It is estimated that the 2011 GDP of the Republic of the Philippines stands at between $213 billion and $215 billion, of which approximately $11 billion or 5% has been earned by the business process outsourcing (BPO) industry. While the Philippines’ economy is the 45th largest in the world, it has a population of 92 million people, making it the 12th most populated country in the world. In addition, 12 million Filipinos live and work outside the Philippines. It is therefore little wonder that Filipinos have seized the opportunities offered by the global trend of large companies, and increasingly small and medium-sized companies, to move back-room business operations offshore in order to save costs.
The traditional view of Filipinos working far from home in menial jobs and contributing towards their country’s GDP largely with their remittances is changing rapidly to a view of the Philippines as a top outsourcing destination, increasingly providing skills- and knowledge-based services to companies of the developed world. Business process outsourcing has provided the Philippines with an industry capable of generating large numbers of high-paying, fulfilling jobs at home and producing real wealth for this developing country.
English the Key to Voice-based Business Process Outsourcing
The Philippines is the third largest English-speaking country in the world. Both Filipino and English are recognized as official languages, and used in government, business and the media, and taught in schools from elementary level onwards. According to the 2002 basic education curriculum in the Philippines, roughly the same amount of teaching time is spent on Filipino and English at elementary, primary and secondary levels, with slightly more time spent on English than on Filipino at elementary level.
This superb command of English has paved the way for the large-scale outsourcing of voice-based services to the Philippines, most notably the establishment of call centres, to the extent the Philippines is today the world leader in voice-based business process outsourcing – by December 2010 the Contact Center Association of the Philippines reported that the country had earned more than $6 billion in voice-based BPO revenue, compared with India’s $5,5 billion, and the industry continues to grow at more than 15% per annum.
A Superior Education System
The Constitution (1987) of the Philippines stipulates that “the State shall protect and promote the right of all citizens to quality education at all levels and shall take appropriate steps to make such education accessible to all”. While primary education is both free and compulsory, secondary education is free at all state schools.
According to the Unesco World Data on Education (VII Ed 2010/11), in 2009/10 there were 10 384 secondary schools in the Philippines, of which 4 707 were in the private sector. The average teacher-student ratio in public schools was 1:38, the Gross Enrolment Rate (i.e. the number of children enrolled in secondary school divided by the number of children of secondary school age) was estimated at 82,1% and the completion rate at 73,7%. This superior education system of the Philippines has resulted in a large pool of young, skilled and talented graduates.
A Business-friendly Regulatory Environment
The Philippines has two incentive programmes which make the country particularly attractive as an outsourcing destination: the Board of Investments (BOI) incentives and the Philippine Export Zones Authority (PEZA) incentives. These incentives provide tax holidays and special exemptions, and together provide an investor-friendly environment for companies wishing to outsource to the Philippines. In addition, the Philippine IT-BPO Road Map 2016 specifically sets out to grow the industry through public-private partnerships and accelerated talent development.
Chairman of the Business Processing Association of the Philippines Fred Ayala summed up what the Philippines has to offer in his address to the 2010 International Outsourcing Summit:
“While we may always call what we do outsourcing and offshoring, we perform tasks that are intrinsically at the core of the organizations we serve and the value propositions we support. We serve the world. And the world is better off for it.”