Businesses of all sizes have already been benefiting from outsourcing for years, and rightfully so. Outsourcing enables to unlock the true potential of a company and take advantage of today’s technologies.
Among other top destinations, outsourcing to the Philippines is gathering pace. It is becoming one of the country’s leading industries, predominantly due to low costs and high levels of English proficiency.
But first – what is business process outsourcing (BPO)?
Business process outsourcing – one of the fastest growing industries in the world – is the delegation of certain business procedures to third-party service providers.
Generally, businesses delegate non-core tasks that do not directly contribute to their main activities to professionals outside of the company.
These processes include, for example:
- Accounting and payroll
- Supplier search
- Importer of record
- Employer of record
- Market research
Types of BPO
Outsourcing services to professionals who are outside of your company, but in the same country as you.
For example, if your company is in the Philippines and you outsource some of your processes to Emerhub.
Contracting services to third-party service providers from neighboring countries.
Contracting services to other countries. For example, if your company is located in the United States, but you outsource certain services to the Philippines.
Why do companies outsource?
The world today is in constant change and technology is developing at a rapid pace, simultaneously creating excellent conditions for realizing its potential. Competition gets tighter and businesses need to re-evaluate their existing operating techniques in order to outrun others.
Outsourcing reduces costs
One of the main targets of business process outsourcing is to bring down expenses. Companies are willing to invest in things that will improve their value and core business. Non-core functions, however, will not fulfill this purpose, yet may demand a lot of resources.
Outsourcing will exempt you from costs such as:
- Hiring and training in-house employees for such tasks
- Taxes and other HR expenses related to respective employees
- Software and equipment
Many businesses also increase their cost-efficiency by outsourcing services from developing countries where labor costs are significantly lower, such as the Philippines.
BPO increases efficiency
Another equally important reason why a lot of companies choose to entrust their non-core tasks to professionals from other companies is that it also accelerates growth.
In other words, outsourcing allows you to implement your maximum potential by enabling you to concentrate on your main goal – which is to enhance and promote your products or services.
This particularly applies when starting a business in emerging markets where there tends to be a lot of red tape and laws might sometimes change overnight.
For that reason, it is wise to channel your energy into developing your strategies and let professionals handle other tasks rather spending time on learning local regulations and compliance requirements on your own.
Outsourcing enables flexibility and faster market entry
Foreign investors are used to that in developed markets, a company can be registered within days or sometimes even within hours. In emerging markets, however, the process of incorporation is lengthier, involves more bureaucracy and may take several months.
Outsourcing, on the other hand, allows entering emerging markets faster than incorporation does. For example, registration of a corporation in the Philippines may take up to 5 weeks.
However, you can participate in tenders immediately by outsourcing services such as:
- Employer of record
- Importer of record
- Distributor search
Furthermore, larger job portals won’t even allow you to post job ads without having a local legal entity.
With an employer of record, however, you can start hiring before you even decide whether you want to set up a company in the Philippines at all.
Test the market by outsourcing
Needless to say, expansion to new markets can always carry certain risks. Before jumping into the unknown, it is indispensable to first consider all the aspects and think out questions such as:
- Will my product or service have enough potential in that market?
- Is company registration the most reasonable way to enter the market?
Business process outsourcing is an optimal way to test the market before making any initial investments whatsoever. After determining the sustainability of your future business, you can proceed with choosing the most suitable legal entity in the Philippines with confidence and an already existing clientele.
4 key benefits of outsourcing to the Philippines
#1 English proficiency
The Philippines is among the largest English-speaking nations in the world. It’s no surprise that Filipinos are famous for high levels of English proficiency since English is one of its official languages.
According to the EF English Proficiency Index in 2016, Philippines ranks 15th out of 80 countries in comparison worldwide. In Asia, the Philippines lands in the top 3.
Fluency in English is one of the main reasons why the Philippines is a great destination for outsourcing communication-based processes, such as call centers and customer support.
In fact, the Philippines is the only country where you can get low expenses with a high level of English proficiency.
#2 Young and educated workforce
According to Worldometers, the median age in the Philippines is 24.3 years. In addition to a young and viable workforce, the talent pool of the Philippines is increasing by nearly half a million graduates each year.
The Philippine Statistic Authority states the literacy rate in the Philippines to be over 95%. Owing to special training programs at universities, a large number of Filipinos are also qualified to work in the BPO industry.
Numerous companies have already chosen the Philippines as the destination for Knowledge Process Outsourcing (KPO) which demands higher levels of skills and expertise.
#3 Low labor costs
Despite economic growth, wages in the Philippines still remain lower than in Western countries. Due to lower labor costs, you will have better access to talents that would require more resources outside of the emerging markets.
The average monthly salaries of customer and technical support employees, for example, range from US$200-US$500, depending on the region. Salaries of BPO employees are higher in metropolitan areas.
#4 Government incentives
As business process outsourcing is one of the top industries in the Philippines, the government is very much interested in encouraging it further and fosters its growth by offering several incentives.
These incentives are, for example:
- Special training programs
- Import-export simplifications
- Tax exemptions
- Tax holidays
Outsourcing in the Philippines using Emerhub
Emerhub offers several services in the Philippines, including:
What we do
Accounting and tax reporting
|We will handle everything regarding accounting and tax reporting on your behalf.|
|Instead of doing your homework on your own, we will take care of the market research and collect information about the prospects of your future business in Southeast Asia.|
|We will recruit a person or a team who will work for you in the Philippines.|
|As your importer of record, we will import your products to the Philippines using our import licenses.|
Also, note that outsourcing to the Philippines is not only for companies who are aiming to test the market or establish a legal entity here. Outsourcing services are also suitable for businesses who wish to outsource only some of the services such as:
- Call centers
- Customer support
- IT services
If you didn’t find the service you’re looking for, no matter if project-based or for a longer term, do not hesitate to get in touch with us by sending an email at [email protected]. We will find a suitable solution for your business.
Outsourced operations model
Emerhub also offers outsourced operation model which allows you to conduct sales, deliver products/services and earn revenue without acquiring any licenses or meeting minimum capital requirements in the Philippines.