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Benefits of Outsourcing to Cebu, Philippines

by | Oct 28, 2020 | Nearshore Outsourcing

The Philippines is one of the best countries for outsourcing, and the Cebu region is an attractive choice for call center operations. Businesses in this region can engage with an educated local workforce, participate in an expanding economy, and enjoy an attractive global currency exchange rate.

With a population of 109 million, the Philippines is the thirteenth largest country in the world by population. It is also the sixth largest English-speaking country and boasts one of the youngest populations in the world.

Political History and Current Political Climate of the Philippines

No discussion of the Philippines would be complete without taking a look at the country’s close relationship with the US and Spain. The Philippines was a colony of Spain for more than 300 years until the Spanish-American War. US forces then took possession and declared the Philippines its own colony.

After a brief occupation by Japanese forces in WWII, the Filipino people gained their independence in 1946.

Given this somewhat chaotic history, it’s no surprise that the country has been strongly influenced by Spanish and American culture. Despite its proximity to the Asian continent, the Philippines enjoys a uniquely Western culture in many ways.

Outsourcing to Cebu, Philippines

Geographically, the Philippines is an archipelago made up of 7,641 islands, including Cebu Island. Cebu is a province located in the Central Visayas region, which includes the bustling capital, Cebu City.

Also known as “the Queen City of the South,” Cebu City is the oldest city in the Philippines. The region is safe, diverse, and prosperous and offers several characteristics that make it a prime choice for companies looking to outsource.

While Cebu has been the site of several sizable protests against the Duterte administration, these demonstrations have been mostly peaceful. In general, Cebu is relatively quiet and enjoys a moderate to low crime rate in most areas, including the busy downtown Cebu City.

Financial Outlook

The Philippines has been thriving economically over the past several years. Like most other countries, the Philippines has experienced a downturn related to the impact of the 2020 pandemic.

However, analysts predict investments made now are likely to grow in value in both the short and long term. The relatively high population growth (around 2 percent annually) is expected to continue driving economic growth over the next several years.

The comparatively lower cost of living in the Philippines is a significant factor for companies considering outsourcing to Cebu and the surrounding areas. The minimum wage in the Philippines is less than USD $10 per day, significantly lower than in the US — in some states, the minimum wage per hour is higher than the daily wage in the Philippines. Companies can save a great deal of money by outsourcing operations to this area.

Technology Infrastructure

Cebu is well-connected. High-speed broadband internet and 4G cellular networks are available throughout most of the Philippines. Cebu has invested heavily in state-of-the-art infrastructure improvements over the past several years.

Language Skills

Many people in the Philippines are native English speakers, as it is an official language in the country. A large segment of the population also speaks the traditional Cebuano language.

Around 90 percent of Filipinos are functionally literate.

Transportation

Cebu has an extensive bus system, and while it does not currently offer a light rail or similar mass transportation system, the local government has been planning for a future light rail system for the past few years. Residents and visitors alike commonly walk and cycle throughout the city centers.

Culture and Education

Culturally, visitors and residents alike consider this region remarkably friendly. Cebu is the central education hub in the Philippines, giving your company a well-educated talent pool to draw from. The region has eleven major universities, each offering several college branches and more than a dozen specialty schools that focus on various professions.

There is bustling nightlife, a well-regarded fine arts scene, and a focus on traditional Filipino cooking and culture. The younger population is diverse and tends to be highly engaged with their families and the local community.

Medical Care

The Philippines offers a well-regarded public healthcare option. Residents can also opt to pay into a private system to add services to the basic public program.

The World Health Organization (WHO) classifies the healthcare system in the Philippines as “fragmented,” meaning some areas offer more robust healthcare while others struggle to meet the needs of local residents. Larger metropolitan areas in Cebu offer well-regarded medical facilities.

Business Regulations

To establish a business presence in the Philippines, a company must create the following entities:

  • A branch which carries out business activities and derives income from within the country
  • A domestic subsidiary incorporated in the Philippines
  • A domestic partnership as outlined here
  • A representative office which deals directly with clients of the foreign company but does not receive income from the Philippines (it is subsidized by its head office)
  • Regional headquarters (RHQ), a branch of a multinational company limited to non-income producing activities in the Asia Pacific region.
  • Regional operating headquarters (ROHQ), a branch which is allowed to derive income solely by providing qualifying services to its affiliates in the region, including data processing and communication

Business in the Philippines is subject to regulations established by the Corporation Code, the Foreign Investments Act and local laws and regulations.

What to Look for in an Outsourcing Partner

Scaling your company with a nearshore or offshore outsourcing partner is challenging. As you move ahead, take care to select a partner that meets your criteria. Consider these questions:

  • Can the outsourcing company handle your specific situation? Do you need both inbound and outbound services, for example?
  • Does the company have access to reliable infrastructure, including broadband internet, mobile connectivity, and modern equipment?
  • What about the local workforce? Do you need accent-neutral call agents or agents who have certain levels of education or specialties?
  • Does the outsourcing company have local, firsthand knowledge of the region and its culture?

Learn more about ContactPoint 360 and how we can help you expand to Cebu and other markets across the globe.

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