Top 5 Reasons Why IT Outsourcing to the Philippines Is in Demand

Top 5 Reasons Why IT Outsourcing to the Philippines Is in Demand

Philippines IT outsourcing is getting up steam, is considered one of the most promising destinations for software development. Recently, the country made it to the top 50 digital nations, taking 18th place, as per TSGI 2021. Meanwhile, its capital, Manila, was listed among the top 100 super cities, landing in 8th place.    

Over 1 million people work in the field of IT outsourcing in the Philippines, while the BPO industry’s revenue recently hit $26.7 billion. It’s expected to grow its revenue to $29 billion by 2022, adding around 160,000 more jobs. 

IT outsourcing companies in the Philippines managed to stay resilient during the pandemic due to implementing flexible work arrangements to ensure continued operations. Such companies as Google, Facebook, Hewlett-Packard (HP), and IBM have already leveraged Philippines IT outsourcing. 

Qubit Labs came up with this research-based article to explain why companies opt for IT outsourcing Philippines and take a closer look at its software development landscape.  

 

IT Outsourcing Philippines Implies Access to a Large Talent Pool

An array of world-known companies consider the Philippines as a software outsourcing destination due to its vast talent pool. You can find specialists with any tech stack in the country because the local IT industry is one of the fastest-developing spheres. As mentioned, there are over 1 million specialists engaged in the IT industry, and mostly, they’re located in 5 major tech hubs, including:

 

Manila

Multiple IT outsourcing companies in the Philippines are based in Manila, the only city that made it to the Top 10 of “super cities” ranking. Manila significantly contributes to the employment opportunities in the country, which, in its turn, positively impacts the overall Filipino economy. 

Manila’s tech boom is fueled by the favorable business climate, which is supported by government regulations. Despite having a considerably small number of startups, Manila puts effort into attracting foreign companies by offering support to emerging startups. 

Software developer jobs available: 4337

 

Cebu

Cebu is the fastest-growing city in the country. So, it’s no wonder that a large number of innovations in software outsourcing Philippines is concentrated in the city. The University of San Carlos Cebu positively affects the local talent pool, graduating hundreds of tech students annually. 

Besides, the city takes second place after Manila, meaning that the entrepreneurs won’t have to compete with numerous large-scale conglomerates as in the capital. Also, the development opportunities are encouraged by the availability of Cebu’s IT Park and Business Parks. 

Software developer jobs available: 503

 

Davao City

Davao is constantly gaining recognition as a flourishing destination for software development outsourcing Philippines. Within the last several years, there was a significant increase in tech jobs in the city, and it proved to be resilient because its BPO industry remained stable when the pandemic hit. 

Also, the local government plans to transform Davao Park District into an iTownship to further support the tech outsourcing industry. 

Software developer jobs available: 201

 

Bacolod City

As per Colliers International Philippines, Bacolod is a promising destination for outsourcing to the Philippines. This is because the city boasts a large number of talented developers, a modern infrastructure, and a streamlined business registration system. 

Bacolod constantly attracts investors to the city by offering them to cooperate with skilled specialists and leverage well-established outsourcing practices. 

Software developer jobs available: 174

 

Santa Rosa

It’s hard to deny the city’s rapid economic growth and unprecedented advancement in the tech industry. There are various establishments that are expected to boost local outsourcing opportunities, and some of them include business and IT parks. 

Although not many IT outsourcing companies in the Philippines are located in Santa Rosa, the upcoming developments will definitely transform this area. 

Software developer jobs available: 787

 

Philippines IT Outsourcing is Cost-Effective

The decision to opt for IT outsourcing Philippines is often induced by the low salary ranges of Asian developers. After analyzing Filipino job boards and different salary statistics, we decided to gather the average salaries for the most popular programming languages. The numbers are the following: 

C/C++ $14,322
Python $13,800
Java $12,593
JavaScript $12,490
PHP $10,713
C# $9,619

 

  • A mid-level C/C++ developer in the Philippines earns $14,322 per annum.
  • The average Python developer salary in the Philippines is $13,800 per year.
  • In the Philippines, the average Java programmer makes $12,593 annually.
  • The Philippines pay the average PHP developer salary of $10,713 per annum.
  • A mid-level C# programmer in the Philippines earns $9,619 per year.

Please note that the mentioned numbers are approximate because many factors affect the salaries, e.g., location, tech stack, and experience. 

Check out our article about offshore hourly rates to see what country meets your requirements better.   

 

A Large Number of IT Outsourcing Companies in the Philippines

The number of IT outsourcing companies in the Philippines exceeds 700, and this explains how the local BPO industry manages to contribute over 11% to the GDP. These are just some of the organizations that leverage outsourcing Philippines:

  • Google (outsources various roles to the Philippines, from IT services providers to analytical consultants)
  • Facebook (apart from specialists in software outsourcing Philippines, it hired local customer support providers and content moderators)
  • UnitedHealth Group (outsourced its global solutions team in the Philippines)
  • Hewlett-Packard (outsourced customer support and IT services)
  • IBM (opted for IT outsourcing Philippines to delegate its IT functions, notably network management and taking care of its IT infrastructures)

 

IT Outsourcing Philippines Ensures a Well-Developed Infrastructure

The advancement of Philippines IT outsourcing is supported by a high number of modern spaces where tech specialists can gather to deliver high-quality software development services. The country is constantly facilitating infrastructure initiatives, building venues for outsourcing operations in strategic locations. 

 

Eastwood City Cyberpark

This is one of the most progressive cyber parks in the country, which provides office spaces and commercial centers for IT outsourcing companies in the Philippines. It is considered a top employer and dollar-earner in the country. The Cyberpark houses several IT companies, namely Dell, IBM, and Accenture. 

 

McKinley Hill Cyberpark

This place is one of the notable players in the field of IT outsourcing Philippines because it’s home to several IT companies. Accenture and Thomson Reuters are some of the organizations occupying McKinley Hill’s prestigious office towers. 

 

Cebu IT Park

Cebu IT Park hosts over 70% of the Filipino IT outsourcing industry stakeholders. This place boasts a high concentration of skilled software developers and is a focal point for various IT companies. For example, IBM’s 2nd Global Delivery Center is located at TGU Tower.

 

Oakridge Business Park

This is a perfect place for small and medium startups because the park offers low prices and modern, convenient spaces.  

 

Central Bloc

Central Bloc is a high reaching land development located in Cebu City. It houses two BPO towers operational 24/7. 

 

Philippines Software Development Outsourcing is Supported by Government

The national government puts effort into helping the outsourcing Philippines grow by ensuring smooth infrastructure and policy development. It recognized the potential of the local BPO industry a while ago, and now it is a substantial economic pillar in the Philippines.

 One of such initiatives was partnering with universities to create specific curriculums that helped support foreign investment and tax incentives. 

Also, the government recently established a TESDA (Technical Education and Competencies Development Authority), the organization that aids in funding call center training.  

 

Pros and Cons of IT Outsourcing in Philippines

Now, let’s review some key takeaways about the landscape of IT outsourcing Philippines: 

 

Pros Cons
Reasonable cost of labor Low quality of work
High English proficiency Risk of natural disasters
Notable understanding of Western culture 18 non-working holidays 
BPO is a government-supported industry Several hours ahead of US/Europe/Canada

 

Explanation of the advantages and shortcomings of the Philippines IT outsourcing:

Pros of software development outsourcing Philippines:

  • Reasonable cost of labor. Finding developers in Asia or Eastern Europe is much easier and cheaper compared to the U.S., Western Europe, or Canada. Also, if you need programmers specializing in widespread technologies, outsourcing is a go-to solution. Also, great locations include Ukraine, TurkeyKazakhstanArmeniaGeorgiaRomania, Poland, Argentina, Costa Rica, Azerbaijan and Mexico.
  • High English proficiency. Around 80% of Filipino software developers know English pretty well, making communication easy and comfortable. 
  • Exceptional understanding of Western culture. Filipino developers are used to Westernized work culture because they often cooperate with foreign companies and adapt to their approaches and demands. 
  • BPO is a government-supported industry. The I.T. outsourcing Philippines wouldn’t have been the fastest-growing industry in the country without support from the national government. There are three enforced laws that facilitated the advancement of the Filipino tech and outsourcing industry.

 

Cons of choosing the Philippines as a software outsourcing destination:

  • Low quality of work. Without knowledge of the country, it’s hard to find a reliable provider who will deliver high-quality services. So, be aware of this because there’s a risk of losing money because of the poor quality of work. 
  • Risk of natural disasters. Power loss, delays, and the cancellation of work are common in the Philippines because the country is prone to natural disasters, which put its citizens in high-risk situations. 
  • Many holidays. The Philippines has a total of 18 non-working holidays, while there are only 11 in the U.S. Although you can ask your employees to come to work on a holiday, local labor laws mandate employers pay more for work during legal holidays. 
  • Several hours ahead of the U.S./Europe/Canada. The country is 13 hours ahead of Washington, D.C., and 8 hours ahead of Los Angeles. Meanwhile, it’s around 7 hours ahead of Europe and 13 hours ahead of Canada (Ottawa). The lowest time difference is between the Philippines and Australia — 3 hours.

 

Although there are considerable risks of I.T. outsourcing in the Philippines, many companies still hire local developers. Most often, the choice comes down to your goals and budget. The country is rapidly growing, so its benefits are continually displacing the disadvantages. 

 

Looking for Outsourcing Vendors?

Working with the right technology partner is probably 50% of the project’s success. 

Qubit Labs is an experienced outstaffing company that helps businesses facilitate their software development by handpicking vetted specialists for them. 

If you need an experienced developer or a dedicated team, schedule a free call with us to discuss the ideas and opportunities. 

 

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Vlada Sirosh
Research Specialist
Vlada Sirosh is a research specialist at Qubit Labs with 5+ years of experience working in the information technology and analytics industry.