Business

The competitive advantage of the Philippines’ outsourcing industry 

 

In today’s market, there’s never a moment where the modern company can feel self-assured of their place. Titans of the economy rise and fall within years, and businesses that were once considered stable investments might become risky in the next cycle. In other words, every dollar counts, and it’s imperative to have a competitive edge in a cutthroat global economy for large companies and small businesses alike. But when revenue seems stagnant and rising oil costs continue to make the price of manufacturing and shipping skyrocket, how can businesses improve their profit margins? There’s only one answer: by cutting the costs of labour. This is why many western companies have taken the leap and started utilising outsourcing services in the Philippines – and it’s paying off. 

Tech giant Amazon is not a new player in the game by any means. In fact, the company saves up to 80% of its budget for customer support by outsourcing this work instead of using in-house labour. Much of the lowered costs come from the low wages themselves. While workers in the US and UK are paid closer to 15 USD an hour for these services as a minimum wage, contact centres in the Philippines only cost companies $40 USD a day per worker. While this number seems low, and certainly an attractive price for western companies, it’s still a much higher salary than many jobs in the Philippines. One worker even reported making more than an average doctor’s salary after years at the company. This higher salary ensures that BPOs in the Philippines attract top-notch talent, as many young, college-educated professionals flock to the industry for the chance at a lucrative and rewarding career. Thus, companies gain a competitive advantage by accessing high-quality services for less than half the price of in-house employees. 

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There are other advantages of outsourcing to the Philippines besides cost, too. Compared to other countries with sizeable outsourcing sectors, the Philippines’ offers the best tax incentives and deregulation for companies to easily navigate. With a 0% tax holiday for companies, it’s one of the best countries for outsourcing work. 

What’s more, deregulation has made it easy to contract BPO work without dealing with bureaucratic red tape and ever-changing international laws. Government officials have recognized the power of BPOs in the Philippines and have sought to make sure their growth is not hindered. When the COVID-19 pandemic hit the country and sweeping lockdowns were issued, the Philippines’ president Rodrigo Duterte issued an essential business statute for contact centres in the Philippines. This allowed workers to continue earning an income in light of the country’s economy and provide essential services in many roles for western companies dealing with lockdowns. Thus, in the wake of the COVID-19 pandemic, outsourcing to the Philippines can be a great way for western companies to find safety in offshore work in the event that their in-house staff is out of commission. 

By offering high-quality services for low costs to western companies, the Philippines has made itself indispensable in the global BPO market. But government buy-in has taken this industry to a new height, making labour cheap, reliable, and tax-free to obtain. By utilising outsourcing companies in the Philippines, western businesses can certainly gain an advantage in today’s fast-paced world. 

 

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