Trend-Spotting : Predictions for the Philippines’ Outsourcing Industry in 2015

With 2014 proving to be another profitable year, the Philippines’ outsourcing industry is expected to remain as the top outsourcing destination in 2015. Although, the Philippines and India are the top two consensus picks for global outsourcing, the Philippines is projected to undisputedly claim the throne from India in 2015. Among the factors cited are as follows:

1. The Philippines averages 470,000 new graduates every year and provides a large pool of talent currently at 39,000,000 Filipinos.

2. The Philippines’ at 96% has one of the highest literacy rates in the world.

3.  The English proficiency rating of the Philippines is at 92.5%, one of the highest in Asia.

4.  The Philippine government continues to support training programs for outsourcing with a greater focus on developing technical skills.

5.  The cost of labor in the Philippines is one of the most affordable in the world; it is currently pegged at a quarter of the average wage rate in the United States.

Outsourcing evolution

Economic and business statistics also support the positive outlook for the Philippines’ outsourcing industry. The Philippines ranked 87 out of 141 countries in a survey made by Forbes magazine identifying the best countries for business.

The Philippines ranked higher than China and India in the survey. The Philippines registered an impressive 7.1% growth in Gross Domestic Product or GDP and renewed demand for real estate. Meanwhile according to The Association of Chamber and Commerce of India, its outsourcing industry lost 50% of its market to the Philippines.

While call center operations account for the majority of receipts, there are segments that are expected to greatly contribute to the growth of the Philippines’ outsourcing industry in 2015.

Mobile Technology

In 2013, mobile phones and tablets emerged as the top choices for making online purchases. The trend has continued in 2014 with the emergence of more online e-commerce platforms and is expected to realize higher growth in 2015. According to research firm, Forrester, 2015 will be a year of e-commerce experimentation for the European community and online traffic from mobile devices is projected to increase by 50%.

Digital marketing

As e-commerce increases, more businesses are moving to have their businesses accessible by mobile technology and implement marketing and promotional programs will increase their mobile presence. Social media marketing strategies will be designed to accommodate the greater use of mobile phones and tablets as the preferred medium of communication and commerce.

Increased demand for Knowledge Process Outsourcing services

As the Philippines’ outsourcing industry continues to set higher benchmarks for growth, opportunities have sprung up for other branches of outsourcing as Knowledge Process Outsourcing or KPO. This is a highly specialized field which involves the process of outsourcing core-information related services and requires greater skill and expertise. Among the services outsourced under KPO are market research in pharmaceuticals and bio-technology, animation and software development.

Organizational Shift toward Human Resource Outsourcing

With trade barriers lowered as ASEAN integrates in 2015, greater competition is expected to take place across a variety of industries. Businesses will be required to improve technical and fundamental competencies of its labor force to keep up with the standards of more developed economies such as Singapore, Malaysia and Thailand. But a greater focus will be placed on helping local companies adapt to cultural and societal nuances as new markets open up. With expected change in business practices, companies would prefer to moderate the risks by outsourcing the human resource function to third party providers.

It is noteworthy that three of the four trends spotted for 2015 are related to the evolution of mobile technology while the fifth refers to optimizing the human resource.

That perhaps is the crux of the Philippines unprecedented success in global outsourcing. While technology continues to be the engine that drives globalization, people remain at the core of its success.