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The Effects of Outsourcing in the Philippines: A Closer Look

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The COVID-19 pandemic has brought about different kinds of work setups and arrangements. We have been introduced to hybrid office setup, freelancing, and remote work. In other situations, some businesses decided to outsource their tasks to outsourcing companies. The latter strategy had been a viable alternative even before the pandemic started; especially given how much outsourcing has been a common practice for businesses not only in the Philippines but also abroad.

So how has outsourcing fared in today’s climate? How does it work? Will it work for you? Read on to know more about the effects of outsourcing in the Philippines.

At a Glance: What is Outsourcing?

Before anything else, what is outsourcing? It is a strategy wherein a business hires an external team or person to provide service or goods for their business. Basically, you source your functions to external or outside sources. This may be done because of lack of manpower or because of an overflow of tasks at hand.

Outsourcing has been in practice for several decades now and is currently widespread here in the Philippines. This process or strategy is often referred to as business process outsourcing or BPO. Because of that, we can safely say that there are several effects of outsourcing in the Philippines and there is indeed a great impact on businesses.

Related Article: Outsourcing Definition and Everything You Need to Know About It

The BPO Industry in the Philippines

We can recall a time when a great number of jobseekers landing jobs in the BPO industry, particularly in the call centers. And that is still a recurring thing. The BPO industry here in the Philippines is still on a high and is still growing. Here in the Philippines, some processes that the BPO industry caters to include human resources, logistics management, medical transcription, payroll administration and maintenance, customer service, telemarketing, legal database management, and maintenance.

When the pandemic hit, even BPO companies themselves struggled to continue their operations. Having that said, the outsourcing industry soldiered on thrived and even attracted many investors. This is in line with a research that reported that the global BPO industry could reach up to $343.19 billion by 2025. This explains why BPO companies remain in demand.

Related Article: The Benefits of Outsourcing, Its Services, and What You Need to Know Before Hiring One

effects of outsourcing in the Philippines include cost savings

What are the Effects of Outsourcing in the Philippines?

Companies and business here in the Philippines are no strangers to outsourcing. Therefore, let’s discuss the effects of outsourcing in the Philippines, and their implications.

Outsourcing greatly impacts both the company and the country’s economy as well. The BPO industry has experienced recognition over the years and especially during the COVID-19 outbreak. Because of that, one notable effect of outsourcing in the Philippines is the international recognition that this industry received, thus solidifying the years-long accolade of the nation as the call center capital of the world.

Another notable effect is the decrease in the unemployment rate in the Philippines. The Philippines has been very generous in providing outsourced services for international clients .Consequently, a great number of individuals are now in the BPO industry—a rate that continues to grow even after all these years.

Is Outsourcing Good for the Philippines?

Generally, it can be noted that outsourcing has been beneficial to the Philippines. Some benefits that it has brought included the following

  • Significant rise in the real estate industry: Given that a huge chunk of business is situated in the Metro, the need for nearer and more accessible accommodation for people in the outsourcing industry has also risen.
  • Improved telecommunication and internet services: The BPO industry heavily relies on the internet, thus necessitating for better telecommunication and internet services.

These effects of outsourcing in the Philippines indicate the boom in the BPO industry. Not to mention, other business have benefited from outsourcing as well; especially small businesses that cater to the needs of those who are working in the BPO industry such as convenience stores and food outlets.

Related Article: Business Process Outsourcing: Back to the Basics

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What to Consider Before You Outsource to the Philippines

Advantages of Outsourcing

Other benefits or advantages that we can credit to the effects of outsourcing in the Philippines include low-cost services and cost-efficiency for the business. Businesses can cut down on cost when they outsource some of their non-core processes, such as logistics and administrative tasks. This will also entail more profit for the company. As they profit from letting outsourcing companies do the work for them, these businesses will now have more time to focus on more integral functions and processes of their company.

Another advantage to note is having an extra hand without the urgent need to provide extensive training and resources. As one of the effects of outsourcing in the Philippines, particularly for the business, having access to talents and experts allows businesses to select professionals who can handle their projects. They can get quality inputs from individuals who are already equipped with the skills that they need.

Lastly, the BPO industry has imposed a boost in the economy of the country, thereby opening a whole new door of opportunities. Job seekers have been employed and they are still continuously pooling for talents. The rise of freelancing can also be attributed to the outsourcing industry.

Related Article: Achieve Cost-Effective Business through Outsourcing Accounting to the Philippines

Disadvantages of Outsourcing

However, given the advantages and the great effects of outsourcing in the Philippines, there is still another side of the coin. There are also disadvantages, which include the possibility of receiving low quality of service from your outsourced team. Since they have their own standards and culture, they might have some practices that are not compatible with a business’ existing standards.

Another disadvantage is the loose authority over outsourced individuals together with their functions. In some cases, the outsourced individual’s home country may also be subject to an increase in their unemployment rate since job seekers are more geared toward providing their services to another country. Also, on the basis of lax regulations, a company’s data, property, and resources that are considered confidential can also be exposed to an outsider of the company. Therefore, there is a threat of security and risk exposure as well.

Lastly, since in numerous cases, the business is a foreign entity and they have outsourced from a different country; there may be cultural incompatibilities, communication and language barriers, and cultural differences.

Related Article: The Pros and Cons of Outsourcing from Bird’s Eye View

workspace of call centers in the Philippines

Why Not Outsource to the Philippines Today?

Given the circumstances of outsourcing as a growing industry, along with the advantages and benefits that they provide; more businesses are now gearing toward hiring outsourced individuals and diving into outsourcing. They are now on the lookout for stellar individuals who can lend them a helping hand, especially now that more businesses have experienced big strides in spite of the pandemic.

Good thing, we at Outsource-Philippines are here. As one of the pioneers in this field, we take pride in delivering quality outsourcing service to help businesses all across the globe attain their goals. We are equipped with a pool of local talents who are more than up to the task of would be able to providing outsourcing service for startups, small businesses, and even established companies. Experience the effects of outsourcing in the Philippines firsthand—contact us now and let’s get started.