benefit by focusing on core competencies. Outsourcing non-core tasks, where which internal employees have less knowledge of it are better to be laid in the hands of the experts on those fields. It gives companies opportunities to: better utilize internal resources, expand responsiveness to client needs, diminish fiscal risks by capital investments reduction and boil down product cycle times.
Like any other businesses where there are uncontrollable circumstances, Outsourcing has risks as well. Companies could lose control of the tasks being performed by the outsourcing companies; could risk confidentiality since many important and sometimes confidential accounts are being passed to the outsourcing companies as a part of the processing and companies may not be able to monitor costs.
Not all these risks are preventable but some can be minimized by selecting partners carefully, clarifying goals and expectations from the outset, securing a confidentiality agreement, developing strong partnerships with suppliers, simplifying the interface between the two parties and consistent communication.
The impact of outsourcing could extend beyond cost reduction to include enhanced quality and service based on partnerships with the best outsourcing companies.
Yes, culture affinity is a strong factor considered by transnational companies in choosing a location or a third party offshore as it best upsurge their capability in achieving the same or better quality results they can have in their own country. An added advantage is that companies can increase their income by outsourcing some functions because of low cost services offered by other countries. India and the Philippines are the two leading offshore destinations in Asia as of now due to the strong workforce they produce and the quality of staff they have.
Another reason for cultural affinity being a vital factor is that, customers won’t find hard to relate if the people they are talking to are very familiar with their ways and needs like specifically Americans who are the biggest part of clientele by outsourcing companies in the Philippines. As what was carved on the pages of the Philippine history, the country has been under the ruling of the Americans for quite a long period of time. With this, Filipinos have learned and acquired the way western people live, think, work and talk. Because of these clear facts, American companies are more comfortable with the Philippines than other countries and is the best choice among all others in terms of English proficiency, attitude towards work and of course, close cultural affinity. That is why they believe that with that Filipinos could confidently deal with the transnational clients which mostly are Americans.
Another good example is the Indians’ close cultural affinity with the British people. With which, their strongest deals are with British companies. During the long existence of British occupation in their land, they were exposed to Britain’s culture and infrastructure that is why Indians have a very well-built and strong infrastructure.
In outsourcing, having groups from several areas working for a common goal is a crucial thing. Working with several teams from numerous countries means communication does not only take place on an individual level but on a CULTURAL level as well. In the outsourcing industry, culture bolster involvement more seriously than simple difference in verbal communication or time zone. Culture is considered a vast and critical factor to be contemplated by transnational outsourcers because it is something no software or anything can absolutely address.
Call Centers have various functions depending on the kind of accounts acquired. It is either Inbound or Outbound for calls, email processing or business writing and chat support.
Outbound call centers usually make calls to consumers and sometimes direct to businesses for the purpose of: setting appointments, selling products, information verification and surveys. Indubitably, this service can be a cost-effective alternative to building an in-house or segregated department to specialize on a particular task. As it takes up a lot of time and would be a long process.
If an account is related to selling, the benefit of outsourcing the tasks is direct information dissemination. Prospects or customers would be better informed about a certain product that can be availed. It would make advertising more effective as it is better that they are able to ask their concerns or queries over the phone than just seeing an advertisement. It is an effective tool for persuading potential clients to realize that a product is worth availing. Usually, agents are very well trained in terms of negotiations, rebuttals or dealing with rejections, proper introduction and closing of the sale. As same with traits, agents are requested to have more patience or be long-tempered. And they should have the ability to deal with different kinds of people.
On the other hand, Inbound call centers receive calls related to Customer Service, Technical Support, Directory Assistance, Sales Inquiries and others. And as all contact centers agents should expect, there are different types of clients. Since, it is inbound or an incoming call, you would not be able to predict or choose the type of client you would receive. There would be hot-tempered callers who would do a lot of complaining over the phone because of the inefficient product availed or an ineffective service rendered by the company you are representing. Mostly, these calls received are recorded for evaluation purposes, to ensure the efficiency of workers and to maintain high standards.
One of the major factors why the Philippines is chosen to be one of the best outsourcing spot in the world is their fluency in English. But beside the universal language, Filipinos are as well good in Spanish language. The question is: Is the possibility of putting Spanish-speaking call centers in the country nearing?
For over 300 years, the Philippines was a Spanish colony and Hispanic influence permeates its culture. And though the language is not widely used and spoken, the language is taught in many universities. Moreover, in the Visayan regions of the country, a great number of fluent Spanish speakers can be found.
With this advantage, the Philippines can outdo India in the business processing outsourcing market by offering Spanish language services. They can target the large Spanish-speaking population of the United States.
The President of National Association of Software and Services Companies of India Kiran Karnik said “India has zero capability to provide services in Spanish but the Philippines could perhaps take advantage of its skill in Spanish”.
As far as the Hispanic market is concerned, the Los Angeles, California area has among the biggest Mexican populations in the US that have stable consumer purchasing power. This doesn’t include the Cuban and Puerto Rican groups in the eastern side of the US. And we are talking of several millions of Spanish-speaking people.
In the world this day, Spanish is the third most widely spoken language. And among the lower-cost Latin American countries that possess the potential to become Spanish-speaking BPO hubs is Chile. Now, is the chance of the Philippines of being Chile’s Asian part about to become a reality?
And with this hanging possibilty, many would surely be holding on. And if this will truly turn out into reality, it would be another great help not just to the country but to many people that fits the job.
Outsourcing emerged as an ubiquitous term in the business world which simply refers to the act of commissioning a third party, usually, offshore to do non-core activities or some functions within for the company. One of the most recognized type of outsourced function is the call center. Call centers became hot items in countries like India and the Philippines. These two countries are rivals in the call center outsourcing services and other Business Processing Outsourcing services. Both are known to be the best location in the world for the said industry.
Moreover, both countries possessed skilled IT workers and many English-speaking people. And there had been comparisons with what these two can offer. It has been said that being a former American colony, the Philippines is way ahead than its major competitor. This is for the reason that the country’s education system was patterned after the American education system and this included American-style diction and pronunciation of the English language. This gave Filipinos a neutral or an almost American accent, which is a big advantage in dealing with the mostly American client. Contrary to this, the call center industry of India has been criticized for having a language barrier primarily because Indians, being a former British colony, were educated in British-style English compounded by the heavy Indian accent.
Another is, it is not just the fact that the people in the Philippines can speak fluent English, the country is as well found to have great availability of much skilled manpower. A study conducted by the Swiss International Institute for Management Development in 2004 found that among Asian countries, the Philippines was number one in the availability of skilled labor. In addition to that, there has been a survey administered by the Michigan-based global staffing firm Kelly Services Inc. and the Singaporean market research outfit ACA Research Inc. that showed that “Filipino call center employees worked harder, were easier to train, had better language skills and were more devoted than their counterparts in India”. The reason why call centers had emerge faster than a blink of an eye in the country. And the uncertainty of which, does it best, is not a so-hard thing to think about. However, many had already taken their sides in matters like this. And their opinions were good enough to turn those uncertainties into certainties.
Business Process Outsourcing (BPO) is growing because companies want to focus on their core businesses. Companies worldwide feel the need to cast off some of their processes, free up internal resources to focus on their core business goals and competencies.
Business Process Outsourcing (BPO) is a strategic management tool that helps companies to improve their task efficiency and effectiveness, as well as reduce costs. The Philippines is one of the most preferred outsourcing location because of its skilled, educated and highly trainable manpower. The country has approximately about 35 million skilled workers, about 300,000 plus graduates annually and a literacy rate of as high as 94%. It also has the largest population certified IT professionals outside of the US, thus offering wider potential for outsourcing of financial services and other types of services or tasks.
The Philippine Government recognizes the economic benefits which BPO provides the country. And this is the main reason for being cooperative with private sectors in setting up an investor-friendly environment- offering fiscal, tax incentives and other benefits.
Outsourcing companies can choose from the following: the Omnibus Investment Code by registering with the Board of Investments (BOI) or the Special Economic Zone Act and the “Guidelines on the Registration of Information Technology Enterprises and Operation of IT Parks and Buildings” by registering with the Philippine Economic Zone Authority (PEZA) as an Information Technology Enterprise.
The main difference between the two is that a PEZA registration includes physically setting up operations inside a PEZA IT Park or Building. Meanwhile, a BOI registration is not only subjected to a specific area or building. A company can choose any location in the country. Companies should take into careful study a lot of factors in order to maximize productivity.
Another incentive which the country offers is that new firms can be free from tax for about four or six years. And an option to extend another year if the following conditions are obtained:
§ Their total imported and domestic capital equipment to the number of workers for the project does not exceed within the ratio of US$10,000 per worker.
§ The net foreign exchange savings or earnings amount to at least US$500,000 annually during the first three years of operation
§ A company should only allow employment of foreign nationals in supervisory, technical or advisory positions for length of five years from date of registration
§ Foreign-owned/registered enterprises shall not be subjected to limitations for the positions: President, General Manager and Treasurer or their equivalent. Also, those foreigners under employment contract and within this incentive, would only permit their spouses and unmarried children under twenty-one (21) years of to live in the Philippines during the period of their employment. A deduction in the income tax of around 50% is only taken if the firm was able to meet the BOI-prescribed capital to labor ratio and shall not be availed simultaneously with ITH. This additional deduction shall be doubled if the activity is located in a less developed area.
Evidently, the Philippine Government provides much support in the Business Process Outsourcing industry for they anticipate the fruits they’ll earn after the years of attracting a lot of outsourcing investors in the country.
The Philippines’ economy soared ever since the Offshore Outsourcing begun in the country. The Business Process Outsourcing (BPO) industry paved way to many career or employment opportunities to the Filipinos. In 2005, it was said to employ 130,000 workers: mainly 70,000 in customer care service area, 25,000 in legal transcription, 5,000 in medical transcription, another 5,000 in animation and 25,000 in software and web development. It proved to help the Philippines gain new hope in obtaining economic stability in the process and a brighter future.
The Philippines is identified as among the top 10 choice for offshore operations, scoring high in the financial structure and human resources indexes. The Philippines is the third largest English-speaking nation in the world outside the United Kingdom and the US. And aside from English proficiency and close affinity with the West, the country has a pool of IT professionals at about 10,000 who are also highly skilled and trainable. And Filipinos usually have a learning curve of only six to eight weeks. There are over 300 software development companies in the country which is the biggest segment in the Philippine e-services industry as a proof of the existence of these people. They are also known to be very friendly and more adoptive to different kinds of culture.
The Philippines is not only a strategic hub for both Asian and Western operations, its culture and infrastructure support cross-cultural needs such as time or zone differentials and physical networking. The democratic and liberalized structure for investment, ownership, and the low costs in terms of lifestyle and taxes made the country a very attractive spot to investors.
More than 8,000 companies had already outsource knowledge-based work to the Philippines like: America Online, Andersen Consulting, Barnes and Noble, Caltex, Citibank, Fluor Daniel, Manulife, Morgan Stanley, Northwest Airlines, Procter and Gamble, People Support to name a few.
Based on statistics and projection in the worldwide BPO market, by 2007, the BPO market is expected to grow to $173 billion and US$180 billion in 2010. And with this, the Philippines had set its goal towards more employment and improving economic status.
Call centers are noticeable almost everywhere in the metropolitan of the Philippines. It is very evident how Filipinos had embrace the culture which seems to have been the answer to their economic poverty for such a long time.
With the Filipinos having the highest English proficiency among other nations and having a literacy rate of 94%, the Philippines has more to offer as it has a large and increasing pool of information technology professionals and a cost-competitive telecoms infrastructure. The country ranks third in Knowledge and Information-based jobs in the 2002 Global Technology Index research done by the META Group. To add , three million college graduates join the workforce each year, providing an enormous and various source of talent. The Philippines is a favorite of countries like the US and Australia and also now looking forward to Britain whose real partner in Outsourcing is India ever since.
Some of the key clients of the Philippines are international companies such as: Caltex, Procter & Gamble, Barnes and Noble and AT&T. And to continually support the services and increase efficiency in the industry, the country consistently researches for the latest tools or widely used by Call centers. Basically VoiP allows transmission of digital voice data over a general-purpose packet-switched network like the Internet. This allows users to make international phone calls using broadband Internet connection instead of a regular phone line which is far more expensive. With the use of different and latest technologies, companies once again are able to reduce or lower cost at about 85%, thus, producing more income and evidently giving them a better edge- increased productivity. This actually benefits both parties, the client and the vendor. Call centers in the Philippines are looking forward to more growth in the coming years. As of now, Manila as the capital has the most number of this call centers (contact centers), followed by Cebu, Baguio and Davao.
