12 Feb

Growth Story of the Philippines Outsourcing Industry

Outsourcing was not the key strength of the Philippines back in the 1970s. It was agriculture, and the Philippines was once a top exporter of fruits and rice to many countries in the world. In the 1980s, the country saw a boom in sending Filipinos as overseas foreign workers. It was in the early 1990s that the call center business first saw the ray of light in the country.

Philippines Outsourcing Industry

The man responsible for it was Frank Holz. He founded the Accenture Global Resource Center in 1992, and the Philippines BPO industry was born.

As the country was trying to deal with the issues that beset the economy, Congress passed an act that would entice foreign corporations to establish their businesses in the Philippines. This act allowed foreign corporations to enjoy low taxes, and some also enjoyed the benefits of having some of their expenses like utilities subsidized by the government.

It was in 1997 and 1999 that other players entered the scene. These were Sykes and eTelecare.

And then came People Support in 2001. The company set up its office in Ayala, Makati, and provided Filipinos more than 8,000 jobs. Two years later, Convergys put up two contact centers in the country, and its then-president announced that the Philippines is going to be a part of the company’s global plan for expansion.

By 2005, the Philippines outsourcing industry accounted for 2.4% of the country’s gross domestic product and had 3% market share in the global BPO industry. The country was competing against BPO giants like Mexico and India.

By 2010, the Philippines was officially recognized as the world’s BPO capital.

Today, the world’s first choice is the Philippines ITES industry. As the BPO industry thrived, the business leaders also ensured that the country is abreast with the demands and the new technologies that the world needs so the businesses here can provide a truly global service.

Among the key business models that the country can offer are:

  • Captive Markets – a system where the BPO is set-up by the parent company itself instead of outsourcing. Examples of these are Wells Fargo and J.P. Morgan.
  • Build, Operate, Transfer – also known as the BOT model. In this system, a company will outsource its business needs to the BPO company. For a specific period of time, the BPO company will consolidate all its processes and best practices and turn over all the assets and employees to the client.
  • Third-Party – this is the most prevalent business model where foreign companies will outsource some of their business processes to either a contact center or a BPO company. Essentially, the employees are under the care of the contact center, but they use the client’s brand name and processes.

There are other models that one can check out, such as the build-from-scratch model, but the three previously mentioned methods are the most prominent.

Summary

Today, it is no longer a question of why the Philippines but rather where in the Philippines should you build your contact center. Or if you are dealing with a BPO company, it is a matter of choosing the right partner do business with. For inquiries, write to bd@athl.com.hk.

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