The Philippines is one of the top outsourcing destinations. Known as the “BPO Capital of the World,” the country has been a preferred destination by foreign companies who are planning to expand their footprint overseas. Top companies like Microsoft, IBM, and Wells Fargo have offices in the Philippines. The country has been a top choice for services like customer service, data entry, and finance and accounting, to name just a few.
Outsourcing in the Philippines is a dynamic sector. Like any industry, outsourcing has experienced major setbacks during the pandemic. However, the sector bounced back strongly by transitioning to WFH and remote work. In this article, we will look at the different trends that will shape the outsourcing industry in the Philippines.
Trends in Philippine Outsourcing
- The Rise of Virtual Workplaces
- Demand For Specialty Outsourcing Services
- The Emergence of Blockchain Technology
- Cloud-Based Outsourcing Solutions
- The Need To Intensify Cyber Security
- Preference For Omnichannel
- Expansion To Other Cities
- Transition To High-Value Services
- Recruiting Niche Talents
- Upskilling of Employees
Trends in Philippine Outsourcing
Despite some bumps along the way, the Philippine outsourcing industry has continued to experience robust growth in the last few decades. It has emerged as one of the two pillars of the Philippine economy along with foreign remittances. Here we look at 10 trends that will shape the outsourcing industry in the country.
1, The Rise of Virtual Workplaces
The COVID-19 pandemic has paved the way for the rise of the work-from-home setup. Statistics reveal that 52% of Filipinos have been working from home for years. The number increased to 85% at the height of the COVID-19 pandemic. With advancements in technology and the Internet, virtual workplaces will only become more popular in the coming years. More and more companies will set up a virtual workplace because of the tremendous savings it can bring to them.
Virtual workplaces are very attractive to employees because it allows them to manage their time and live their lives the way they want. A virtual workplace offers a low-stress environment which can lead to increased productivity compared to a traditional office. With virtual workplaces, employees can have a healthier work-life balance. Studies reveal that virtual workers see an improvement in their work performance by 13%.
Virtual workplaces have a positive effect on employees. Data from a PGI study revealed that 82% of virtual workers reported lower stress levels and 80% said they had higher morale when working remotely. For businesses, virtual workplaces have allowed them to execute their workflow from anywhere anytime. It also helps them reduce operational costs and turnover rates.
2. Demand For Specialty Outsourcing Services
From just being limited to voice and non-voice, the BPO industry in the country has gone a long way and expanded to other services. The Philippines has now become a hub for specialized outsourcing services like accounting, legal, healthcare, cybersecurity, data and business analytics, and programming to name just a few.
According to the Upwork Future Workforce Report, 60% of hiring managers find it difficult to fill open positions. This is because some job categories are in huge demand compared to others. For this reason, many US companies have chosen to outsource these specialized skills to the Philippines.
Year in and year out, the Philippines produces graduates in courses like accounting and information technology, two of the most in-demand specialized skills. In recent years, there has also been a growth in demand for HR & recruitment professionals. A recent survey of HR leaders revealed that 1 in 4 respondents find filling open positions a challenge. Other specialized skills that have grown in demand over the years include admin support, web development, data science and engineering, among others. \
3. The Emergence of Blockchain Technology
Blockchain technology is slowly finding its way into the outsourcing industry. According to the Blockchain Council of the Philippines, the Philippines is poised to become the top blockchain hub. This can be attributed to the fact that the Philippines is one of the most digitally connected with a mobile phone penetration rate of 140% and an internet penetration rate of 68%.
Once adopted, blockchain technology can help ensure a secure and transparent recording and verification of transactions. It can help remove the need for intermediaries between outsourcing contracts. In addition, it can help streamline operations and reduce costs. Moreover, blockchain can help companies devise secure and cost-effective solutions.
Blockchain technology can help future-proof BPO operations to keep them competitive and relevant. It can help take the current BPO operations to the next level. For this reason, outsourcing companies are starting to explore the potential of blockchain technology. Before they do, they should first identify and overcome a few obstacles.
4. Cloud-Based Outsourcing Solutions
Reliance on cloud computing will continue to shape the outsourcing industry. According to a survey commissioned by Alibaba Cloud, 85% of businesses plan to make a full-scale transition to the cloud by 2025. Furthermore, 9 out of 10 firms in the country will increase their investment in digital solutions to keep up with consumers who prefer online transactions.
The survey further says that the shift to cloud technology was buoyed by the growth of data centers in the Philippines. These facilities serve as storage sites for applications and information managed by tech companies such as Amazon, Google, and Meta. Currently valued at $298 million as of 2021, it is projected that data centers will grow at an average of 13 percent to hit $635 million by 2027.
Cloud technology can optimize operations and enhance flexibility. It can boost productivity and make remote work arrangements and scaling possible. In addition, it allows files and data to be accessed quickly and easily. It eliminates the need to invest in traditional data storage hardware thereby reducing maintenance costs. With cloud technology, you can enjoy the following benefits: :
- Access critical resources
- Seamless collaboration
- Secured data storage The Need To Intensify Cyber Security
5. The Need To Intensify
Cybersecurity is very important for the outsourcing industry. BPO companies should be concerned with protecting sensitive customer data and financial information. As reported by cybersecurity firm Sophos, 69% of Philippine businesses experienced a ransomware attack in 2021. Meanwhile, the NBI Cybercrime Division reported a 200 percent increase in phishing since the country went into lockdown in March 2020. In 2021, ransomware attacks cost businesses $1.6 million doubling the average of $820,000 in 2020.
As the threat of cybersecurity increases, outsourcing companies need to intensify their cybersecurity protocols. For most companies, this can be a daunting task. You need to be aware of security protocols such as GDPR, HIPAA, and PCI. In addition, you need to conduct regular reviews and updates of your security protocols. Intensifying cybersecurity can help safeguard customer data and reduce risks.
Cybersecurity threats have become more sophisticated recently and you or your team must be knowledgeable and trained in cybersecurity best practices. The government has taken the necessary steps to address security concerns. It also has launched initiatives to boost awareness of cybersecurity threats.
6. Preference For Omnichannel
Gone are the days when email and telephone were the only preferred channels of communication by customers. With the dawning of social media and the internet, the expectations of customers on how they want to be reached have reached a whole new level. Now, they are looking for omnichannel customer support from businesses. Using omnichannel can help you achieve 89% customer retention rate.
Back in the day, omnichannel support was just a nice-to-have. Due to the COVID-19 pandemic, however, businesses had to improvise and devise new ways to reach their customers. As they went online, they had to implement new strategies for implementing customer support. It is projected that mobile commerce will comprise 40.4% of total ecommerce sales by 2024. In addition, mobile sales are expected to account for 10.4% of retail transactions.
An omnichannel support ensures a seamless online experience for customers. With this strategy, you can interact and respond to customers from all possible touchpoints. Thus, you need to make sure that you implement omnichannel support channels like live chat, self-service, social media, and others.
7. Expansion To Other Cities
Long ago, foreign BPO investors focused their expansion operations on big cities like Pasig, Taguig, Makati, and Manila. Over the years, however, there has been an influx of outsourcing firms expanding their operations in other major cities in the country. That is why we see BPO companies emerging in locations outside Metro Manila such as Clark in Pampanga, Dumaguete, Cagayan de Oro, and Davao.
Currently, the IT & Business Process Association of the Philippines (IBPAP), Philippine Economic Zone Authority (PEZA), and the Department of Information and Communications Technology (DICT) have launched The Digital Cities 2025 initiative which is expected to pave the way for the setting up of BPO companies in various cities, such as Balanga City, Batangas City, Cabanatuan, and General Santos, to name a few.
Under the initiative, the 25 identified cities will receive support in four areas namely institutional development, infrastructure development, talent attraction and development, and marketing and promotions. The three government agencies aim to make sure that the cities on the list are industry-ready by developing ICT hubs and economic zones.
8. Transition To High-Value Services
BPO companies are moving beyond traditional services such as customer service and data entry into more complex and high-value services such as customer experience, analytics and insights, and digital marketing. With this, BPO companies aim to provide more value to their clients, increase revenue, and increase industry reputation. However, this shift presents various challenges like increased foreign competition and investment in technology and infrastructure.
The shift to high-value services is buoyed by artificial intelligence, which has changed the landscape of the BPO industry in the Philippines and abroad. As most of the repetitive tasks are now being automated, outsourcing providers can now focus on doing more complicated and technical tasks like accounting, web design, and research. As technology improves, BPOs can now focus on transitioning to high-value offerings.
However, the shift won’t happen overnight. BPO companies need to start moving towards higher-value services if they want to stay competitive and relevant in the industry. They need to start training their teams to ensure that they have the skill sets to handle these complicated tasks.
9. Recruiting Niche Talents
The demand for specialized services has resulted in businesses scouting for niche talents. Most HR professionals admit that finding the right talent has been a challenge for them. A study by iSmartRecruit revealed that 87% of HR professionals reported “few or no qualified applicants” for the positions they were trying to fill. Thus, companies turn to niche talents to fill up these roles.
Niche talents are usually associated with the IT industry as well as emerging technologies. They are individuals with specialized skills. Examples of niche skills include content writing, web development, accounting, and others. Recruiting niche talents requires a different approach from traditional recruitment. It goes beyond throwing your recruitment net into a huge pool of talent.
The pool for niche talents is much smaller so you need to focus on just one or a few industries. Unlike in traditional recruitment, you don’t focus on a candidate with diverse backgrounds or accept candidates from any industry. Recruiting niche talents requires a strategic and proactive approach. .
10. Upskilling of Employees
In light of emerging technologies, businesses must keep up with these innovations to stay competitive. The current skills of your employees may no longer apply to the latest tools. Hence, you need to invest in the training and development of your employees. As new technologies emerge, the demand for new skills also increases.
Just how important is the upskilling of your employees? It can help keep your employees engaged and can also boost retention rates. A Gallup study revealed that employees are likely to leave their jobs if they do not see any growth potential. Also, according to the World Economic Forum, 95% of employers expect their employees to pick up new skills on the job by 2024.
Upskilling employees can help fill skill gaps within a company. Now more than ever, with the huge gap between vacant positions and qualified candidates, businesses must consider investing in upskilling programs. We also know for a fact that it is more costly to hire a new employee than to retain one. Giving your employees a chance to grow in their respective careers is an indication that you value them which could result in increased motivation and job satisfaction.
Watch Out For These Trends To Stay Competitive
These 10 trends can have a huge impact on how you can be able to compete with other outsourcing firms. Knowledge of these trends can make a huge difference in shaping the future of your company in a highly competitive and dynamic sector.
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