Outsourcing Insights

Business Process Outsourcing (BPO) in the Philippines: An Historical Timeline

Dale Pearce  •  August 15, 2023

Platinum Outsourcing only recently made its entry into the Philippines, setting up our offices in the southern part of the National Capital Region (‘NCR’), Alabang, in 2021. We have since grown our presence in the country to over 80 FTE, and plan to grow our team here to 200 over the coming 18 months.

The BPO industry here in the Philippines was thriving long before Platinum Outsourcing was founded, and has experienced significant growth since its inception, becoming a major economic contributor to the country and its people. As well as becoming what most consider to be the premier destination for the global outsourcing market.

It is an interesting journey for a country that is still very much a developing nation – and a story that is still being written. I have done my best to verify the timeline and information, however if there are any errors in my research please reach out.

Humble Beginnings

The BPO industry in the Philippines can trace its roots back to the early 1990s, when Frank Holz established the Accenture Global Resource Center, marking the birth of the Philippines' first contact center. Following on from that was PeopleSupport, with their Parent company, Los Angeles-based PeopleSupport Inc., beginning operations in 1998, providing outsourced customer service and sales support for e-commerce sites. PeopleSupport were among a handful of outsourcing companies to open in the country in the late 1990’s (at the height of the dot-com bubble burst). Unsurprisingly in hindsight, the decision paid off with first year revenues in the Philippines 5.8 times the 1999 revenues when it operated only in the US.

In February of 1995, Former President Fidel V. Ramos introduced the Philippine Economic Zone Authority (PEZA), which offered Government incentives such as tax breaks and support for infrastructure development. The primary function of which was to assist in attracting foreign investment. This continues to this day, with most BPO companies operating within what are known as ‘PEZA’ zones, enjoying economic and other benefits.

Around the same time, Sykes Enterprises also established their presence in the country, cementing its position as the first of its kind in the nation. This move not only demonstrated the Philippines' appeal as an outsourcing destination but also lit the flame for future industry growth. Sykes retain a very large presence in country today, with employment numbers in the 10’s of thousands.

Rapid Growth and Diversification (the early 2000’s)

The year 2000 witnessed the outsourcing industry contributing 0.075% to the Philippines' GDP, foreshadowing the potential for future growth and economic impact. The Contact Center Association of the Philippines (‘CCAP’) is established, an initiative aimed at promoting collaboration, sharing ideas, and enhancing awareness within the contact centre industry. CCAP now has nearly a hundred member-companies in various locations in the Philippines. These members account for more than 84% of the economic activity and employment in the industry as of 2022.

In 2003, Convergys Corp (now Concentrix) strategically expanded its global footprint by establishing two sites in the Philippines, alongside India, under the leadership of then-president Jack Freker. This move set the stage for increased revenue and job opportunities within the Philippine outsourcing sector. Not long after, the Philippine government launched the ‘Roadmap for the IT-BPO Industry’, which aimed to position the country as a preferred global outsourcing destination.

The mid-2000s saw a surge in the BPO industry's growth, driven by factors like the Philippines' English-speaking population and competitive labor costs. The industry diversified beyond voice-based, contact centre services to include back-office processes like finance and accounting, human resources, and healthcare-related services.

It was in 2007 that Telstra first made its move to outsource roles to the Philippines, as they continue to do up until today. It was around this time that I had my first exposure to outsourcing / offshoring to the Philippines whilst working for a North American company (RCI, now owned by Wyndham Worldwide), when our satellite North American support arm was moved from Australia to the Philippines.

Global Leadership and Expansion (2010s)

In late 2010, the Philippines was named the world’s BPO capital after it employed 525,000 people and generated $8.9 billion in revenue. The sector experienced continued growth, attracting a wide range of businesses, including multinational corporations, startups, and SMEs. The industry expanded beyond Metro Manila, with Cebu, Davao and other cities becoming prominent outsourcing hubs. This expansion helped create job opportunities and economic growth outside of the National Capital Region.

It is now 2012, the BPO industry has revenues accounting for 5.4% of the country's GDP and the sector provided employment opportunities to over 700,000 Filipinos. As technology evolved, the BPO industry in the Philippines adapted by incorporating this into its offerings. This in turn allowed the industry to provide more sophisticated and higher-value services, such as data analytics, software development, and digital marketing. As a result, by the following year (in 2013) revenue generated from the industry had increased to $15.5 billion, while the number of full-time employees reached a milestone of 900,000.

The industry faced a temporary setback in 2017 due to the Marawi conflict in Mindanao, which led to apprehension among foreign investors. Nevertheless, the Philippines' outsourcing sector demonstrated resilience and recuperated its growth trajectory, and in the year 2018, the industry created an additional 70,000 jobs, and added a further $1 billion in revenue.

Late 2010’s to Present Day

By 2019 the Philippines had made substantial progress on the global stage, climbing from 124th to 95th place in the World Bank's ease of doing business index. This upward trajectory signified the nation's commitment to fostering a conducive environment for foreign investment.

Despite the challenging economic landscape brought about by the COVID19 pandemic, the Philippine BPO industry exhibited resilience by still recording a rise in revenues (albeit meager; 1.4%). This tenacity underscored the sector's importance in contributing to economic stability – and the faith placed in the industry by the global market. The year 2021 proved to be a watershed moment for the Philippine BPO industry, with a workforce of 1.3 million and a staggering $30 billion in revenue, the sector solidified its position as a critical driver of the Philippine economy.

This growth has continued into 2022, with a revenue increase of 10.3% to $32.5 billion, and employee headcount rising 8.4% to 1.57 million!

Onwards and upwards!

Thanks for reading.

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