Why Is the Philippines A Top Destination for IT Outsourcing?

Posted on:
April 29, 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?
Why The Philippines Is A Top Choice For IT Outsourcing
KDCI Outsourcing
April 29, 2024

IT Outsourcing is one of the most lucrative industries in the Philippines, with many investors around the globe building their offshore IT operations in the country in recent years. 

And with the global IT Outsourcing industry estimated to grow 5.48% annually from 2019 to 2029, the Philippines, with its large pool of IT professionals and government incentives, is strategically positioned to grow in the next decade.  

Top Reasons Why You Should Outsource IT Services to the Philippines

The growth of IT Outsourcing in the Philippines can be attributed to many things, the most relevant of which are discussed below. 

Sustained Growth of the IT Industry

The Philippines is considered one of the providers of high quality information technology services since the early 1990s. While the Philippine Outsourcing industry initially started with voice BPO services, it quickly expanded its offerings to IT services, which now include software development, web design, tech support, and more. 

In fact, the Information Technology-Business Process Management Association of the Philippines (IBPAP) predicted a 7% growth in the Philippine IT BPO industry in 2024. 

Large Pool of IT Professionals

The Philippine workforce has a large pool of IT professionals ready to meet the rising demand of IT Outsourcing. As a matter of fact, there were 77,747 IT graduates from state universities and colleges in the school year of 2017-2018 alone. 

With such a large number of tech-savvy graduates, global companies will not have a hard time filling IT roles of varying levels of complexity. As such, even Fortune 500 companies like Google, IBM, Amazon, and Microsoft have offshore IT operations in the Philippines. 

Data Privacy & Cybersecurity Measures

The most pressing concern in IT Outsourcing today is security and privacy. 

In 2023, the FBI reported an all-time high loss of $12.5 Billion due to internet crime. Meanwhile, Deloitte’s 2024 cybersecurity trends report shows that 66% of organizations were affected by ransomware in 2023, misuse of valid credentials led to 44.7% of data breaches, and IoT malware attacks have increased 400% across industries.

To equip Philippine outsourcing companies against these cyber threats, the Philippine government passed the Data Privacy Act of 2012 , a law that aims to protect individual privacy while ensuring the free flow of information to promote innovation and economic growth. In the first quarter of 2024, they also approved the National Cybersecurity Plan 2024-2029, which outlines policy direction and operational guidelines to enhance cybersecurity measures. 

With these safety measures in place, companies can safely rely on Philippine IT Outsourcing companies to handle their sensitive and confidential data.

High Proficiency in the English Language

While there are many IT Outsourcing destinations like India, Poland, and Malaysia, the Philippines remains competitive due to its high English proficiency, a great asset for smooth communication. 

Filipinos are exposed to the English language at a young age and next to Singapore, the Philippines has the highest English proficiency among Asian countries, making it the top choice for sourcing English-speaking IT professionals.

Lower Cost of Labor

A huge driving force behind the rise of IT Outsourcing in the Philippines is due to its lower cost of labor. Due to the country's comparatively low cost of living, operational costs tend to be much cheaper than those in Western countries. 

For example, 2024 data shows that the average junior IT professional in the Philippines costs approx. $555/month, whereas it costs $7,009/month in the United States. 

Though there are added costs to outsourcing, such as government mandated benefits, hiring costs, and other operational costs, the total cost to outsource is still significantly lower, allowing companies to save up to 70%.

24/7 Service Availability

Another factor that urges Western companies to outsource their IT service to the Philippines is due to their flexibility in terms of work hours and timezone differences.

Because companies require coverage for multiple shifts, it’s become a standard practice for outsourcing companies to have various shift schedules to accommodate the client’s preferred time zone. This benefits the client as they can work with offshore teams as if they were just next door.

The opposite can also be true. While some organizations favor real-time collaboration, some require off-hours work. In these situations, companies choose to outsource functions that require round-the-clock work to countries on the other side of the globe, like the Philippines.

Cultural Compatibility

Colonized by the United States for 48 years, the Philippines has grown accustomed to Western culture, and has adapted it in various areas of their everyday life. Such similarities in culture make it easier for Filipinos to acclimate to Western organizations and culture, making the Philippines an ideal location for building offshore teams for international enterprises. 

Outsource Your IT To The Philippines

There are numerous reasons why global companies want to outsource IT services to developing countries like the Philippines. Whether you’re looking to cut costs, find hard-to-source IT expertise, or optimize your IT operations with an offshore team, KDCI Outsourcing can help you achieve your business objectives.

At KDCI, we build excellent outsourced IT teams with more than the specialized IT roles you’re looking for; we find you people with the right skills and attitude to seamlessly integrate with your organization, ensuring smooth onboarding, minimal disruptions, and maximum productivity.

Learn more about how you can build your offshore IT team in the Philippines.

Contact us to learn more!

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