Are you planning to start your outsourcing business in the Philippines? It is important to understand the regulatory requirements to ensure compliance with local laws and successful market entry.
This guide will walk you through the essentials of starting your outsourcing business in the Philippines.
An Overview of the Philippine Outsourcing Industry
The outsourcing industry is a key driver of the Philippine economy, generating over $29 billion annually. These outsourcing businesses offer services to foreign companies looking to reduce their operational costs without affecting their service quality
Cities like Manila, Cebu, and Davao are hubs for outsourcing services such as customer support, IT solutions, back-office operations, and specialized Business Process Outsourcing (BPO) services.
Can Foreigners Set Up an Outsourcing Business in the Philippines?
Under the Foreign Investment Act of 1991 (Republic Act 7042), foreigners can set up outsourcing businesses in the Philippines with 100% ownership. Most outsourcing activities are excluded from the Foreign Investment Negative List (FINL), allowing foreign investors to fully own and operate their businesses without requiring a local partner.
However, depending the ownership structure, you must meet the minimum capital requirements which are as follows:
- Corporations with more than 40% foreign ownership must meet a minimum paid-up capital of USD 200,000. However, this can be reduced to USD 100,000 if you employ at least 50 Filipino workers or use advanced technology.
- Export oriented BPOs generating at least 60% revenue from overseas, the minimum paid-up capital requirement is significantly lower— USD 100.
How to Register An Outsourcing Business in the Philippines
Starting an outsourcing company in the Philippines involves several crucial steps to ensure compliance with local laws. Emerhub can simplify this process by managing all necessary documentation, liaising with government agencies, and providing expert guidance tailored to your business needs.
Following is the general process to start your outsourcing company in the Philippines:
1. Register Your Company with SEC
The first step to establishing your business operations in the Philippines is registering with the Securities and Exchange Commission (SEC). For most outsourcing companies, incorporating as a domestic corporation is advisable.
Our local experts will handle necessary submissions to ensure completeness and accuracy, and secure the company registration certificate from the SEC on your behalf.
2. Obtain Necessary Permits for Outsourcing Operations
To legally operate your outsourcing company in the Philippines, you must secure the necessary permits and licenses from the relevant authorities. While additional permits depend on your planned business activities, some of the mandatory licenses include the business permit/mayor’s permit from LGU, BIR registration for tax compliance, and enrolling your employees in the mandatory Social Security System (SSS), PhilHealth, and Pag-IBIG Fund.
3. Meet Additional BPO-Specific Requirements
Once your company is registered and operational, you will need to meet specific BPO-related compliance requirements. These include:
- Data Privacy Compliance: Implement robust data protection measures in line with the The Data Privacy Act of 2012 (Republic Act 10173). Depending on your data processing activities, you will also need to register with the National Privacy Commission (NPC).
- Employee benefits for remote employees: Under the Telecommuting Act (Republic Act 11165), you must ensure your remote workers have the same benefits as onsite employees, requiring you to comply with SSS, PhilHealth, and Pag-IBIG regulations.
The approval process for your outsourcing company typically takes 3-4 months, depending on your planned business activities and compliance requirements. Our local experts will handle the necessary submissions on your behalf to avoid unnecessary delays and ensure timely approvals.
Set Up Your Outsourcing Business in the Philippines with Emerhub
Navigating the Philippine legal requirements can be complex, especially for foreign investors unfamiliar with local regulations. Emerhub offers end-to-end corporate solutions to set up your outsourcing business in the Philippines. Our expert services include:
- Company registration
- Tax registration and compliance support
- Visa and work permit processing for foreign employees
- Ongoing regulatory support such as initiating timely license renewals.
For more details, fill out the form below and we’ll put you in touch with one of our local experts!