Why Should You Outsource in the Philippines?

Most foreign companies opt to invest in outsourcing back office from Asian countries in order to avoid certain costs and, at the same time, obtain a competent workforce.

In this industry, the Philippines continues to outperform its neighbouring competitors and should become the first choice for your outsourcing needs.

Recently, Australian Small and Medium Enterprises (SMEs) started outsourcing jobs to the Philippines. In an article from The Courier-Mail, 1 Information Technology (IT) entrepreneur and outsourcing guru Scott Linden Jones said about 25,000 Australian roles were exported to Philippines-based outsourcing companies last year.

He predicted the figure would soar to 50,000 in 2014, not counting jobs being exported to India or China.

But why should you outsource in the Philippines? Here are the five advantages that make it an attractive offshoring destination for Australian accounting firms:

  • Similar time zone and geographical proximity

The Philippines is in the same time zone as Western Australia and has only 0.75 – 2-hour time difference from other Australian cities, which makes it convenient for Filipino employees because their usual working hours will not be compromised.

Its location is also an advantage since Australia is only 4000 miles from the Philippines. It will take about 8 hours to fly from Manila (Philippines’ capital city) to Canberra.2

  • Good command of the English Language

English is the second official language of the Philippines. It is used as a medium of instruction in Science, Mathematics, and Technology subjects in conformity with the Philippine Bilingual Education Policy (BEP).3

For this reason, the Philippines maintains its edge in the business world. For the second year in a row, it was named the world’s best country in Business English Proficiency, even beating the United States and India.

The Global English Corporation annually conducts a study in which they measure the Business English Proficiency in the workplace using the Business English Index (BEI).

In 2013, the Philippines topped, yet again, the BEI rankings with 7.95%, placing ahead of Norway (7.06%) and Netherlands (7.03%). The US scored 5.23%, compared to its index of 5.09% in 2012.

India, Philippines’ major competitor in the Business Process Outsourcing (BPO) sector, garnered 6.32%, placing 9thon the list.4

Also, the Philippines has a strong affinity to the Western Culture having been colonised by the Americans during World War II. This is the reason Filipinos can emulate Western accent, which makes communication with foreigners easier.

  • Globally competitive workers

According to the National Statistics Office (NSO), the literacy rate in the Philippines is 97.5% which means 69.8 million of the total 71.5 million persons aged 10 and above were literate in 2010.

5The Philippines has also recently adopted the K-12 program which is patterned after the education system in the US and some parts of Australia.

Moreover, Filipinos are one of the most sought after labour force by foreign companies because of their global competence and skills. Associated Chambers of Commerce and Industry of India (Assocham) Secretary-General D.S. Rawat cited a study claiming that the Philippines has an advantage over India due to its large pool of “well-educated, English-speaking, talented and employable graduates.”6

  • Established experience in outsourcing

From its third spot last year, Metro Manila has now beaten Mumbai, India in Tholons’ Top 100 Outsourcing Destinations for 20147 while Bangalore, India retains its top position. Aside from Metro Manila, six other Philippine cities made it to the list: Cebu (8th), Davao City (69th), Sta. Rosa, Laguna (82nd), Bacolod (93rd), Iloilo (95th), and Baguio (99th).

Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO) Undersecretary Louis Casambre aims to “add three more cities from the Philippines in the top 100” in 2016.

According to the investment advisory firm Tholons, “the growth rate of Manila’s BPO sector remained consistent with previous years, and while Contact Support services continue to characterize the location’s identity, a notable increase in Finance and Accounting Outsourced (FAO) services and other higher value processes in the Information Technology Outsourcing (ITO) and other Knowledge Processes Outsourcing (KPO) spaces, have also been observed the past two years.”

  • Cost-competitive advantage

Finally, what makes the Philippines an ideal outsourcing location is that you can cut costs effectively. Compared to Western countries, the Philippines has a lower cost of living which makes its labour price only a fraction of what you pay to other countries.

“The big corporates started offshoring years ago and so had a huge competitive advantage over smaller businesses,” said Mike O’Hagan, founder of Brisbane-based Mini Movers.

He added, “Now small to medium-sized enterprises have access to it. So people can go to an Australian company and get a website built for, say, $5000, or go overseas and have it done for a few hundred dollars.”1

Furthermore, there’s no need to pay night shift differential since the time difference is insignificant.

These advantages only prove that the Philippines is an ideal outsourcing partner, which can help you add value to your clients’ needs, and grow your business without the heavy costs and burden.


The Outsourced Accountant  supports Australian and New Zealand accounting firms by helping them understand and implement outsourcing solutions to help them become more proactive and truly add value to their clients.

If you want to know more about outsourcing, call us at 1300 896 522 and download our e-book.


ENDNOTES

1 http://www.couriermail.com.au/business/queensland-jobs-outsourced-to-philippines-by-the-hundreds-of-thousands/story-fnihsps3-1226820940889

2 http://www.happyzebra.com/distance-calculator/Philippines-and-Australia.php

3

4 http://www.economist.com/blogs/johnson/2013/04/business-english

5

6http://www.thehindubusinessline.com/features/smartbuy/indias-itbpo-sector-may-lose-out-to-philippines-unless-it-cuts-costs/article5879671.ece

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