-
The BPO sector is the major driver of growth in the Philippines and the #2 source of export revenues.
-
Organizations from all over the world are offshoring to the Philippines leveraging the deep capabilities that have been developed in Manila and elsewhere.
-
The first choice for firms offshoring is deciding which of three options to utilise. Getting this decision right is the first critical hurdle to successful offshoring.
-
Often companies evolve which model they utilise over time as they develop the skills capabilities and confidence to manage their Philippines operation effectively and/or they expand the work types offshored toward more complex activities.
-
There are companies that use a combination of these offshoring options.
The Philippines is a leading global destination for offshoring.
The Philippines BPO industry has emerged quickly because of the wide variety of capabilities available in the Philippines – supported by an impressive public-private sectoral policy that has evolved over time reflecting the needs of the industry.
The offshoring options available to clients has also evolved over time with key options available:
- Fully managed outsourced services – commonly called ‘BPO outsourcing’. The BPO takes full accountability for the end-to-end management of the programs they manage on your behalf.
- Incorporating your own company and building / developing your own operation – commonly called ‘captive’ or ‘in-house’ operation
- Staff leasing – a model under which a BPO employees staff and provides office space, payroll, IT infrastructure and recruiting support, but the client over-sights and directs day-to-day work and performance.
At present, the Philippine BPO industry is famed to have an atmosphere that is friendly not only to the Filipino locals but most especially to foreign investors. Firms and organizations from all over the world are outsourcing their processes to third-party providers in the Philippines.
Outsourcing Options in the Philippines
Since the country has become a prime destination for outsourcing tasks, different companies look for different options to meet their needs whether that is quality & control or cost-effectiveness . In the Philippines, you can choose to either incorporate, lease staff or fully outsource to a third party BPO (business process operator).
Incorporation
A Domestic Corporation (DC) is the most popular kind of corporation set up by foreign investors who come to the Philippines. Under Philippine laws, it is still an administratively flexible form of investment in terms of foreign ownership.
As the Philippines entity is directly owned by the parent company, it affords very high levels control over operations. This model tends to be preferred by companies with:
- Strict privacy requirements – eg financial services firms, firms handling health & medical records, etc.
- Sensitive intellectual property, high-end capabilities, etc – eg tech firms and engineering consultants.
- Non-traditional work types that require high levels of agility and quality to execute well.
- Large scale operations in the Philippines who want to attract and retain the best talent through a defined employee value proposition that includes career pathing both in the Philippines and to their other global delivery centres located in other countries.
Compared to other ways of outsourcing in the Philippines, incorporation has higher startup costs and takes longer to finalize. Prime considerations for the process include consultancy fees, registration fees, permits, and licenses, among others.
All Domestic Corporations must obtain their licenses and registration through the Securities and Exchange Commission (SEC). It requires all potential corporations to register and reserve a name, submit a proposed Articles of Incorporation and By-Laws that are compliant to the Corporation Code of the Philippines.
The SEC also requires a business address and proof that they have the minimum capitalization requirement set per industry type.
Other appropriate agencies to register with include the Social Security System (SSS), Home Development Mutual Fund (HDMF), the Philippine Health Insurance Corporation (PhilHealth), and the local government unit where the principal office of the business will be located.
This entire process could take up ~6 months, depending on how long you accomplish your requirements and how long government agencies will take in approving your application.
Often companies evolve their business into this model over time as they develop the skills capabilities and confidence to manage their Philippines operation effectively.
Staff Leasing
Outsourced staffing also allows you to create your own dedicated team, handpicked by you. But it removes the requirements to incorporate,lease and set-up office space and the associated costs.
Similar to incorporation, staff leasing allows you to have high levels of control over your staff. This time, however, you are working with a local BPO partner who manages the overhead functions such as recruitment, HR, IT, facilities, etc .
The staff lease BPO provides fitted office space, with IT and facilities support. They recruit the talent to your specifications and provide HR oversight including payroll and formal performance management. Team members are dedicated to specific clients but formally remain employees of the BPO. the office With staff leasing services, talent is sourced and taken care of until they are employed, and the HR and Payroll for the people who will work with you in your company departments are managed, although the final hiring decisions will be made by you.
Under this model, you take ownership for day-to-day oversight of the performance, what people work on, etc. The BPO takes no accountability for the actual results the team achieves.
Outsourcing
The traditional outsource model entails contracting service delivery to a third party business process outsourcer (BPO).
Under this model the BPO takes full accountability for service delivery to agreed standards or KPIs.
This model tends to be preferred by companies with:
- Large scale workforces and those with seasonal variations
- High volume, transactional work types
- A need to realise productivity and cost efficiencies
- A need to access next generation tools and technology (eg automation, robotics, etc) – including those with capex constraints.
Offshoring Done Right
Determining the best offshoring model for your business is the first critical decision you will take in your offshoring journey.
Allow Grealy Consulting to assist determining what’s right for your business.
We have extensive experience in assisting clients on:
- Selecting the operating model that best suits your business objectives and operating preferences.
- Project managing offshore transitions.
- Site selection – accessing the best talent pool.
- BPO vendor selection / procurement processes – particularly due diligence assessments.
- Business establishment – setting up in-house delivery centres.
Grealy Consulting is a consulting firm in the Philippines that focuses on contact centers and BPOs, anchored in deep local knowledge and networks. We do not sell pre-determined solutions. We make them with you.
Tom Grealy, the Principal for Grealy, brings his extensive industry experience to the Philippines. He is a seasoned International Operations Executive and is recognized for his expertise in building and managing operations that span several geographic areas. Tom is based in Manila.
Take your business forward. Contact us now for your 20-minute consultation!
References
Booth and Partners. (2018). Offshore staff leasing Philippines. Retrieved from https://boothandpartners.com/services/staff-leasing-philippines/
Outsource Accelerator. (2017). Guide to doing outsourcing business in the philippines. Retrieved from https://outsourceaccelerator.com/guide/guide-to-doing-outsourcing-business-in-the-philippines/
V Office. (2018). Incorporating your business in The Philippines. Retrieved from https://voffice.com.ph/Business-tips-Philippines/2018/05/24/incorporating-your-business-in-the-philippines/
