Introduction
The Philippines, often called the “Pearl of the Orient,” is a premier destination for offshoring services worldwide. It ranks 12th as the most attractive country for offshore services according to Kearney’s 2023 Global Services Location Index (GSLI) and houses more than 1,000 BPO companies nationwide with almost 1.2 million employees.
With a rapidly growing talent pool, strong English fluency, and a culture of service excellence, this Southeast Asian nation has become a go-to hub for businesses globally looking to optimize their operations. This guide will detail some of the more strategic advantages of choosing the Philippines as an offshoring destination and why it could be your company’s next best strategic move.
Proficiency in English
One of the standout advantages of offshoring in the Philippines is the country’s high level of English communication skills – a consequence of its historic closeness with the United States. English is one of the official languages of the Philippines, making it a natural choice for businesses looking to partner with an English-speaking workforce remotely. With an impressive 92.5% English proficiency rating, Filipinos easily bridge the communication gap. This capability ensures effective communication and seamless collaboration, minimizing language barriers often arising in offshoring relationships. Moreover, their spoken English is accent-neutral, making it effortless to integrate them into a global team because it is easy to understand and hard to place. This observation is particularly invaluable when it comes to remote accounting and customer support functions where crystal-clear communication is needed.
Vast Talent Pool
The Philippines boasts of a vast and diverse talent pool, particularly in finance, accounting, IT, customer support, and more. Filipinos value education highly – in 2022, a reported 4.1 million students enrolled in colleges and universities in the country. With a steady stream of college graduates (roughly producing 350,000) and skilled professionals entering the job market each year, businesses can tap into a rich source of talent to meet their specific needs.
Cost-Effective Solutions
One of the primary reasons companies turn to offshore is to reduce operational costs while maintaining or improving service quality. The Philippines offers a cost-effective labor market, allowing organizations to access highly skilled professionals at a fraction of the cost compared to many Western countries. It is among the lowest in Asia, with an hourly labor cost (including wages and benefits) for eight service occupations averaging 13% of U.S. levels. This cost advantage significantly contributes to the bottom line.
Service-Oriented Culture
Filipinos are renowned for their hospitality and service-oriented mindset. Filipino hospitality, often called “hospitality with a smile,” is a hallmark of Filipino culture. It is a deeply ingrained value emphasizing warmth, friendliness, and generosity when welcoming guests, strangers, or acquaintances.
Filipino hospitality is deeply rooted in the concept of shared identity or humanity. It reflects the idea that all individuals are interconnected and should be treated with kindness and respect. Whether you’re a guest in a Filipino home or a traveler exploring the Philippines, you will likely experience the warmth and genuine hospitality that define this vibrant culture.
This cultural trait translates seamlessly into offshoring relationships, as Filipino professionals are committed to providing top-notch service and going the extra mile to meet client expectations.
Government Support
The Philippine government actively promotes and supports the offshoring industry through various incentives and initiatives. Fiscal incentives for BPO companies (Business Process Outsourcing) where offshoring falls under, in predetermined ecozones by the Philippine Economic Zone Authority, include an Income Tax Holiday, Special Corporate Income Tax, Enhanced Deductions, and even Importation Incentives. All these tax breaks contribute to the thriving offshoring ecosystem in the country.
Familiarity with Western Culture
Time Zone Compatibility
The Philippines operates in a time zone that is highly compatible with many Western countries, particularly in North America. Because the Philippines has a 12-14 hour headstart from their US counterparts – the overlap in working hours ensures real-time collaboration and responsiveness, enhancing productivity and efficiency in offshoring partnerships. This often translates as a business advantage as it suggests running a business operation around the clock. In essence, the Philippines’ strategic time zone positioning catalyzes businesses, allowing them to maximize their operational capacity and capitalize on a truly global workforce – a distinct advantage that modern companies should consider.
Technological Advancements
The Philippines has seen significant advancements in digital innovation in recent years. The country’s tech industry has been growing steadily, with startups, tech hubs, and digital entrepreneurs contributing to innovations in various fields such as e-commerce, fintech, mobile app development, and more. Additionally, the government has been taking steps to support and promote the digital economy through initiatives like the “Digital Transformation Strategy.” While challenges exist, the Philippines is making strides in the digital innovation landscape and is considered a promising player in the Southeast Asian tech ecosystem. This commitment to staying at the forefront of technological advancements means businesses can access state-of-the-art facilities, software, and hardware to support their offshoring operations.
Conclusion
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Contact IQ BackOffice today to learn more about building an effective Global Accounting Team.
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