Outsourcing is an ever-evolving sector, and the new wave is automation. Companies have progressed beyond establishing HQs in developing economies and hiring providers for non-core services. The current landscape is one dominated by machines' and clients.
Does automation and near-shoring render outsourcing to countries like the Philippines irrelevant? Far from it. Robots are the future, but the newness and a lack of industry regulation mean that companies will take their time to adopt the technology. Besides, robots can never replace tasks that require complex human judgment.
The challenge for the Philippines is to continue evolving to remain globally competitive. And the country is doing exactly that. From a solid call center background, it is moving toward higher value propositions like KPO, insurance, finance, accounting and other niche services.
If you are an investor, NOW is the best time to offshore to the Philippines. Why? Three reasons:
Manila is second only to Bangalore, India as the world's top outsourcing destination, according to the latest Top 100 list by Tholons, the global investment advisory organization. Besides Metro Manila, the so-called "Next Wave" Philippine cities also joined the top 100: Cebu(8th), Davao (69th), Sta. Rosa, Laguna (82th), Bacolod (93th), Iloilo (95th) and Baguio (99th).
Thanks to the joint efforts by local and national governments and the IT and Business Process Association of the Philippines (IBPAP), there are no signs that the country's BPO sector is slowing down. Manila remains strong as a Contact Support provider, but it is expanding into higher value-added offerings like Finance and Accounting (FAO), Information Technology Outsourcing (ITO), and other Knowledge Processes Outsourcing (KPO) services.
The Philippines is noted for its rich and deep labor force, composed of highly-motivated, college-educated, and English-speaking professionals. Now the BPO workforce has become even richer, employing about 1 million people in 2014. This is almost a tenfold improvement from the 100k-odd figure back in 2004.
The BPO industry is one of the major growth drivers of the Philippine economy, providing well-paying jobs for both direct employees and support positions. Businesses tap into an extensive pool of talent at a fraction of the cost of hiring, training, and supporting local professionals. The move into KPO services also means that investors can now hire highly qualified people with specialized skill sets while keeping costs at a minimum.
India and China remain premiere outsourcing destinations, but their steady economic growth is accompanied by high rental rates in the central business districts. As a result, more and more multinational companies are moving from leasing to buying office space in regions like the Philippines. Rental rates in the Philippines remain the lowest in Asia at $29 per square feet per year.
Global real estate consultancy firm Cushman & Wakefield reported that while India or China is the present, the Philippines may be the future. While the country's economic route is still emerging compared to India, the Philippines is a gold mine of opportunities for international giants. The most benefit comes from investing "sooner rather than later."
To learn more about the Philippines as an outsourcing destination in 2014, please read our blog Metro Manila Beats Mumbai - Philippine BPO's growth for Q1 and the rest of the year.
IS OUTSOURCING RIGHT FOR YOUR BUSINESS?
Is Outsourcing for You? is a list of questions to help you decide if offshoring in the Philippines is a good fit for your business. Or contact Sourcefit for a free, no-risk consultation with an expert.