The BPO industry in the Philippines remains one of the fastest-growing information technology and business process sectors, and its importance in the country’s economy simply can’t be overstated. In fact, according to a recent study, call centers and other Philippine BPO companies contribute over $30 billion yearly to the country’s economy.
Meanwhile, in the global BPO market scale, the country also accounts for 10-15% of its dedicated workforce. Because of the consistent impressive performance of BPO sectors, foreign investors continue to invest making the Philippines one of the go-to outsourcing destinations not only in Asia but across the world.
Still curious about this continuously growing sector in the Philippines? Let’s take a peek at how business process outsourcing or BPO industry works, the current situation of the BPO industry in the Philippines, and why this high-skill industry in the country is still among the fastest-growing to date.
What is BPO?
Business process outsourcing or BPO is the practice of subcontracting or outsourcing different business operations by utilizing third-party services or vendors. The BPO industry that we know today has its roots in the manufacturing sector—specifically the soft drink manufacturers who felt the need to outsource the bulk of their supply chains to reach massive demand quotas. The global BPO market took off eventually as information technology and business process matters evolved.
How Does the BPO Industry Work?
Both the back-office and front-office departments of the BPO companies in the Philippines play a big part in a company’s daily operations. The former is a part of the work chain mostly made up of personnel who do administrative and support-related tasks that do not require directly interact with clients. On the other hand, functions such as clearances, settlements, accounting, and IT services such as software development all fall under back-office operations.
Nowadays, most companies especially those in the information technology and business process fields put emphasis on offshoring operations, hiring BPO sectors from another country like the Philippines to reduce costs. Thanks to technological advancements and people normalizing remote-work set-ups, companies now have access to a more diversified pool of talents.
Another side of the BPO industry in the Philippines handles front-office operations. There are dedicated call centers that handle client-facing services that cover marketing, sales, tech support, and customer service, among others. Hiring offshore for front-office needs gives a company the advantage of reducing in-house costs by strategically dividing customer-facing services.
An Outlook on the BPO Industry in the Philippines
The BPO sector in the country has been around for more than two decades. Based on an article published by Colliers, the BPO industry in the Philippines started through the establishment of the first-ever contact center by Frank Holz of the Accenture group in 1992. By 1995, Congress passed the Special Economic Zone Act to transform and develop selected areas across the country. The implementation of these ecozones, along with the promise of generous tax incentives, encouraged the arrival of foreign investors. This eventually led to the creation of the Philippine Economic Zone Authority or PEZA.
In the Philippines, the IT and Business Association of the Philippines (IBPAP) is in charge of monitoring the performance and growth of the BPO industry in the country, as well as regulating business practices. They released an official statement in 2022 stating that “the business process outsourcing (BPO) industry has hit the employment and revenue growth targets it set for itself this year. It is ahead of schedule on its targets, having already exceeded the 2022 goals of 1.43 million full-time employees (FTEs) and $29.1 billion worth of revenues.”
Types of BPO Industry in the Philippines
Before we narrow down the types of BPO industry in the Philippines, the global BPO market categorizes this sector into three: onshore, nearshore, and offshore. In both onshore and nearshore, hired third-party vendors are located either in the same area or are located in neighboring the contracting company’s country. The Philippines on the other hand, is known as one of the top offshore outsourcing destinations by foreign investors and companies alike.
The Philippine BPO industry is known for supporting various high-skill services to help fill the labor gaps in companies. Here are some of the most in-demand:
Information Technology-Enabled Services (ITES)
One of the BPO sectors that peruse information technology is ITES. The jobs under this branch deliver internet- or data network-related services like IT analysis, desk analysis, and production support analysis. Companies that heavily rely on information technology and business process also avail of these sectors’ skills in software development, testing, and implementation.
Most call centers in the country provide KPO services offshore. Some of the most popular careers involve analysis, research, and Microsoft Office-related work (e.g., Word and Excel tasks). KPOs also can make low-level business decisions on behalf of their client companies, as long as they do not cause conflict with higher-level policies. This particular BPO sector in the Philippines values high-skill workers who can do their tasks in a time-efficient manner.
Legal Process Outsourcing (LPO)
Besides handling legal transcription, LPOs in the BPO industry are in demand since they are also involved in doing higher-level work such as drafting legal agreements and patent applications. It is a normal practice for companies’ legal departments to have LPOs on a retainer basis, especially if they have high-skill paralegals on the team.
Research Process Outsourcing (RPO)
This particular department of the BPO companies in the Philippines specializes in major research and analysis work that assists various sectors like biotech, investment, business, and top marketing companies. RPOs usually either collaborate with or are under larger KPOs.
One of the fastest growing BPO sectors, Travel BPOs cater to both local and international travel needs of their client companies. They usually have a delegated contact center for hotel reservations and vehicle bookings. Tour providers and airline companies also rely on the specific BPO industry to streamline their front and back-end office processes such as their ticketing services.
Most financial institutions and major manufacturers rely on this specialized sector of the BPO industry in the Philippines as these third-party vendors are involved in the processing of checks, credit, and debit cards; collections and receivables; procurement, logistics and dispatch; transportation administrative tasks; and even warehouse management.
Finance and Accounting
Offshore companies also rely upon the local BPO industry for financial and accounting-related assistance. Sought-after services include but are not limited to accounts payable, billing, accounts receivable, general accounting services, and auditing.
This particular BPO industry in the Philippines deals with workforce challenges faced by its clientele. Responsibilities can cover from doing payroll, organizing employee healthcare concerns, and workers’ training, to even hiring and recruitment.
Customer Interaction Services
This specific BPO sector in the Philippines has been scoffed at by many as most assume that tasks involved in such call centers do not require high-skill employees. But on the contrary, even the global BPO market recognizes our country as one of the best outsourcing destinations for client-facing services such as appointment setting, telemarketing, voicemail and email, payment and order processing, quality assurance, and customer support.
Effects of the BPO Industry in the Philippines
As mentioned earlier, the local BPO industry has contributed almost $30 billion to the country’s economy every year. In the Philippines, IBPAP also confirmed that BPO sectors also provided full-time employment for over 1.44 million Filipinos. Because of the high skill and competency of local BPO employees, it drums constant interest from foreign investors; thereby making the Philippines one of the most reliable outsourcing destinations in the world.
Despite having many offshore clients passed the BPO companies in the Philippines as highly competent, outsourcing tasks are prone to data breaches and communication issues. These can be costly as they can cause project delays. Another disadvantage would be possible customer backlash if they feel that they are being treated in an inferior manner.
FilWeb Asia: Embodying the Importance of the BPO Industry in the Philippines
Even at the height of the global pandemic, the BPO industry in the Philippines continues to provide premium services, from software development and web design to digital marketing. We at FilWeb Asia can offer what other leading business process outsourcing or BPO companies have—and more! Foreign investors and offshore companies will have a chance to work with Filipinos of high skill and experience the unique workplace culture that is brimming with dedication and camaraderie.
What are you waiting for? Check out our outsourcing services and partner with us today!