In recent years, an industry with three little letters, BPO or Business Process Outsourcing, has transformed the Philippine economy. In just over a decade, the Philippines has become the second largest source of foreign exchange in the country, raking in more than fifteen billion dollars in revenue and providing employment opportunities for nearly one million people. This growth is projected to continue as the demand for outsourcing services increases.
One of the key factors that sets the Philippines apart is its strong Western influence. Despite being an Asian country, its history has shaped it into a nation that is highly Westernized in terms of culture. One hundred million Filipinos speak English fluently, making them a highly sought-after workforce for companies needing assistance with their contact services or back-office operations. This proficiency in English has given the Philippines a competitive edge in the global marketplace.
Teleperformance, one of the leading outsourcing companies in the Philippines, employs 23,000 individuals. However, it is just one of the 800+ BPOs in the country. The Philippines has attracted companies from all over the world due to its cost-effective solutions. Not only is it cheaper for BPOs, but it has also become a preferred destination for manufacturing. The rising costs in China, along with infrastructure challenges like power shortages, are driving companies, not just from the US but also from Japan and Korea, to relocate to the Philippines.
Despite the positive aspects of the Philippine outsourcing industry, the country still faces challenges. According to the World Bank, the Philippines is one of the least open economies to foreign investment. There are restrictions in sectors like telecoms, transportation, and banking, which limit the potential for growth. Between 1995 and 2012, the Philippines only captured 6% of the foreign direct investment inflows into Southeast Asia. Red tape, corruption, and inadequate transportation infrastructure are significant stumbling blocks that need to be addressed.
The good news is that improvement is underway. President Benigno Aquino’s administration has placed a strong emphasis on good governance, leading to an increase in investor confidence. Efforts have been made to reduce bureaucracy and create a more favorable investment climate. Aquino’s administration recognizes the importance of sustainable and higher levels of investment in infrastructure, which will require continued efforts to improve the business environment.
Transportation is a critical component of economic growth, and the Philippines has long struggled with traffic congestion. Monster traffic jams have not only become a part of daily life but also result in significant economic losses, totaling three billion dollars per year in wasted time and opportunity costs. However, ongoing efforts are being made to address this issue, with infrastructure projects aimed at improving transportation systems throughout the country.
In conclusion, the Philippines has positioned itself as a key player in the global outsourcing market. Its strong Western influence, proficient English-speaking workforce, and cost-effective solutions are attracting companies from around the world. While there are challenges to overcome, the Philippine government’s commitment to reform and improve the investment climate bodes well for the country’s future growth. With continued efforts to address issues such as infrastructure and bureaucracy, the Philippines is well-positioned to seize the next wave of investments and solidify its status as a hub for business outsourcing.