DISCLAIMER: This post was last modified on 2 April 2024. Some information in this article may not be updated.

When a business grows, its costs and requirements for human resources will usually also increase. These added demands also take up attention to the core focus of a business, thus reducing efficiency. However, one strategic option that can help with mounting costs and scaling staff while improving efficiency is business process outsourcing or BPO. 

Growing companies can benefit from BPO in several areas, such as cost efficiency, scalability, focus on core activities, flexibility, access to talent and global reach. Due to these benefits, BPO is an appealing option for businesses seeking to reduce costs, improve efficiency and obtain a competitive advantage in today’s fast-paced business environment. 

In this article, we focus on what is considered the biggest BPO centre globally: the Philippines. 

Philippines as a BPO centre

The Philippines has become a significant player in the global BPO sector. The Philippine BPO sector (locally referred as Information Technology – Business Process Management or IT-BPM) is among the fastest growing business sector in the country yielding YoY revenue growth of nine to ten per cent between 2020-2023. As of the end of 2023, the IT-BPM sector has revenues of US$35.4B and employs 1.7M workers.  

According to a Reuters report, Philippine BPO companies usually offer services to entities in the United States, Europe, Australia and New Zealand.  

It is estimated that 10-15% of the global outsourcing market is in the Philippines. In recent years, the talent availability has also seen a shift from customer care/support staff to managed services able to perform functions such as finance, HR, technology and healthcare.  

The advantages

• Skilled workforce: Filipino workers are highly trained and efficient, and the country can always meet operational demands due to its high literacy rate of 97.0 per cent. The Philippines has a competitive advantage in attracting SMEs and entrepreneurs looking to establish a business in the country due to its highly proficient English-speaking population.  
• Favourable time zone: When it comes to time zones, the Philippines has a strategic edge in outsourcing services to the European Union (EU) and North America. Being typically 6 to 8 hours ahead of most EU countries and 12 to 16 hours ahead of North American time zones, the Philippines’ favourable time zone enables BPO providers to serve clients in North America and the EU efficiently, increasing responsiveness in outsourcing operations through continuous service delivery and communication, round-the-clock coverage and overlapping working hours.  
• Cost-effectiveness: Several factors contribute to the cost-effectiveness of outsourcing BPO services to the Philippines. For instance, operational efficiency in processes and workflows, access to specialised skills, robust quality assurance processes and technological advancements all result in improved efficiency and productivity, driving down costs for clients.  
• Supportive government: The Philippines offers several supportive government policies and tax incentives for companies outsourcing business processes to the country. For example, the Philippines has several Special Economic Zones (SEZs) and IT Parks and offers income tax holidays, reduced corporate income tax rate, simplified tax compliance and training and development incentives to foreign companies outsourcing their services and functions to the Philippines.    

Why should EU companies set up a BPO centre in the Philippines?

Foreign companies and investors, especially those from the EU seeking to streamline their operations and enhance global competitiveness, should set up or outsource a BPO company in the Philippines to benefit from the cost-effective, efficient and culturally compatible solutions available in the country. 

A competent workforce, a high level of English proficiency and a welcoming culture are just a few reasons these companies consider the Philippines as their outsourcing destination.  

According to Pocholo Niebres, Bolder Group Philippines General Manager, an estimated 85%-90% of the Philippine BPO sector caters to North American clients. The remaining are spread across Australia, New Zealand, UK and the EU. All these regions turn to the Philippines to solve problems on human capital shortage, labor cost and professionalising their operations. With a more favourable time zone for cross collaboration and similar English language competency levels, the EU is becoming an attractive option for both local BPO industry and its workers.  

Through its BPO sector, the Philippines leads the way in the cultural adoption of western business practices due to a high rate of tertiary education graduates (approx. 1.7M annually) and the wide use of the English language which is the primary language used in the local education system.  

“Working in BPOs is seen as a favorable employment option to many young Filipinos building a career after school. The government led by the Technical Education and Skills Development Authority (TESDA) and the local education system has supported the “future proofing” of local talent by adding programs on emerging disciplines making its way via outsourcing such as finance, technology, HR, marketing, legal, and healthcare.”

Aside from the government incentives mentioned earlier that contribute to the Philippines’ appeal for EU companies to outsource their business processes, Niebres also highlighted that the Philippines has 13 “Next Wave” cities that have been home to BPOs since the mid-2000s. In 2022, the Department of Information Communication and Technology (DICT), along with the IT-Business Process Association of the Philippines (IBPAP), identified 25 “Digital Cities” across the country as part of a commitment to build up more locations in the countryside to support the BPO demand. These locations were identified based on the availability of Talent, Infrastructure, Competitive Cost and Business Environment.   

BPO company formation in the PH with Bolder Group

In conclusion, whether you are deciding between outsourcing to an existing BPO company in the Philippines and forming your own BPO company, it’s crucial to partner with a qualified global corporate service provider like Bolder Group.  

Our industry experts can help and guide you through the process with your business objectives and specific needs in mind. We provide professional assistance in navigating the regulations and procedures in the Philippines to ensure a smooth and compliant setup process for your BPO company.  

Ready to discuss our global company formation services? Contact us today.  

Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

Bolder Group refers to the global network of independent subsidiaries of Bolder Group Holding BV. Bolder Group Holding BV provides no client services. Such services are provided solely by the independent companies within the Bolder Group which are each legally distinct and separate entities and have no authority (actual, apparent, implied or otherwise) to obligate or bind Bolder Group Holding BV in any manner whatsoever. The operations of the Bolder Group are conducted independently and have no affiliation with third party financial, tax or legal advisory firms or corporations.