The Pros & Cons of Outsourcing Customer Service to the Philippines

Posted on:
June 7, 2024
min read
Table of Contents
What are the benefits of outsourcing to developing countries?
What are the challenges of outsourcing to developing countries?
Top 5 Most In-demand Developing Countries for Outsourcing
What are some successful examples of companies that have outsourced to developing countries?
What are the best practices for outsourcing to developing countries?
Pros & Cons of Outsourcing Customer Service to the Philippines
KDCI Outsourcing
June 7, 2024

Philippine Customer Service Outsourcing Overview

The Philippines is the world’s call center capital for a reason. Since the 1990s, the Philippines has housed many call centers, providing customer service to brands all over the world. Today, the Philippines has 432 registered call centers under Philippine Economic Zone Authority (PEZA).

With its high literacy rate, impressive English proficiency, and customer-first attitude, it’s no wonder that the country rose to the top in the customer service outsourcing world. Still, as wondering an outsourcing destination the Philippines is, there are potential downsides to outsourcing there. Keep yourself informed to mitigate the pitfalls of outsourcing to the Philippines.

Pros of Outsourcing Customer Service to the Philippines

Affordable Wages 

Did you know that the average salary of a call center agent in the United States in 2024 is $2,692/month? Meanwhile, the cost to outsource a full time call center agent to the Philippines costs around $1,000/month. 

That’s over 60% less than an on-shore agent, not to mention, the cost to outsource the Philippine call center agent is inclusive of benefits, equipment, and even administrative fee.

Outsourcing customer service to the Philippines also comes with added value – the use of AI to personalize messaging, the use of chatbots to reduce customer queries for agent resolution, and the use of automation to streamline the customer support process.

With the lower cost of labor and the enhanced efficiencies brought about by outsourcing customer service to a call center in the Philippines, companies can save up to 70% overall, giving them a competitive advantage in a volatile market.

High Literacy Rate & Excellent English

The success of customer service relies heavily on the comprehension and problem solving ability of the customer service agent. 

With the country’s high literacy rate of 97% and #2 ranking in English proficiency in all of Asia, it’s no surprise that the Philippines is the world’s call center capital.

Filipino customer service agents are built for customer support, and it shows in the high customer satisfaction, five-star ratings, and increasing number of clients that are patronizing the Philippine customer service outsourcing industry.

Hospitality & Optimism

Filipinos are globally renowned as happy people with amazing hospitality. These traits are embedded in the country’s culture, and manifests in the ‘bayanihan’ spirit, concept of ‘malasakit’, and the ability to find humor even in the direst situations.

It is these traits that make Filipinos naturally inclined towards customer service, always putting customers first and ensuring satisfaction. 

Peace of Mind

As much as 33.3% of customer service agents feel emotional exhaustion after work. After all, customer service is one of the most emotionally demanding jobs available, especially for people who aren’t built for this kind of work. 

For most businesses, it simply saves themselves and their staff a whole lot of stress to outsource customer service to people who are used to it and have protocols to help them cope with the emotional stress of working in customer service. This is particularly true for Philippine call centers with decades of experience.

Staffing Solution

At the end of the day, one of the driving forces behind outsourced customer service is staff augmentation. Finding the right people just takes too much time and effort sometimes. And hiring an outsourcing company to do the heavy lifting for you is a quick and easy way to solve the problem.

When you outsource to customer service outsourcing companies, they will handle the recruitment, training, and onboarding of your offshore team, and all you have to do is work with them and help them integrate into your in-house operations.

This process is much easier in a country like the Philippines with a large pool of skilled workers. In fact, the country sees about 350,000 college graduates each year, so there’s an endless stream of highly qualified folks to choose from.

Increased Focus

Managing your customer service operations takes a lot of time and energy. Simply hiring and training them isn’t enough; you also have to manage them, provide feedback, and continuously QA their work to ensure they are hitting their key performance indicators (KPIs).

But when you outsource customer service, you can do away with that. With customer service out of your way, you can focus on other aspects of the business, giving you more focus, which can go a long way in furthering your business objectives.

Small Learning Curve

Bringing in agents to manage your customer service in-house requires a learning curve, not only for your agents but also for your organization. Everyone has to adjust to the new process and people, and in time, find a system that works well. This can take some time, and even a bit of trial and error, to get used to.

On the other hand, when outsourcing customer service to the Philippines, your outsourcing partner is a customer service expert with years of experience providing customer service to various brands from multiple industries. This gives them an advantage in terms of adapting to your brand and environment, reducing the learning curve significantly, making the process more efficient.

Cons of Outsourcing Customer Service to the Philippines

Mismanaged Offshore Team

When you outsource to a country on the other side of the world, such as the Philippines, there are things that are out of your control. One is the management of your offshore team. Without your direct supervision, you may experience performance issues and delays in implementing changes – both of which can slow down your operations and hinder the agility of your customer service operations to deal with market changes.

Communication Challenges

Despite the Philippines being the 3rd largest English speaking country in the world, most Filipinos are not native English speakers. This can make it difficult to understand nuances that can lead to misunderstandings, impacting not only your working relationship with your offshore customer service team, but also your relationship with your customers.

Risk Of Damaging Reputation

Customer service agents are typically the first point of contact your customers have with your brand. This makes each agent an ambassador of your brand, and whatever they may or may not do is a direct reflection of your brand.

With 64% of customers saying they’ll find another brand if a company doesn’t offer good customer service despite having great products, working with an offshore customer service team who you cannot directly oversee opens up a huge risk for your brand’s reputation.

This is why it’s crucial to work with a Philippine outsourcing company with a reputation of providing excellent customer service.

Strict Labor Laws and Regulations

It’s complicated outsourcing your customer service to the Philippines. Companies should know about the strict labor laws that safeguard workers' rights. Such laws require employees to have benefits, minimum wage, and job security. 

Unless you’re aware of these costs, you may mistakenly think you’re only paying agents’ salaries, which is not the case when you outsource. And should you fail to comply with these laws, you will face legal repercussions such as fines and penalties, bringing up your total outsourcing costs and possibly canceling out the savings that first urged you to outsource.

To easily prevent this, work with a reputable outsourcing agency who will take care of your offshore customer service team. They would know the ins and outs of Philippine hiring practices best, and the outsourcing fee you pay them should cover all the expenses associated with maintaining your offshore customer service agents.

Poor Infrastructure and Outdated Technology

Despite heavy investments in the development of infrastructure, the Philippines still faces challenges with infrastructure and technology, particularly in rural areas. Poor internet connectivity and frequent power outages can disrupt customer service operations, leading to delays and dissatisfaction. 

Moreover, outdated technology infrastructure hinders the adoption and implementation of advanced customer service tools and platforms, affecting service efficiency and quality. These issues necessitate significant investments in infrastructure improvements and technology upgrades, which can be costly and time-consuming for outsourcing firms​.

To avoid this, work with an outsourcing company that is based within Metro Manila; ones with redundant electricity and internet are preferred.

Security and Privacy Risks

Outsourcing customer service to the Philippines involves sharing sensitive customer data, which can pose significant security and privacy risks. Through the years, the country has faced issues with data breaches and cyber-attacks that can compromise customer information. 

Compliance with international data protection standards, such as GDPR, requires rigorous security measures that might not always be fully implemented. 

You must find a customer service outsourcing company who has robust cybersecurity protocols in place. Not only that, they should continuously monitor and stay up to date with cybersecurity to avoid cyber crimes or theft, which are ruinous to a brand’s reputation.

Disruptions To Operations

The Philippines often faces natural calamities in the form of typhoons and earthquakes, which can disrupt day to day operations. Not only will these create communication, they can also totally suspend your offshore team, leaving your customers hanging without support.

To counteract these dangers, you should allocate funds for disasters’ recovery strategies and pay for absence complications which happen to be both expensive and difficult. In addition, prepare a back-up and diversify your outsourcing partners. 

Build Your Offshore Customer Service Team in the Philippines

Despite the pitfalls of Philippine call centers, outsourcing customer service to the Philippines remains a top choice for many brands globally due to its proven benefits – cost efficiency, amazing talent, excellent English, and customer-first attitude. 

If you want to get peace of mind and ensure your customers are treated well, build your offshore customer service team with KDCI Outsourcing. We specialize in finding the right people for your team; not only do they have the skills and experience that fit your requirements, they also mesh well with your culture to ensure seamless integration with your in-house team.

Learn more about outsourced customer service. Contact us today!

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