Location Risk Monitoring

The Philippines: Assessment of Outsourcing Industry – Risks and Opportunities

Written by Swathi Sarma

In early 1990s, when the concept of outsourcing was officially formulated as a “Business Strategy”, the attention of global companies shifted to low cost countries in APAC especially towards India and the Philippines. While India became an IT hub, the focus of the Philippines was more on attracting BPO centers. BPO in the Philippines started with opening of Accenture’s Global Resource Center in Manila. Since then, the South-east Asian country with a then population of 66 million and with a literacy rate of 97%, became one of the fastest growing BPO hubs in Asia, second only to India. The country holds a major share of the BPO market serving huge multi-nationals in United States, Europe, and Middle-East region. Supported by cost competitiveness and government incentives, the outsourcing industry in the Philippines has grown at ~46% since 2006 and is estimated to contribute 11% of the country’s GDP by 2020.

The Philippines progress in the outsourcing sector was on a smooth ride till the election of President Rodrigo Duterte, who is currently known for his stances against United States. His comments such as Separation from U.S”, “Exit of Foreign Troops” etc. have raised concerns among the U.S firms as well as investors in the country. Coupled with high corruption levels, severe power cuts, increasing difficulty in doing business, the Philippine nationals are worried that the industry that provides employment to more than 1 million Filipinos might shrink in the coming years. Would these Geo-political and business risks have a drastic impact on the outsourcing industry? How are the country’s current macro-economic and infrastructure scenarios? This Supply WisdomSM white paper attempts to provide answers for few of the questions and then explore some more about the country.

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