The Philippines: An Important Offshore Player

 

Capitalizing on the offshore advantage, though a relatively new trend has sky rocketed into one of the fastest growing industries. Business process outsourcing is becoming a staple part of every globally competitive enterprise in fulfilling its IT strategies. As of 2005, the Philippines remains an important offshore player and is gaining substantial ground with revenues close to $3 billion according to investment bank Goldman Sachs.
                                                                                    
The Philippines, often referred to as an untapped jewel, possesses great strengths that allow it quite an advantage when put up against other offshore hotspots.

Affinity to US Culture

The United States is not just another country to the Philippines or its people, nor is the Philippines just a former colony. The Filipino people have been not only exposed to, but influenced by American culture for more than one hundred years. Until this day, the United States plays a significant role in Philippine diplomatic relations. This close relationship ricochets into Philippine culture, practices, policies, and even business processes.

One of the biggest challenges to offshore outsourcing especially with an Indian-based firm, is the cultural difference. US customers dealing with these firms suffer higher attrition and abandonment rates due to the inability to understand grating accents. In addition, it is normal for Philippine based firms to surpass service level agreements established with its clients. Thus, firms analyzing the strengths and weaknesses between India and the Philippines, often see the Philippines as more attractive with regard to its lower upfront investment in cross-cultural and language training. Since Filipinos are usually already accustomed to dealing and interacting with Americans, they also have the ability to assimilate themselves with American professionalism and work ethic.

Breaking Language Barriers

Primarily because of the historical process of “Americanization”, the English language has been the medium of instruction for decades. With a 97 percent literacy rate, the Philippines correctly serves the title of the third largest English proficient country in the world. Characterized by Gartner as “world-class”, the Philippines is set apart from other English-speaking countries. With an English fluency rate of 72 percent equivalent to over 64 million people, the Philippines undoubtedly maintains a significant advantage over India and other offshore destinations. Not only is the Philippines English proficient, but due to its affinity to US culture, the Filipinos naturally understand American idiomatic expressions and possess a neutral American-like accent. As English is the medium of instruction for primary to post-graduate studies, Filipinos naturally have the ability to understand English with clarity and comprehension.

Overall Attractiveness

In addition to the Philippines’ advantage with respect to its English proficiency and cultural affinity, the country also possesses other numerous traits. These specific elements contribute to its leverage and overall competitive advantage over other offshore destinations.

In the search for quality and cost advantage in offshore destinations, many enterprises consider compensation costs, quality of the potential workforce, and of course to match the skills needed to successfully achieve the tasks related in attaining their goals.

Since Philippine business processes are patterned after the US model, its workforce is highly skilled. Not only is the Philippines technically proficient in computer science and programming, but also boasts of its industry-specific knowledge. Government support with the help of the private sector is prevalent in its continued establishment of training centers particular for outsourcing services. This gives the country an upper hand in providing quality coupled with lower training costs.

Filipinos have also obtained the strong work ethic evident in many Asian cultures. They are able to achieve high customer acquisition rates while simultaneously providing one of the lowest hourly labor rates in the world. This obviously results to significant savings and leverage for enterprises, making the Philippines a competitive offshore provider.