4 Reasons Why Philippines is the ‘BPO Capital of the World’

The business process outsourcing (BPO) is undeniably one of the fastest growing sectors in the Philippines. From a lone call center business pioneering the industry in 1992, the said sector had seen impressive development over the years. In fact, the BPO sector singlehandedly generated 1.2 million direct jobs and $22 billion in revenues in 2015, making it the second largest source of income in PH.

On top of that, the growth of the industry offering BPO services was so fast that the country was even hailed the “BPO Capital of the World” in just less than two decades. This international recognition wouldn’t be made possible if not for the following factors, which allow the country to attract both local and foreign investors.

Accent Neutral

Compared to other BPO giants such as India, Filipinos speak in English more fluently. The country has a national English proficiency rate of 92.5% based on a report. The Philippines is also the third largest English-speaking country in the world, thanks to its long and rich history with the Western nations.

Filipinos are also accent neutral, which is what most companies look for in their voice-support operations. In addition, they are also exposed to American idioms and slangs, which can be accounted to the country’s education system and the Western media. While all these are available in the Philippines, other countries thriving with BPO scene like India don’t have access to these things.

High Literacy Rate

With a 95% higher education literacy rate, the Philippines is producing over 450,000 graduates annually. These numbers add up to the 38 million employment pool in the country according to this infographic. Among these numbers include graduates with different specializations such as accountancy, nursing, and information technology. With such a diverse knowledge-based workforce, Filipinos are qualified to work on different BPO services, which can be seen as a huge advantage for investors.

Aside from that, government offices such as the Technical Education and Skills Development Authority (TESDA) also offer courses that are in line with the BPO sector requirements, specifically in the voice-support industry.

Cost-Effective Rates

Labor cost in the Philippines is generally inexpensive, with only a fraction-worth of the salaries in the Western countries. However, rates in the Philippines remain slightly higher than that of the former BPO capital, India. Although this is the case, BPO companies still choose to operate in the country because of the quality of labor Filipinos provide, according to the Information Technology-Business Processing Association of the Philippines (iBPAP).

Based on a US Meta Group study, the Philippines is the top country in the world with the most skilled workers and availability of knowledge-based jobs. The same study found out that the country also ranks fourth in labor quality among the Asian nations.

Government Support

Aside from offering TESDA courses, the government also shows its support to the BPO industry in various ways. For instance, the creation of the Department of Information and Communications Technology through RA 10844 was aimed to bolster the BPO sector in the country.

In addition, various laws such as the Data Security Act and the revised Special Economic Zone Act were also passed to help boost the said industry. The Data Security Act, or RA 10173, aims to protect sensitive data from threats like banking details. It complies with the International Data Privacy Standard.

On the other hand, the revised Special Economic Zone Act, or RA 7916, introduces taxation-relation benefits such as four-year corporate income tax exemption, local tax and permits exemptions, duty-free import of capital equipment, and permanent residence for foreign investors. It also offers operation-related and capital-related benefits, as well as reduced area requirements for developers.

With the help of the factors above, the BPO sector in the Philippines was able to reach a milestone in just a few years. The international scene has recognized the efforts the whole nation was putting into the BPO services it provides. If this success keeps up, it is not far to reach that $48 annual revenue by 2020, as projected by experts.