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Philippine Outsourcing and Its place in Economy

Article by Neil Westling

Outsourcing has long been practiced by multiple industries globally aiming to profit by minimizing expenses. Philippine outsourcing providers have been the primary option of western companies when it comes to specific jobs and tasks because the country offers a vast pool of talent with lower costs of labor. Different multinational companies are now opting to outsource their services to further improve their company’s business. By means of outsourcing business companies have the ability to save 40 to 60 percent in production and marketing. The effectiveness of outsourcing in providing manpower and resources at a lower cost has already been proved. Multinational companies and individually owned businesses are taking advantage of outsourcing to minimize expenses, increase production and be at par with the global market change.

United States serves as the top client of outsourcing providers. With US President Barrack Obama’s relentless campaign to strengthen the US economy, some big companies are choosing to keep their business within their country. Part of President Obama’s campaign is adjusting tax codes by offering tax incentives to companies who do not go offshore. This can mean closing the biggest doors of business process outsourcing (BPO) for internal restoration. This aims to provide a positive future for US but posed as a threat to the economy of other countries that have been gaining from the cost cutting need of United States by means of outsourcing. The alarm is raised among outsourcing countries such as India, Canada, China, Mexico and Philippines.

Asian outsourcing firms reconsider investment and have changed company strategies to stand the global economic tension. Philippine government undertook fiscal reforms in 2005-2006 that helped to shield BPO firms from any adverse impact of a recession. While other industries continue to show sluggish recovery since the US financial meltdown that sparked a global recession, Philippine outsourcing displayed remarkable resiliency. As the global downturn continues to submit to wider recovery, the BPO industry of the country has been more dignified and persistent. For first quarter of the 2011 year, in April, Central Bank of the Philippines reported that amidst global economic slowdown, Philippine BPO industry manages to stay afloat maintaining the pace of its growth.

BPO has been a very important key that opened opportunities to Filipinos to fight the war against unemployment which is one of the major problems of the government. The increasing demand in the outsourcing industry has been addressed by the Philippine government in order to attract more foreign investors. It is an obvious fact that Philippine outsourcing in one of the country’s largest market and revenue contributors, so the support of the government is very essential in the survival of the BPO industry. Currently, the Philippine BPO industry employs around 530,000 workers, according to the Business Processing Association of the Philippines (BPAP), which is the private association of BPO service providers in the country.

Since call centers are eating 80 percent of the BPO industry within the country, outsourcing is expected to continually show rapid growth despite the fact that the global economy is declining.

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