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Outsourcing and the Philippine economy

"We think there are four reasons for the rapid development of the BPO/IT services industry in the Philippines. First, with English as one of its official languages, the Philippines has ample human resources with excellent English skills, qualifying them as call center operators targeting English-speaking regions. Second, the country has adopted social systems that are similar to those of the US in the legal, accounting, medical and other such fields, as a result of influences from the US during the colonial period. We think this has put the Philippines in a strong position when it comes to attracting outsourcing orders from US companies in particular. Third, it may be that the Philippines is often selected as a potential alternative call center base to India in order to spread risk from natural disasters and terrorist attacks. Fourth, because of the density of the BPO/IT services industry in India, labor costs and real estate prices have risen there. This in turn has left the Philippine BPO/IT services industry more cost-competitive, in our view."

"We think that the Philippines has grown into the No. 2 outsourcing base after India in call center-based BPO fields."

~ Nomura Securities Co Ltd, Tokyo (Nov 2007)

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