The Philippine BPO industry history began to flourish as early as 1992. Owing much to both globalization and the country’s government support, the BPO industry has continued to contribute to the economy of the Philippines and its people.
The following are key economic milestones that helped pave way to the robust Philippine business process outsourcing industry that we have come to know today.
1995
The 1995 Special Economic Zone Act was passed in the Philippine Congress to promote investments in both the the export-oriented manufacturing and services sectors inside special economic zones, particularly to the growing Philippine BPO industry. Under the 1995 Special Economic Zone Act, foreign companies are eligible to countless tax incentives, grants and privileges.
This law has helped pave way to Philippine Special Economic Zone Authority (PEZA) registered enterprises that have reportedly provided 1,017,559 jobs to nationwide with exports amounting to USD 15.797 billion (as of 2019).
2000-2020: Two Decades of Economic Growth
The contribution of the Philippine BPO industry has been growing steadily over the past two decades.
In a report by the Oxford Business Group, according to the IT and Business Process Management (IT-BPM) Roadmap for 2012-16 published by the industry group IT and BPO Association of the Philippines (IBPAP), Philippine Busines Process Outsourcing accounted for just 0.075% of GDP in 2000, rising swiftly to reach 2.4% in 2005, 4.9% in 2011, and 5.4% in 2012. Its estimated GDP contribution was 6% in 2015, with expectations that it could contribute up to 9% of GDP in 2016.
A 2019 report from the World Trade Organization (WTO) states that the Philippine business process outsourcing industry accounts for a 7.3% contribution to the growth in GDP.
According to the IT and Business Process Association of the Philippines (IBPAP), the number of full-time employees (FTEs) of the sector in the country increased by 23,000 in 2020, increasing the total industry headcount to 1.32 million.
The Road Ahead
Looking back at the Philippine BPO industry history, the growth trajectory has been consistent and deliberate. Moving forward, the Philippine Business Process Outsourcing Industry is expected to see continued growth in the country.
Moving forward, the Philippine Business Process Outsourcing Industry is expected a continual growth in the country.
The IBPAP’s revised targets for 2022, projects the headcount growth at around 1.37 million to 1.43 million full-time employees, or 2.7% to 5%, and industry revenues of $29.09 billion with a compound annual growth rate of 3.2% to 5.5% in the next two years.
Conclusion
The Philippine BPO industry has come a long way since its early beginnings in 1992. From contributing just 0.075% of GDP in 2000 to becoming the country’s second-largest source of foreign direct investment inflows, the sector’s growth has been nothing short of remarkable.
Backed by strong government legislation, a highly skilled English-proficient workforce, and a proven track record of delivering quality outsourcing solutions, the Philippine BPO industry is well-positioned to sustain its upward trajectory in the years ahead. For businesses looking to reduce overhead, scale operations, and access top-tier offshore talent, the Philippines remains one of the most strategic outsourcing destinations in the world, and that outlook shows no signs of slowing down.
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Deepen your understanding of the Philippine BPO industry. Explore our blog post what are the business processes outsourced from the Philippines to see how these services have shaped key economic milestones in the sector.
Frequently Asked Questions
1. What is the Philippine BPO industry?
The Philippine BPO industry refers to the sector of businesses in the Philippines that provide outsourced business process services to foreign companies. These services range from customer support, IT, and healthcare to finance, HR, and back-office operations. The industry is one of the country’s largest economic contributors, employing over 1.32 million full-time workers and generating billions in annual revenue.
2. When did the Philippine BPO industry start?
The Philippine BPO industry began to flourish as early as 1992, supported by the country’s large English-proficient workforce and strong cultural alignment with Western markets. The passage of the Special Economic Zone Act in 1995 further accelerated growth by offering foreign investors tax incentives and operating privileges inside designated economic zones.
3. How much does the Philippine BPO industry contribute to the economy?
According to a 2019 World Trade Organization (WTO) report, the Philippine BPO industry accounts for a 7.3% contribution to GDP growth. It is the second-largest source of foreign direct investment inflows in the Philippines, behind only remittances from Overseas Filipino Workers (OFWs).
4. How many people work in the Philippine BPO industry?
As of 2020, the Philippine BPO industry employed approximately 1.32 million full-time employees, adding 23,000 new workers that year alone. IBPAP projects headcount to grow to between 1.37 million and 1.43 million FTEs, with industry revenues reaching $29.09 billion.
5. Why do foreign companies outsource to the Philippines?
Foreign companies outsource to the Philippines because of its large pool of highly educated, English-proficient professionals, competitive labor costs, strong government support through economic zone incentives, and a well-established BPO infrastructure built over three decades. The Philippine BPO industry is particularly strong in healthcare, IT, customer service, finance, and back-office support.
6. What is IBPAP and what role does it play in the Philippine BPO industry?
IBPAP, the IT and Business Process Association of the Philippines, is the primary industry group representing the Philippine BPO industry. It publishes key roadmaps, employment targets, and revenue projections that guide industry development and inform government policy. Their IT-BPM Roadmap has been instrumental in tracking and driving the sector’s growth milestones.
