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Metro Manila is the capital of the Philippines; the political, financial, educational, and social-cultural center that comprises nearly 30% of the entire country’s GDP.

It receives a large portion of the government budget, and Philippine events tend to focus more on Manila’s happenings. Of course, having a large population means more business opportunities, more workforce allocation, and consequently, more profit. Imports and exports are largely centered here, and grounding a business in Manila means having every resource at an arm’s reach away.

So why are outsourcing companies moving or relocating to Cebu? Or moving out to other major cities like Davao, Iloilo, or Bacolod for that matter? If Manila is so rife with economic opportunities, why do BPO companies prefer the remoteness of these outlying cities?

1) To escape the excesses of Metro Manila. Well, the list of negatives is long. The country’s capital is the most densely populated city in the world, with a population density of around 43,000 people per square kilometer. The density congests every area in the city and, with migrants from provinces coming in droves, crime goes up and safety for ordinary civilians plummets.

The city’s air pollution is also one of the worst in the world, with the pollutant particles making up nearly 60 micrograms of particles per cubic meter, almost 300% above acceptable levels.

Intense traffic problems is also a turn-off for most foreign investors wanting to establish businesses in the country. One hour or more traffic delay times are common in its congested streets.

The political turmoil in Manila is real and tangible, and even the rest of the country is easily swept by its chaos. Red tape and corruption among the government agencies are widespread.

With this list of harmful factors, no wonder BPO industries are trying their hand on other urban areas.

2) Cebu has established its integrity as a true BPO hub in Asia. A few years ago, Cebu emerged as one of the Top 50 Emerging Global Outsourcing Cities in a Thornton study, besting all other Asian cities in India and China. The achievement has convinced potential BPO investors to come to the city and set-up their businesses here.

Additionally, the quality of benefits offered by Cebu does not differ so much as with Manila’s. Literacy rate is high among the workforce. In fact, BPO companies actually work with the local schools and universities, producing graduates that are highly employable and competent. The cultural adaptability of Cebuanos with foreigners is the same, if not, better than their counterparts. Furthermore, Cebu already has the IT infrastructure capable of supporting a robust BPO industry.

The most obvious inducement of outsourcing is its cost-saving attribute.  By outsourcing certain jobs to offshore destinations, companies can cut their costs relating to expenditures for salaries and benefits in accordance with the law of the state where the company is situated.  Instead, companies will be paying less by having the jobs performed in places where salary rates are lower.  This cost-cutting option allows even small-sized businesses and companies to operate and survive despite the difficulties in today’s global economy.

With outsourcing, companies are also given the opportunity to select highly-skilled employees from certain agencies that offer human resources that are groomed for a particular job.  Thus, the company is relieved from that tedious process of selecting, hiring, training and grooming prospective employees.  In addition, outsourcing affords these companies with professionals and specialists who are trained and equipped for certain jobs.

Production is also likely to speed up if the job is outsourced.  Companies with limited manpower can still increase the production rate by outsourcing the additional projects while retaining the core tasks internally. 

Outsourcing is the new trend adopted by most businesses today.  Almost any job can be outsourced now; hence, it has become a useful tool for companies. 

Visit Outsourcing Truths for more information.

During these financially-troubled times, more and more companies have resorted to ways that tend to lessen operating costs and expenses.  One of these alternatives is resorting to outsourcing.  It is the perfect choice for those who want the job done fast.  Moreover, outsourcing the job can be less expensive since you do not have to pay for other operating costs related to training the company workforce.

There are a lot of freelancers that provide a full range of professional services.  In view of their expertise and mastery over the job, these individuals know how to beat the clock.  In addition, hiring a freelancer to do the job would cost less compared to hiring an individual as an employee.

When the company hires an individual, it has to pay for costs relating to training and schooling for the job.  In addition, the company has to comply with the legal requirements relating to the individual’s employment.  But with outsourcing, it is much cheaper, and the output is much better since the job is performed by professionals that specialize in certain fields.

No wonder outsourcing has become a more popular alternative for many businesses that seek to lower their operating expenses.  It has played a significant role in improving revenue ratings and provided a meaningful solution to the work required by these businesses.

For more on this, visit Outsourcing Truths to learn more about it.

India

Educated and Talented Workforce. With over a billion inhabitants, India never seems to lack good talent. The technical expertise that we see in young Indians is the result of a rigorous education system that emphasizes science and mathematics at early levels of school. Consequently, Indian workers have a good grasp of qualitative and quantitative concepts, enabling them to comprehend the latest technologies and trends available. Indians are great English speakers too, producing 2.3 million English-speaking graduates.

High-end Technology. While data entry is still strong among outsourcing jobs in India, numerous offshore jobs going to India are consistently increasing in complexity and scope. The networking infrastructure in the country — telecom, ISP, and networking sectors — are intertwined to assist the growth of BPO-related jobs.

Pro-Outsourcing Government Stance. India’s government so far has favored the enormous growth of the I.T. sector. Landmark laws have been passed in order to facilitate the entry of foreign investment, international job offerings and outsourcing opportunities. A few of these measures include:

• Creating a separate governmental department — The Ministry of Information Technology — to handle all national I.T. projects and to simplify regulation.

• Passing the Information Technology Act of 2000, a body of law that seeks to regulate all e-Commerce and I.T.-related activities in the country. The issuance of cyberlaws makes India one of the select nations to consider on I.T. security.

Philippines

Cultural Affinity/Better Adaptability. It is no secret that Filipinos are better equipped in dealing with Westerners. Their English skills are comparatively better than other Asian neighbors, being influenced by several decades of American rule. Filipinos boast about their countrymen having a 95% literacy rate, and almost 80% of these are fluent in English.

As a result, Philippine English is more accent-muted; meaning there is a small of amount of discernable intonation and unfamiliar diction in their speech. Western culture is also ubiquitous in the country and widely-accepted. This makes it easier for Westerners to understand communication with the Filipinos, and lessens culture shock for them.

Service-oriented Workforce. In addition, both locals and foreigners admit that Filipinos are quite adept at dealing with people relationally. Decades of Malay, Chinese, and Spanish influences have developed the Filipino with a commendable gift of better relational skills. Consequently, they are more proficient in areas of customer service. No wonder many international firms choose to outsource their customer service departments to the Philippines, and that BPO industries are booming in this nation.

Active Government Support. Although the Philippines is relatively a newcomer in the outsourcing industry, it also has responded quickly to the emerging IT trend, setting up an atmosphere for job growth and foreign investment during the dot com boom.

• Creation of the Information Technology and E-Commerce Council (ITECC) and the E-Commerce Act of 2000 in order to handle and encourage the growth of the IT industry in the country. The cyber law also mandates the businesses to extend their services online, making local Philippine businesses available on the Web.

• Creation of the nation’s first Cyber Corridor, a network of cities having the most vigorous and productive IT and BPO hubs in the country. This national project aims to generate at least $13 billion in revenue this 2010, and employ more than a million Filipinos.

Among the commonly outsourced jobs by these companies are the IT services being offered by many agencies and freelancers.  Many companies resort to this option since outsourcing allows these businesses to save on operating costs and expenses as against hiring and training employees on their own.  Moreover, getting their own employees would also mean that they have to spend on establishing and maintaining a company department within which those employees will be placed.

But with outsourcing, these companies are relieved from the burden of maintaining a regular workforce.  Rather than looking after their employees, they could focus their efforts on the company’s main objectives while these outsourcing agencies and freelancers do the job for them.

With outsourcing, companies are able to reduce their operating costs; thus, expanding their resources to other business areas.  Accordingly, businesses can re-focus their money and investments on higher-value opportunities, as well as simplify management.

Outsourcing is the best business leverage for these growing times because it dramatically improves the efficiency of the company.  By hiring outsourcing professionals, companies are liberated from the burden of handling employees.  It simplifies day-to-day management and reduces business risks.  With outsourcing, companies can focus their efforts towards more important matters and other strategic business goals.

Discover what Outsourcing can do for you.  Visit Outsourcing Truths today.

The best thing there is about outsourcing is that it frees one’s hands from dabbling with the particular outsourced job. In addition, it frees up company resources by allowing it to minimize IT expenditures. Accordingly, there is no need to spend for equipment since one does not need to set up an in-house personnel or department for that matter.

By simply letting others do the job, one can redirect its resources into the core business of the company. It relieves the executive and administrative team from dealing with human-resource problems as well as issues that deal with manpower.

Among the best things about outsourcing is that one can save on expenses relating to training. In addition, outsourcing also allows companies to gain access to an unlimited pool of talented individuals that possess specialized IT skills.

Outsourcing is the intelligent choice for companies who seek to save on operating expenses, and focus on its core business. Through this medium, one can significantly improve the business by being able to focus on providing the best quality products and services.

Why drain your resources when you can use it on matters that really count? Relieve yourself from the burden of costly operational expenses by simply outsourcing your IT needs. Visit Outsourcing Truths for more information.

Presidential Decree No. 851, or the 13th Month Pay Law, mandates all employers to pay all rank and file employees a 13th month pay on or before December 24 of each year. How is the 13th month pay in the Philippines computed? The 13th month pay is equivalent to one twelfth (1/12) of the basic salary within a calendar year. To be eligible for it, an employee must have worked for the employer for at least one month in that calendar year.

In the computation of the 13th month pay, the “basic salary” excludes overtime pay, earnings, sick leaves, vacation leaves, maternity leaves and other remunerations.

In cases where an employer withholds the 13th month pay, covered employees can direct their complaints to the Department of Labor and Employment (DOLE) or the National Labor Relations Commission (NLRC).

The 13th month pay is different from the Christmas bonus. The 13th month pay is mandated by law, whereas the Christmas bonus is paid at the sole discretion of the employer. The 13th month pay is taxable only for amounts that exceed Php 30,000.00 (Philippine pesos).

There are employers who are exempted from paying the 13th month pay, among which are government and government-owned corporations, employers of household helpers, and employers of those paid on commission or task basis. An outsourcer outside the Philippines can only be subject to the 13th month pay rule if the company has its own business units on Philippine grounds, duly registered with the appropriate government establishments. When the outsourcing arrangement is purely on a contractual freelance basis, the employer is not required to dole out the mandated bonus.

Indeed, the 13th month pay serves its purpose to lend extra financial aid to employees during the Christmas season, and at the same time boost employee morale.

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Similarly, power interruptions also occur when repairs are being made.  In the latter case, the public shall be notified of the scheduled power outage through newspapers and television.  And in most instances, these blackouts only last up to an hour or two at the most.  Thus, the production of most companies is not severely affected.  Moreover, most businesses in the Philippines are already equipped with power generators that will supply ample electricity in the event of power outages.

With apprehension regarding electricity blackouts and power interruptions out of the way, Outsourcing in the Philippines is a viable option for businesses who seek to minimize their operational costs.

Why drain the company’s vital resources when you can divert it for other uses?

With outsourcing, companies no longer need to spend on equipment, or otherwise set up a department within the company.  Instead, companies can get hold of the necessary manpower from specialized outsourcing agencies; thus, freeing up company resources for other important uses.  In addition, companies no longer need to spend for training of their workforce.  Through specialized agencies, companies can have access to skilled and talented individuals who are specially trained for the job.  As a result, companies can enjoy greater profits since operational expenses are significantly reduced. 

The Philippines is home to a lot of talented and skilled individuals who are well-versed in the field of website optimization, web design and software development.  In addition, outsourcing jobs can be less expensive here as opposed to India.

For more on this, visit Outsourcing Truths to know more why outsourcing here in the Philippines is an intelligent choice for businesses and individuals alike.

Aside from company incentives, employers are required by law to shell out funds for their employees’ 13th month pay. The outsourcing industry in the Philippines is not exempted from this mandate.  The only entities not required under this law are the government, employers of household helps and persons who hire people based on a commission-, boundary-, or task-basis.  

This is mandatory under the provisions of Presidential Decree No. 851. Under such decree, all employers are required to dole out a 13th month pay to all their employees receiving basic monthly salaries, regardless of the nature of their employment and not later than the 24th of December annually.  This covers all employers ranging from small- and medium-scale entrepreneurs to top-earning business processing outsourcing providers. Covered employees who do not receive their 13th month pay have the option of directing their complaints to the Department of Labor and Employment or to the National Labor Relations Commission.

To be entitled this bonus, which is equivalent to at least one month of an employee’s wage, the said employee must have rendered work for that company for at least a month during that calendar year.   This payout is calculated based on the employee’s basic monthly pay divided by 12 and multiplied by the number of months the employee has worked for the company within the calendar year.

Outsourcing companies engaged in the provision of information and communications technology or information technology services are awarded incentives by the Philippine government. To qualify for these incentives, a foreign corporation may establish a local office or a wholly-owned unit in the Philippines. By doing so, these outsourcing companies become governed by the Philippine labor laws, which in turn requires employers to give rank-and-file employees a 13th month pay. So, now we know why our friends working for the biggest BPOs are happiest every December.

image credit://computerwoche

During the early 90s, companies were looking for new business models to adopt in view of the developments and changes in the world market.  In view of the looming financial difficulties that abound them, multinational companies resorted to low-cost locations where they would conduct their operations.  These destinations include India and the Philippines.  Apparently, setting up bases in offshore locations significantly reduced the operating costs and a corresponding increase in profits for these companies.

The outsourcing phenomenon quickly took flight as many companies realized the advantages, as well as the need to resort to it in view of the impending global financial crisis.  Majority of the workload outsourced by these multinational companies involve customer support, telemarketing and technical support.

Subsequently, the trend evolved that even freelancers are now engaged to perform work outsourced from companies to individuals alike.  This type of outsourcing enabled small and medium businesses to take advantage of the benefits of outsourcing.  The usual outsourced jobs to freelancers would include content writing, web design, programming and software development.

At present, India is being regarded as the top outsourcing destination.  A close second is the Philippines.  However, due to the increasing salary rates in India, multinational companies as well as certain individuals are pulling out their outsourced jobs.  Naturally, the tendency is to go to an alternative, which is the Philippines.

The Philippines is home to a lot of talented and skilled individuals who are trainable.  In addition, English is a widely-spoken language in the country; hence, language is not a barrier.  Moreover, Filipinos are exposed to the culture, style and trends of Western countries.

Visit Outsourcing Truths and discover the benefits of outsourcing.