Technology has made it possible for employees to work anywhere effectively. In many ways, it’s opened the doors for them to work for companies located abroad. This business practice is known as outsourcing, defined as hiring international parties or individuals to provide their services to your company.
The Philippines is notable for being one of the best countries to outsource employees, and it shares this feat with places like India, Mexico, and Brazil. The country is a prime candidate for outsourcing opportunities because of its immense talent pool present and its residents’ advanced proficiency in English.
If you’re a business looking to outsource Filipino professionals, you should first understand the local laws that would enable this employment relationship to run smoothly.
Outsourcing in the Philippines: Quick Facts and Figures
Outsourcing benefits global businesses by saving more on operational expenses. On the other hand, recruited locals gain from receiving a more competitive salary range and eliminating unnecessary commutes.
The Philippines has always been a top contender for the best country in Asia to outsource. Below are some facts and figures about the country’s strong outsourcing performance:
- The BPO industry positively impacts the country’s revenue growth
The outsourcing industry has contributed significantly to the country’s overall revenue. In 2021, the country’s IT and Business Process Management (IT-BPM) sector generated over $29 billion in revenue. According to the IT and Business Process Association of the Philippines (IBPAP), this was a 10.6% increase from the field’s 2020 performance. - The Philippines has a strong workforce in the outsourcing sector
IBPAP also noted that the industry welcomed another 120,000 full-time employees, a 9.1% increase from the year before. The strong performance evident in both 2020 and 2021 is a result of pent-up demand, higher confidence in remote work effectiveness, and growth in the e-commerce, fintech, and technology sectors.
- The Philippines is home to at least 1.3 million outsourced employees
In terms of volume, around 1.3 million Filipinos worked in the business process outsourcing (BPO) industry in 2019. Since then, the sector has been forecasted to grow by 8-10% annually.
As of 2021, IBPAP recorded a headcount of 1.44 million Filipinos. The strong growth forecast is also a result of outsourcing being one of the industries that benefited the most from the pandemic and lockdowns. - The country holds 10-15% of the global BPO market
Numerous employees working in the outsourcing sector also allowed the Philippines to hold 10- 15% of the global BPO market. Most businesses availing of the Philippines’ outsourcing landscape and pool of talent come from the United States, parts of Europe, and nearby countries like Japan, Australia, and New Zealand. - The Philippines is expected to continue being a top destination for outsourcing needs
Several factors contributed to the Philippines’ success in the global industry. Among these include having a scalable talent pool that’s well educated, fluent in English, and cost competitive. The country has remained a top outsourcing hub for years, with India being its nearest competitor for the number one spot.
In addition to the merits of the workers, the country provides adequate government support to further encourage the BPO landscape in the country. These include organisations like the Philippine Economic Zone Authority (PEZA) and the IBPAP, which focus on promoting and establishing ecozones and BPO industries for foreign investments. - Customer service is the most outsourced service in the Philippines
Considering that the country is well-versed in the English language, most of the services assigned to its outsourced employees involve customer service, both voice and non-voice. Due to their educational background and the volume of workers, the Philippines currently holds the largest market share for offshore customer service.
Additionally, its predominantly Western cultural influences have primed the country to be compatible with most countries looking to outsource. Besides customer service operations, the Philippines is also in demand for businesses wanting to expand their workforce for data entry and back-office purposes.
Source: Mikhail Nilov via Pexels
- The number of workers in the BPO industry is expected to double by 2028
As the sector performs excellently throughout the years, it’s expected to remain robust well into the future. If current trends and percentages are to be considered, a rough estimate of 2.5 million people is projected to work in the outsourcing industry by 2028.
According to IBPAP, growth targets for 2021 have already exceeded the initial and retargeted projections for 2022, which was 1.43 million.
6 Laws Specific to the Philippine Outsourcing Sector
With a significant number of the Philippines’ workforce outsourced to other countries, different outsourcing laws are enforced to protect the workers’ rights and benefits. Putting these laws into place is crucial since the industry impacts the country’s economy and revenue generation.
With the considerable weight of the BPO sector, certain government initiatives have been put into place to stabilise the Philippine economy while protecting and promoting outsourcing. The following regulations are testaments to how seriously the government strives to protect its outsourced workers:
- Data Privacy Act of 2012
Republic Act (RA) 10173, also called the Data Privacy Act, aims to protect all forms of data given by the employee, whether personal, private, or confidential. This protection is expected to benefit both employees and business entities as a whole.
The Act includes any information stored manually or digitally by the employing organisation. For employers, this protects employees and minimises the instances where they become the subject of finger-pointing should a data breach occur. It also gives the employee the right to have a copy of any information that concerns them and their capacity to provide service.
According to the Act, personal information collected for specified and legitimate purposes should be disclosed to the employee beforehand. They should also be recorded accurately, processed following Philippine law, and retained only until the purpose for requiring the information is fulfilled. - Department of Information and Communications Technology Act of 2015
Otherwise known as RA 10844, the Department of Information and Communications Technology Act aims to oversee various agencies within the information and communications technology (ICT) sector and assist the development of the local ICT scene, which can enable future start-up enterprises.
In addition to being the government’s initiative to promote more businesses in the Philippines, the Act also wants to encourage the usage of ICT within different industries. Other roles include enforcing individuals’ right to information privacy and confidentiality as well as promoting digital literacy, knowledge-building, and industry expertise. - Special Economic Zone Act of 1995
The biggest contribution and goal of RA 7916 is to encourage economic growth at local, regional, and national levels. It’s done primarily through developing special economic zones, referred to in the law as ecozones.
Ecozones are government-designated areas meant for agricultural, commercial, industrial, or recreational developments in certain parts of different regions. It’s primed to act as an independent community with little to no government interference and is meant to be home to various businesses, which includes the BPO sector.
Along with the implementation of this Act was the creation of the Philippine Economic Zone Authority (PEZA), which acts as the governing authority meant to stir national economic growth through employment generation in cities outside the metropolitan area, particularly in countryside locations and provinces beyond Metro Manila. - Telecommuting Act of 2018
Telecommuting is the process of working from any location. In a post-pandemic era, this means having the option to work from home or work remotely without compromising your capacity to work.
As outsourcing doesn’t mean employees are moving to the business’s location, the working arrangement can call for an employer to provide a telecommuting program through the employee’s contract or agreement. It allows recruited individuals to perform their tasks virtually anywhere.
Although RA 11165, or the Telecommuting Act, was enacted in 2018, its implications and the conditions it maintains still prove to be timely today. It also continues to protect the well-being of employees who work remotely through terms and conditions written specifically in the Act, such as eligibility of an employee, occupational safety, and data protection and confidentiality. - Policy and Guidelines Governing the Safety and Health of Workers in the Call Center Industry
This labour code acted as the government’s response to the country’s rapidly growing number of BPO workers. The Department of Labor and Employment’s (DOLE) amendments to this policy has extended beyond regular full-time employees and covered the rights, well-being, and benefits of workers in the BPO industry.
It also pressures employers to be responsible for their employees and overall health, ensures the workplace is safe, and affirms that employees abide by the healthcare privacy laws regulated in the country and worldwide. - Guidelines on the Implementation of Flexible Work Arrangements and the Exemption from the Nightwork Prohibition for Women Employees in the Business Process Outsourcing Industry
Before DOLE implemented its Advisory No. 4, women weren’t allowed to work graveyard shifts, which prevented them from participating in some industries. Since the United States and other European countries asked for Filipino BPO companies for their backend operations, this limited the female workforce’s capacity to participate in BPO firms.
The creation and subsequent implementation of this policy tackled this issue, finally allowing women to be given equal opportunities to their male counterparts when working in BPOs. Not only that, but it also covers policies for female employees if they’re pregnant or breastfeeding. In this case, they must submit a medical clearance before they’re allowed to work.
Outsourcing for a Better Tomorrow
As a business looking to outsource, you would do best to research the laws exclusive to the country you’re eyeing to outsource from, including local regulations and their scopes and limitations. Moreover, you should only work with HIPAA-certified outsourcing partners or HIPAA-certified agencies to better safeguard and protect your business from unwanted incidents.
Ultimately, outsourcing to the Philippines is a business practice that greatly benefits the employer and the employees they partner with. It’s also a major contributor to the economy, so the government should implement various Philippine laws regarding outsourced individuals.
The outsourcing laws in the Philippines continue to grow and improve yearly, all for the nation’s prosperity as well as to protect the rights and well-being of the country’s outsourced labour force.
If you’re looking for a call centre based in the Philippines, you won’t find a better partner than Select VoiceCom! For more information, check out our services page or contact us today to learn more!