Not too long ago, having a global outsourcing base in the Philippines was a hush-hush competitive advantage for many global businesses seeking to scale. But the cat’s out of the bag, and many of the world’s top 500 soon realized that the Filipinos’ English proficiency, neutral (and highly trainable) accent, favorable labor costs, highly skilled workforce, and government incentives (among many other factors) are exceptional combinations they couldn’t get anywhere else.
The expansion of the Philippine BPO industry isn’t expected to slow any time soon.
For one, the cost-cutting measures of many foreign companies coupled with the global economic slowdown foreshadow bigger demand. As per the IT and Business Process Association of the Philippines or the IBPAP, the industry could create as much as US$35 billion in revenues in 2023. This is because organizations will continue to outsource and many will opt to use global business services to fulfill cost optimization initiatives.
A survey by the IBPAP found that most investments will stem from the game development and animation sector, cybersecurity firms, contact center agencies, financial technology services, internet providers, healthcare, IT solutions, and shared services centers.
Manila, Cebu, and Davao continue to be popular information technology – business process management (IT-BPM) locations but businesses shouldn’t be surprised to find even more lucrative options in Iloilo, Pampanga, and Laguna.
Post-pandemic, things are looking great as well. IBPAP reported that the BPO sector has beaten its 2022 targets. The number of full-time employees increased by 8.40% (121,000), which brings the total industry headcount in 2022 to 1.57 million.
$32.50 billion in revenues for 2022 has also been confirmed.
As for office space, Leechiu Property Consultants disclosed that IT-BPM accounted for 466,000 sqm of office real estate use or 48% of the total demand for office space nationwide. This figure represents an 81% growth from 257,000 sqm in 2021.
Why businesses should head to the Philippines
The Philippines continues to display major improvements in its business environment compared to previous years. Many of the advances are closely linked to BPO initiatives, a supportive national and local government, and a focused academe.
Further, as one of the country’s major sources of revenue, the Board of Investments (BOI) has given local fiscal and non-fiscal incentives such as tax holidays to BPOs. Special Economic Zones (PEZA) which allow BPOs to enjoy tax exemptions, tax income holidays, and permanent residence status for foreign investors and family members are all in place.
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