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The Growth of the Outsourcing Industry and I.T. Talent Pool in the Philippines

October 16, 2019    |     Marella Gimenez

The Outsourcing Industry

Traditionally, employers looking for suitable candidates to join their company were only limited to the talent pool in their location.

This poses a problem to companies in smaller cities with no active CBDs as they have a meager selection and slimmer pickings for certain employees they may be looking for. However, today’s latest developments counter this problem with third-party outsourcing companies connecting employers with the employees they need. They recruit, source, and pre-screen fitting candidates, referring to the job description provided by clients. They then present only the shortlisted talent to the employer for the final interview. Companies of all sizes and needs now seek the services of outsourcing companies because they see the many advantages it brings to their business:

  • cost efficiency - In most instances, companies choose to set up a team or staff outside of their country because other countries’ labor costs are considerably lower. This allows them to get the same quality of work while cutting costs and creating an extension of their business.
  • focus on brand development & core services - The outsourcing company then manages the day-to-day operations as well as handling the facilities, labor laws, IT, and HR. Meanwhile, they still retain control of the quality and productivity they want to put out. 


 How the Philippines Compares

With the steady rise of the Information Technology – Business Process Outsourcing (IT-BPO) industry in the Philippines over the last two decades, it has become the second largest outsourcing country in the world. Its outsourcing industry comprise of shared service offices, global in-house centers, captives and third-party outsourcing providers. Here is how the country compares globally:

  • 13th largest population in the world
  • with 1.3 million people employed in outsourcing
  • 4th largest English speaking country 
  • 3rd in location for both graduate-level and professional talent in the accounting, engineering, healthcare, and finance sectors of the IT-BPO industry

The Future of the IT Talent Pool


From the country's large population there were 77,747 Information Technology graduates from state universities and colleges alone (2017-2018). With a high demand for IT talent in IT-BPOs, the Philippines proves to be a reliable location to supply these needs. College graduates hoping to find jobs in reputable companies may later struggle to stand out among the increasing number of applicants. Working at offshore extensions of other multinational companies provide a good alternative for them with the same experience.

A recent study however finds that more people are opting to be in school longer rather than work. More than 750,000 Filipinos aged 15 and above stayed out of the labor force and indicated to staying in school as the reason. Encouraged by the high demand, most of the male students in tertiary education are taking up Information Technology, with internationally recognized universities churning out 37,000 IT graduates annually. Although this prevents the country’s labor force from increasing much this year, this proves beneficial in the long run. A better educated workforce is advantageous for a country that has its population size as the major driver of its economy. The challenge this poses nonetheless is the continuation of generating more opportunities for higher-skilled workers, which offshoring and outsourcing companies can do. 


Data Science's Call for IT Talent


Ayala Corp. CEO Paolo Borromeo additionally states that the Philippines need to elevate its big data talent pool to be able to utilize the business and governance potential of mining information. Data science in the country is in its preliminary stages while companies are sitting on a wealth of data that could potentially help them serve customers better.

Therefore, this needs to build the talent base to support it and emphasizes the louder call for IT talent to aid in the advancing of data science.  Luckily, the country has seen an increasing number of IT graduates every year, being cultivated by the high demand.  

The IT-Business Process Association of the Philippines (IBPAP) also have plans in place to implement skills-upgrading programs for the available talent pool. They have arranged to collaborate with Metro Manila mayors to make this easily accessible around major urban areas such as Manila and Quezon city. This is to help promote the growth of the IT-BPO sector and to explore the possibility of expanding in smaller cities. 


Projected Growth of the IT-BPO Industry

The IT-BPO industry currently touts a steady growth in revenue and compensates 10-15% of the market share in the global outsourcing market. It is predicted to increase employment with 1.5-1.7 million new jobs in 2019 and onwards. According to IBPAP, the IT-BPO and Global In-House Centers (GICs) are the country’s most important job generators.

These sectors contribute approximately 17% to the Gross Domestic Product (GDP) and has generated revenues of $25 billion, a huge increase compared to the start of the decade. This makes it the Philippines’ second largest net foreign exchange earner, after remittances from overseas workers. The projected growth reinforces the call for more people in the workforce, particularly in the field of IT. 


The non-stop growth expected in the future of this industry means IT talent will be needed more than ever. They are the backbone of the industry ensuring communication with clients and the technological operations of companies run smoothly. Protecting the confidential data and information of these businesses are also what make their roles so crucial. With government upskilling programs in place and the youth preferring to be educated for longer periods, the future of the IT talent pool in the Philippines look to be promising.  

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Posted by Marella Gimenez


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