Pros and Cons of Offshoring In The Philippines: Why It Is A Smart Choice
The offshoring industry in the Philippines continues to grow rapidly. Recently, more companies, especially small to medium, are looking to outsourcing as a strategy to cut costs, find staff with specific skill set, increase efficiency, and reduce administration and overhead. From traditional Business Process Outsourcing (BPO) focused on customer service, the industry has now evolved into Knowledge Process Outsourcing (KPO). As a result, multi-disciplinary teams are being built across the value spectrum including lead generation, sales support, administration, customers service, purchasing & logistics, accounting & finance, IT and marketing. As well as outsourcing moving into new areas, it is also moving up the value chain, with more senior resources being engaged over time. The Philippines has positioned itself as one of the top offshoring destinations in the world, and continues to outperform its neighbouring competitors for various reasons:
Excellent English proficiency
Large pool of highly-skilled professionals
Long standing connection with foreign clients
Proven competence in the outsourcing sector
Growth in Knowledge Process Outsourcing
Pros 1: Excellent English proficiency
The Philippines has embraced English as one of its official languages which makes it the 4th largest English speaking country in the world, with over 90 million English speakers (as a comparison the UK has 78 million English speakers). When doing business in the Philippines, communication is smoother than countries like China and other Asian nations. This allows offshore team members, onshore managers, and clients to collaborate and communicate more efficiently and effectively.
Pros 2: Large pool of highly skilled professionals
The Philippines boasts a large population of highly skilled professionals, and every year over 400,000 university graduates join the workforce, expanding the talent pool. Many of these graduates are educated in software engineering, accounting, business administration, IT and customer-related services, making them ideal for companies looking to hire staff with specific skill set.
Pros 3: Long standing connection with foreign clients
Filipino professionals are a natural fit for outsourcing because of their strong affinity with Western culture. Years of exposure has set the Philippines in a strategic position where its people can work, collaborate and adapt with several nations. Many candidates in the offshoring space have in fact only ever worked for Western businesses.
Pros 4: Proven competence and reputation in the outsourcing sector
In Tholons Services Globalization Index 2017, the Philippines ranked 3rd in the Top 50 “Digital Nations” while Manila ranked 4th in the Top 100 “Super Cities”.
“Philippines has been the undisputed leader in customer service, BPM and is home to major multinational corporations and GICs. English fluency among the youth, cultural affinity to Western countries, and the growing influence of multinational corporations on the country’s economy is significant. Furthermore, the country has a high literacy rate (95%), and is one of the world’s largest English speaking nations. Leading organisations have made Philippines a hub for digital process innovation.” Tholons said.
Pros 5: Growth in Knowledge Process Outsourcing (KPO)
Beyond BPO, the country is also gaining ground in areas of high-value such as software and application development, animation, graphics design, accounting, digital marketing, engineering, medical, legal services also known as Knowledge Process Outsourcing (KPO). This area is expected to continue to grow in the coming years.
Pros 6: Emerging BPO hubs outside of Manila
With so much demand for outsourcing in Metro Manila, investors are starting to branch out into other key major areas. Clark, Cebu and Davao are the new cities to be seen as new hubs of economic activities.
Aside from talent pool, these cities offer supportive infrastructure, a flexible local business environment, and cost efficiency. In one recent interview, a Director of optiBPO shared this:
“The decision (in which area to choose) is based on customer requirement, the sort of skill sets that you’re looking for, and the functions that you are looking to build. It is critical to work with a partner who has access to multiple locations to ensure the best outcome.”
While many firms consider outsourcing as a viable strategy to scale their business, there are still many others that have yet to explore this space. Some of the things to explore are the possible challenges:
Cultural differences
Managing your team
Technology setup
Poor processes
Cons 1: Cultural differences
Culture is often cited as one of the biggest barriers for many companies looking to outsource. But, with the overall growth of BPO industry in the Philippines more and more companies are embracing diversity in the workplace by celebrating cultural backgrounds. After you develop a good rapport with your offshore staff, core values such as respect, teamwork, trust, and excellence can be of benefit for both the client and the staff.
Cons 2: Managing your team
Unless you have spent time in the Philippines, managing a team from a distance can be a challenge. Offshore staff are just like your staff at home. They also need daily rhythm, feedback, and training on business processes. Team meetings don’t need to be long, just a few minutes each day makes an enormous difference. There are many advantages in building a healthy relationship with your remote team such as:
- Improved communication streams in both quality and frequency
- Build loyalty and improves staff retention
- Help staff feel like a part of your company, resulting in increased efficiency and outcome delivery
➜ See also: Management Tips For A Successful Outsourcing
Cons 3: Technology setup
A common concern for those ready to outsource is the ability of the outsourcing vendor to provide technical support, from initial setup to ongoing IT support. The more mature providers not only provide direct IT support, but they also can provide diagnostic and analysis to proactively suggest improvements for network connectivity. It should go without saying that if your vendor doesn’t have redundant ISPs, backup power & generation, and backup links between campuses, then they should be avoided. This should be part of any vendor due diligence.
Cons 4: Poor processes
Having the right systems and processes is a critical part of a successful offshoring. When preparing to outsource, ensure that your organisation has clearly mapped out all major processes to avoid future problems. Here are some important tips to strengthen your processes:
- Provide new team members an overview of your business, as well as the BPO team
- Identify training needs within the team, and raise these requirements with the management
- Build daily rhythms for daily catch-ups and to understand issues
- Implement standard quality control within the team
If Standard Operating Procedures (SOPs) are a gap, the optidocs service is something many organisations utilise to rapidly fill this gap.
Conclusion
The Philippines has made its name as one of the pre-eminent offshoring destinations because of the many advantages it offers. Over the years, Filipino workers have proved themselves to be valuable partners in supporting Western businesses. When kept motivated, treated with respect, highly appreciated and valued, expect that they will deliver great work in return.
