Philippine Outsourcing: Half-empty, Half-full?

  • March 31, 2011
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By Roy Jonathan del Rosario

Even the most successful business ever turned its spotlight brighter than it used to be still has a thing or two to improve. The Philippine call center boom has been tagged as one of Philippines’ key to economic growth, and it has been proven by the apparent generation of 100,000 jobs in the call center industry today. Known to be the most proficient in the English language in Asia, having the closest affinity with the western culture, having workers with perseverance toward work and having the ability to deal with different nationalities in a convincing way, and being on the verge of being the best among all the offshore destinations in the world, do you believe that the Philippines, still, has a lot to build up and improve when it comes to all areas of the outsourcing industry? Offshoring has been a big part of Philippines’ business industry.

In the past years, Philippines has generated $1.7 billion worth of offshore services to the Philippine economy as well as to the world economy. Low employment cost is the primary factor why Philippines became one of the offshore destinations here in Asia. According to surveys conducted by different researchers, Philippines has the second-lowest hourly salary for offshoring companies which is only 13 percent of the wages being given in the United States, while India ranked with the lowest salary with 12 percent. Despite the small population of 88 million of the Philippines, it has comparatively a bigger number of bands of workers suitable for transnational companies that the population would suggest. In the statistics rendered by the researchers, for every 100 fresh college graduates with economics and finance degrees from the offshore destinations, executives of the transnational companies said they would hire 30 in the Philippines versus with just 15 from India; the equivalent statistics from other researchers, correspondingly, were 25 of the Philippines over just 10 of India and 20 over 15 on the other researches.

The Philippines as well compares satisfactorily on the suitability of its graduates of engineering for employment with the multinationals – a precise strength for India. However, a bigger percentage of the Philippines population has earned a degree in college than of India’s. However, Philippiner crashes behind other competent offshore destinations on five other criteria that transnational companies look for when choosing an offshore site. And an all the countries that has been surveyed, the Philippines landed as the nation with the weakest risk profile which includes threats in security, unpredictable natural calamities and stealing of data plus the very few number of third-party salesmen. In addition, the Philippines only allure just a fraction of the interests India generates as a competent domestic market for services. The Philippines not very balanced business surroundings experience and suffer meticulous labor laws, continuous corruption of national budget by sinister in the government, and a surfeit system of government. It takes as much as double the time in Malaysia and India consumed in obtaining an approval to open a contact center in the Philippines. Another disadvantage is a scarcity of direct flights from the Philippines to the far markets like the United States. Another drawback is the scarcity of management talent in the Philippines partially due to the fact that the Philippines is still in the early level of enhancing and developing the industry and potential managers are still on the process of being trained constantly. Moreover, it is apparent that the Philippine economy is mostly owned and managed by either small or medium-sized companies that are often owned by well-known families and don’t produce that much talent in management. Actually, the Philippines has a huge number of diaspora that could be competent managers, but these emigrants tend to take nonmanagerial jobs like contract workers or nurses abroad, so they go back home without suitable experience. Although transnational companies see Philippines as an ideal offshore destination, it will still depend on the way they weigh and consider the Philippines’ risk against its other advantages. Indeed, Philippines though tagged as an eye-catching destination for offshore outsourcing, still has a lot to improve and enhance to be more competent in the field of outsourcing not just with how well the agents speak, deal with the clients and persuade but also by means of advanced infrastructure, well-established labor law and peace stability that will make the foreign companies comfortable to build an offshore destination here.


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