BPO and the Philippines: An Update

Outsourcing has been a key business strategy used by companies in various industries for more than a quarter of a century. Automotive companies have been outsourcing manufacturing operations, business services, back-office tasks, and even entire lines of business since the 80s. More recently, business processes such as information technology, logistics, printing, human resource management, payroll, e-Commerce and marketing, consultancy, and certain elements of procurement have also been outsourced.



Across the globe, competing pressures and the necessity for financial improvements, and high quality outputs are driving an increase in the magnitude of outsourcing. Factors as to why companies are executing outsourcing plans include reduction and control of operating costs, gaining access to world class capabilities, accelerating reengineering benefits, shared risks, and cash infusions.



For many Filipinos, synonymous to outsourcing are call centers. Though outsourcing (a.k.a. BPO) generally covers a wider scope, call centers dominate the bulk of the industry in the country. Despite the recent collapse of the giant economies in the West, market players are now restructuring their workflows. One avenue where they can maximize their company potentials is by embracing outsourcing. In fact, almost 50% of USA companies outsource most of their services. Moreover, at the rate outsourcing is going, forecasts show that at least 8.3% increase will be seen by 2010.



There are two chief reasons why there is a global rise in interest to outsource: one reason is the increased number of global brands. This requires brand consistency throughout all marketing communications. While marketers are experts at guiding the brand from concept to final output, they realize that ensuring consistency of the output and delivery of the work is not usually an area of their expertise. This is where e-Commerce comes in. In the Philippines, e-Commerce comes in the form of inbound/outbound call transactions, direct online selling and buying, tele-marketing and e-campaigns. The second factor is procurement thinking. Large corporate organizations often subscribe to the large agency model for their marketing supply chains. But, with the global credit squeeze, businesses across the globe are looking to realize cost savings that do not impact negatively on their business.



The Philippines is a strategic location for outsourcing – especially call centers - for a lot of reasons. Aside from the cheap price of labour, another edge that the Philippines has is proficiency in the use of the “language of business” – English. Filipinos are known to adapt easily to accents, dictions, and registers of prospect clients – be it in American English or the Queen’s. Currently, the Philippines enjoy a large market for call centers, probably even the largest in the world.



Why the Philippines over others? If affordability and competency is not enough, one can look at the prospects of quality, the environment, and piece of mind of one’s business. With the call center industry over 15 years old and governed by the same business rules, regulations and legislation as the call centers back in the West, the Philippines represents as low-risk a destination for your outsourcing requirements as is possible to find. Along side cost and quality considerations, experts know that any modern call center and other outsourced industries attach great importance to environmental concerns – something that the Philippines is truly strict with. Lastly, intellectual property rights are protected. In the first line, by local government laws and secondly by the fact that virtually every outsourced industries are under the auspices of the World Trade Organization and the World Intellectual Property Organization.



Call centers were forged in the fires of the last global recession. Given the current economic upset, the Philippines should be a good destination for more outsourced services.