Over the last 10 years, business process outsourcing (BPO) centres have cropped up all over Asia. Two countries have emerged as leaders in the BPO sector: India and the Philippines. While Bangalore city in India ranked first in 2014 for top outsourcing destinations, Manila ranked second. The Philippine BPO industry is likely to do extremely well and possibly overtake India soon.

Australian businesses have caught on to the trend. There is a growing number of companies that are looking at the Philippines for their offshoring needs. Australia is in a particularly favourable location because of its proximity to Southeast Asia. There are a number of reasons why Australia gives preference to the Philippines for outsourcing.

Inexpensive Labour

Common knowledge suggests that labour is cheaper in Asia. But to put that in perspective, an experienced BPO agent in the Philippines earns USD500 a month whereas the equivalent in Australia earns USD2700 a month. Back end operating expenses fall by a magnitude of 10 simply by offshoring. With wages rising in India, the Philippines looks like a good candidate for offshoring.

Literacy Rate: 97.5%

97.5% literacy rate is a staggering number. To put this in perspective, India stands at 74% and China at 88.6%. As a leading country in the BPO industry in Asia, this is very suitable for Australian businesses because of ease of communication with locals. The Philippines has the third largest educated workforce in terms of absolute numbers (after India and China).

Close to home, similar time zone

The Philippines is one of the closest countries to Australia.It is just a 6 hour flight away. Australia also enjoys the benefits of sharing a timezone with the Philippines. This wipes out the hassle of a mismatch in working hours for both countries.

Cultural Similarities

The Philippines was colonized by the Spanish for nearly 375 years until the Americans came along and colonized the archipelago for 48 years till 1946. The lifestyle of the Americans left a deep mark on the Filipino culture. Culturally, they are similar to most western nations, which is an anomaly in southeast Asia. The similar background makes for a negligible culture shock for Australian businesses. The friendly nature of Filipinos makes this the perfect place to set up customer service outsourcing.

Strong Government Initiatives

The government has been promoting the BPO sector for a few years now, through training progammes for Filipinos and financial incentives for companies. The financial incentives include Special Economic Zones, tax holidays for 6-8 years, import and customs duty waivers, reduced tax after the tax-holiday ends (down to 5%) and more. The government is also making efforts to improve infrastructure. Although the progress has been slow, internet connectivity is improving. The country does well in terms of office spaces. Around 80% of office spaces are occupied by BPOs.

There are a number of ancillary businesses that cater to Australian businesses that want to outsource to the Philippines. One of them is Mike’s Manila Tours by (you guessed it) Mike O’Hagan. Mike gives tours around the Philippines for businesses who need reliable information from someone closer to the ground. We spoke to Mike and featured him on our blog. You can check out the post here. We have also published a series on Australian businesses that outsource parts of their business to the Philippines. We have PANALITIX, ServiceSeeking Manila and Wint & Kidd Inc telling readers about what you need to know before taking that crucial step of moving to the Philippines.

If you would like to learn more about setting up in the Philippines with PayrollHero feel free to reach out and one of our team would be pleased to speak further.