Outsourcing to the Philippines + Guide

The Rise of Outsourcing in the Philippines

The Philippines holds approximately 10% to 15% of the global BPO market, positioning it as a key international player in the outsourcing industry.

The local BPO industry contributes $32.5 billion annually to the economy, which makes outsourcing a great source of opportunity and revenue for the country.

Despite challenges in the global market, the Philippine outsourcing industry’s revenues continued to climb even during the pandemic. By 2022, the outsourcing industry reached over 1.4 million employees, surpassing its original target.

The Philippines is considered one of the top outsourcing destinations in the world — and there are several reasons why this is the case.

Why Businesses Should Outsource to the Philippines

Cost efficiency

You can save 70% of operational costs by hiring remote Filipino Staff because of the low living costs, allowing you to allocate resources to other high-priority areas.

English proficiency

Filipinos have a high English proficiency at a young age as this is the medium of instruction in schools. This ensures Filipino employees can easily understand and communicate with English-speaking international employers.

Culture compatibility

The Philippines has a long history of being occupied by countries such as Spain and the United States. This gives the Philippines a strong cultural affinity with Western countries, which makes it easy for Filipinos to adapt to an international work environment.

24/7 staffing

The Philippine outsourcing ecosystem is very mature and is built for the global employment market. Highly westernised with a 24/7 culture in the metros, the workforce can provide business solutions anytime and anywhere, regardless of the time difference. This benefits businesses with customer service and online sales, which require 24/7 availability.

High educational attainment

The Philippines produces 700,000 university graduates per yet, creating a highly skilled and talented workforce that can compete in the global employment market and provide businesses with high-performing employees.

Benefits of Outsourcing to the Philippines

By outsourcing to the Philippines, you can experience the following benefits for your business:

Low Labor costs

The Philippines provides more affordable services while maintaining high-quality output compared to other countries. For example, China may offer lower labour costs than the Philippines, but may not be as English-proficient and culturally compatible as Filipino workers.

Highly skilled workforce

The Philippines has a highly skilled workforce that excels in IT, finance and healthcare, allowing Filipino employees to succeed in different industries. You can be confident that your outsourced staff from the Philippines will demonstrate proficiency and competence in their respective fields.

Data privacy and security

Sensitive data and confidential business information are often shared with third-party service providers when outsourcing work, which is why it’s important for you to consider data privacy and security when choosing an outsourcing provider.

Philippine regulations require external service providers to follow strict data privacy and security measures. You can trust your external service providers in the Philippines to implement measures to adequately protect sensitive data.

Popular Outsourcing Services in the Philippines

There are three common types of outsourcing services in the Philippines you can choose from.

Professional Employer Organisation

While a Professional Employer Organisation (PEO) acts as a company’s outsourced HR partner, it is not the employer of the organisation’s workforce. PEOs serve as co-employer for businesses and work well for small enterprises with full-time employees. This requires you to have an entity in the country you are employing your team in.

Employer of Record

Unlike a PEO, an Employer of Record (EOR) takes on all employer-related responsibilities for small to large businesses. An Employer of Record can quickly hire top talent for your business without requiring you to set up a local entity while ensuring you remain compliant and reduce costs in the long run.

Fully managed services

This is also known as the traditional business process outsourcing model (BPO), which is best for business owners that have a hands-off approach, as the BPO will handle on-ground and on-site operations for outsourced employees. This also means you will not have control over the hiring process for your team or their wages. The traditional BPO pricing structures are typically bundled and offer no transparency as to how much of the fee goes to your team.

Companies that Outsource to the Philippines

Outsourcing to the Philippines has contributed to the success of numerous companies, some of the most popular ones being:

Google

According to Bloomberg, Google has more outsourced workers than direct employees, and many of their contract workers are from the Philippines.

Outsourcing in the Philippines enables Google Inc. to fill in support roles and specialised positions at affordable labour costs while maintaining quality output from top talent.

American Express

A well-known credit card company in the Philippines, American Express works alongside BPO companies in the Philippines to offload non-core tasks to external providers. This allows the business to focus on key business areas while its back-office solutions are handled by outsourced employees.

Wells Fargo

Another well-known multinational company that works with outsourced teams is Wells Fargo, which has a wide pool of dedicated remote professionals across Asia. Some of the tasks that Wells Fargo outsources in the Philippines include fraud management, financial accounting, payroll and customer support.

Choosing the Right Outsourcing Partner in the Philippines

Before you decide to choose an outsourcing provider in the Philippines, you must consider the following factors first.

The political and economic landscape in the Philippines

As a business, you need to consider a location’s political, social and economic health to develop a solid outsourcing strategy. Philippine regulations and governing bodies are supportive of the outsourcing industry because of its significant contribution to the national economy, resulting in little to no risks when outsourcing in the country.

Company values and goals

You need to review a potential provider’s company values and goals, ensuring that their principles align with yours.

Company reputation

Check a potential service provider’s track record and reputation to ensure that you are partnering with a credible company.

Expertise and services

Identify the type of outsourcing services your business needs and make sure to assess whether a potential provider has a specialisation in different fields (e.g. IT, finance, customer service).

Budget adherence

Canvass the fees for the options you’re considering and calculate which providers can reduce costs for your business and which are more expensive in the long run.

Key Outsourcing Cities

Manila

Manila, the capital city, is the largest hub for outsourcing in the Philippines. It offers a wide range of services and has a robust infrastructure to support the industry.

Cebu

Cebu is known for its strong IT and software development outsourcing services. The city also offers excellent customer support services and is a popular destination for tourism and expatriates.

Davao

Davao is an emerging outsourcing hub, known for its lower cost of living and high quality of life. It offers a variety of BPO services, including customer service and technical support.

Clark

Clark Freeport Zone is another growing outsourcing destination, offering various incentives for businesses, including tax breaks and simplified business processes. It is strategically located near the capital and has excellent infrastructure.

Industry Focus

IT Outsourcing

The Philippines offers a wide range of IT services, from software development to network management. The country is known for its skilled IT professionals who provide cost-effective solutions to businesses worldwide.

Healthcare Outsourcing

Healthcare outsourcing in the Philippines includes medical transcription, billing and coding, and telehealth services. The country has a growing number of healthcare professionals trained in these areas.

Customer Service

Customer service is one of the largest sectors in the Philippine outsourcing industry. Companies can leverage the excellent communication skills and customer-oriented mindset of Filipino professionals.

Finance and Accounting

The Philippines provides a range of financial and accounting services, including bookkeeping, payroll processing, and financial analysis. The country’s professionals are well-versed in international accounting standards.

How Remotify Helps Businesses

Remotify is one of the leading Employer of Record service providers in the Philippines. It is committed to being a good business for all — from its clients to its remote employees.

Businesses can expect the following benefits from partnering with Remotify:

Lower costs to employ top talents
Eliminate office rental costs
Efficient payroll processes
Ensure compliance with labour standards
Secure your team's local benefits
No separate local business entity required
Manage your team directly and keep control of your business processes
Keep your team engagement high
Prevent the loss of great talents

Case Study: National Corporate Housing Expands Operations with the Help of Remotify

National Corporate Housing offers temporary, furnished corporate housing around the world and is headquartered in the United States. As its Employer of Record, Remotify provides HR support to National Corporate Housing, ensuring that the company maximises its talent.

“Remotify’s in-region service and elevated customer experience, combined with their understanding of our business and organisational needs, really set them apart from other potential HR suppliers.” — Tom Meertens, COO of National Corporate Housing

Frequently Asked Questions

1. Why do foreign companies want to outsource in the Philippines?

The Philippines is considered one of the top outsourcing destinations for many reasons. Foreign companies that partner with a top outsourcing provider in the Philippines can expect the following:

Cost efficiency
English proficiency
Culture compatibility
24/7 staffing
Flexible workforce

2. Why outsourcing to the Philippines is better than any other country in Asia?

The combination of qualities that the Philippine workforce possess enable the country’s outsourcing services to compete globally.

For example, India may have a larger pool of IT professionals, but the Philippines has an advantage in terms of English proficiency and cultural similarity to Western countries. Vietnam may offer lower labour costs, but it may not have the same level of expertise as the Philippines in certain industries, such as call centre services and accounting and data entry services.

3. What are the costs involved?

The costs of outsourcing to the Philippines are generally lower than in Western countries. However, they vary depending on the services required and the provider selected.

4. What are the primary benefits of using an Employer of Record?

Using an Employer of Record (EOR) provides several benefits including ensuring compliance with local labor laws, simplifying payroll and tax management, offering access to employee benefits, saving costs and time, supporting global expansion without the need for local entities, mitigating employment risks, and providing flexibility to scale the workforce efficiently.

5. How does an Employer of Record improve compliance?

An EOR stays up-to-date with changes in local labor laws and regulations, ensuring that all employment practices, including payroll, benefits, and taxes, comply with current legal standards. This reduces the risk of non-compliance and associated penalties.

6. Can an Employer of Record help with international hiring?

Yes, an EOR is particularly beneficial for international hiring. It allows companies to employ workers in different countries without setting up a legal entity in each location. The EOR manages all local employment compliance, payroll, and HR functions, simplifying the process of global expansion.

7. What types of businesses benefit most from using an EOR?

Businesses of all sizes can benefit from using an EOR, especially those looking to expand internationally, startups, companies with remote workforces, and organizations that want to outsource HR and compliance functions to focus on core business operations.

8. EOR vs. BPO

When we talk about EOR vs. BPO, an Employer of Record (EOR) takes on the legal responsibilities of employment, including payroll, taxes, benefits, and compliance with labor laws, allowing companies to hire globally without setting up local entities. In contrast, Business Process Outsourcing (BPO) involves contracting specific business functions like customer service or IT to third-party providers. While BPO focuses on handling operational tasks, EOR focuses on managing employment and HR functions, providing greater flexibility and compliance assurance for global workforce management.