The article discusses the top 5 reasons the Philippines is a premier offshoring destination.
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Offshoring is a business strategy that involves relocating some or all of a company’s operations to another country, usually to reduce costs, access new markets, or leverage talent. Offshoring can offer many benefits for businesses of different sizes and industries, but choosing the right destination is crucial for success.
One of the most popular and attractive offshoring destinations in the world is the Philippines.
The Philippines has a lot to offer for businesses looking to offshore their processes, from customer service and technical support, to accounting and software development. Here are the top five reasons why the Philippines is a premier offshoring destination:
What makes the Philippines a Premier Offshoring Destination?
Read more on what makes the Philippines a top choice for business process outsourcing.
Cost Savings
One of the main reasons why businesses offshore their operations is to save money on labor, infrastructure, taxes, and other expenses. The Philippines has a low cost of living and a competitive wage rate, which means that businesses can hire highly skilled and qualified workers for a fraction of the cost in their home countries.
Philippine tax laws were legislated to promote investments in the growing Philippine BPO industry. Economic Zone Enterprises registered with Philippine Economic Zone Authority (PEZA) receive additional incentives.
Investors outsourcing business processes to the Philippines are eligible to fiscal and non-fiscal incentives and tax breaks for foreign investors, such as income tax holidays, duty-free importation of capital equipment, and exemption from local taxes.
Filipinos speak and write English fluently
Another reason why the Philippines is a premier offshoring destination is its high level of English proficiency.
Business process outsourcing companies choose to outsource in the Philippines because the country has a highly literate and proficient English-speaking population. The natural affinity of the country to the English language makes it especially attractive to companies who are looking to outsrouce in a destination which means that there is no language barrier between offshore workers and their clients or customers. Filipino staff can understand tasks, communicate with clients, interpret important assigned documents, and provide quality support.
The Philippines ranks second in Asia for 24 Asian countries with the highest English proficiency as of 2022, ahead of other offshoring destinations such as India, China, and Vietnam. The country ranks #22 of 111 countries globally.
Cultural Compatibility
The Philippines has a strong cultural affinity with Western countries, especially the US, due to its history of colonization and influence. The Philippines was a US territory for almost 50 years, and up to this day the country still maintains close ties with the US.
The country shares many values, beliefs, and customs with Western countries, such as democracy, individualism, and consumerism. The Philippines also has a diverse and multicultural society, with influences from Spanish, Chinese, Malay, and other cultures.
When it comes to offshoring, this makes it easier for offshore workers to understand and relate to their clients or customers from different backgrounds and preferences.
Talent Pool
The Philippines has a large and talented pool of workers who have technical skills, can cater to various offshoring needs, and have worked for large multinational and business process outsourcing companies. The Philippines has a population of over 100 million people. The number of Filipinos 15 years old and over who were in the labor force was at 49.56 million of the estimated 76.60 million population 15 years old and over in 2022.
The Philippines also has a high literacy rate, and a high enrollment rate in tertiary education. The Philippines produces graduates every year, many of whom have degrees in fields such as engineering, computer science, business administration, and accounting.
Infrastructure & Technology
The Philippines has a modern and reliable infrastructure that supports its offshoring industry. The Philippines has a robust telecommunications network that ensures fast and stable internet connectivity. According to Speedtest Global Index, the average download speed in the Philippines for mobile is 25.84 Mbps. The country also has a stable power supply that ensures uninterrupted operations for offshoring businesses.
The Philippines also has over 415 economic zones that provide world-class facilities and amenities for offshoring businesses.
Among the popular economic zones, or “ecozones” as they are called are the following:
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- Rockwell Business Center in Makati City
- UP-Ayala Technohub in Quezon City
- Eastwood City CyberPark in Quezon City
- Strata 100 in Pasig City
- Carmelray International Business Park in Calamba City, Laguna
- Golden Mile Business Park in Carmona, Cavite
- Matina IT Park in Davao City
- Clark Freeport and Special Economic Zone in Tarlac and Pampanga
- San Carlos Ecozone in San Carlos City, Negros Occidental Baguio City Economic Zone
- Cavite Economic Zone
- Mactan Economic Zone
Aside from infrastructure, IT-BPM industries earned a revenue of PhP 221.30 billion from transactions outside the country, which is equivalent to 27.3 percent of the industry’s total revenue in 2019.
The Annual Survey of Philippine Business and Industry (ASPBI) preliminary results showed that a total of 2,147 establishments in the formal sector of the economy were engaged in IT-BPM activities in 2019, higher by 40.1 percent recorded in 2017. Computer programming activities recorded the highest in terms of number of establishments, followed by customer relationship management, and sales and marketing (including telemarketing) activities.
In conclusion, the Philippines stands out as a premier offshoring destination for several compelling reasons. Firstly, businesses can achieve significant cost savings by leveraging the country’s low cost of living and competitive wage rates, along with various incentives and tax breaks offered to foreign investors. Secondly, the high level of English proficiency among Filipinos eliminates language barriers and ensures effective communication between offshore workers and clients or customers. Additionally, the cultural compatibility with Western countries enhances understanding and facilitates smooth interactions. The Philippines boasts a large and talented pool of workers with technical skills and experience in multinational companies, making it an abundant source of skilled labor. Moreover, the country’s modern infrastructure, including a reliable telecommunications network and stable power supply, supports efficient offshoring operations. The presence of numerous economic zones equipped with world-class facilities further enhances the attractiveness of the Philippines for offshoring. With a thriving IT-BPM industry and a track record of successful engagements, the Philippines proves its prowess as a top choice for businesses seeking a premier offshoring destination.
Connext Global Solutions provides Quality Business Process Outsourcing Solutions
Connext Global Solutions helps manage a client’s team as if it was theirs and makes sure the performance matches or exceeds that of your local teams.
Industries Connext Caters to:
1. Healthcare Providers
2. Distribution
3. Telecommunications
4. Title and Escrow
5. Property Management
6. Accounting
7. Banking
8. Technology
9. E-Commerce
10. Retail
11. Construction
12. Professional Employer Organization
13. Insurance
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References:
English Proficiency Index. https://www.ef.com/wwen/epi/regions/asia/philippines/. Accessed July 15, 2023.
Speedtest Global Index. https://www.speedtest.net/global-index/philippines. Speedest. speedtest.net. Accessed July 15, 2023.
Derek Gallimore. PEZA incentives, requirements and locations. https://www.outsourceaccelerator.com/articles/peza-incentives-requirements-and-locations/. Outsource Accelerator. www.outsourceaccelerator.com. Published June 6, 2022. Accessed July 15, 2023.
2019 Annual Survey of Philippine Business and Industry (ASPBI) – Information Technology – Business Process Management (IT-BPM) Industries: Preliminary Results. 2022 Annual Provincial Labor Market Statistics (Preliminary Results). https://psa.gov.ph/press-releases/id/167718. PSA. psa.gov. Released June 7, 2023. Accessed July 15, 2023.
