Global Locations Compass - The Philippines

15 Feb 2012



The Philippines is seeing a lot of interest as a delivery destination for global services. It is classified as a mature location on Everest Group’s Market Vista Locations Maturity Heatmap. With its sizable graduate pool, low cost of operations, and English language advantage, the Philippines offers an attractive proposition for organizations looking for destinations to offshore services. Additionally, several government initiatives, such as Next Wave CitiesTM have resulted in significant activity in the Philippines’ global services industry. As a result of this, the Philippines has emerged from constituting less than five percent share of global offshoring industry in 2006 to 10 percent share in 2011, – a year-on-year CAGR of 28 percent.

In this report, we analyze the Philippines as a global services destination across market characteristics, education system, and future outlook. It also provides details on key cities across labor pool, cost, market activity, and risk analysis. The report will assist buyers and service providers to understand the unique value proposition offered by the Philippines in terms of labor pool availability, cost, services, etc. This would enable developing a holistic perspective for investors who are evaluating entering or expanding existing footprint in the country.

Scope and methodology

  • The focus of this report is on Philippines’ global services sector across in-house centers and third-party service providers
  • The analysis spans across IT and BPO services, and does not include KPO, engineering services / R&D
  • The report focuses its analysis on key cities in the Philippines, specifically, Metro Manila, Cebu, and the Next Wave CitiesTM
  • The report leverages multiple sources of information - Everest Group’s proprietary databases (global in-house centers, service providers, market activity, cost, labor pool), extensive advisory experience in supporting clients with Location Optimization decisions, and inputs from global services stakeholders and industry experts


The report provides detailed data and analysis on the global services landscape in the Philippines, and is structured along the following sections:

  • Country overview, spanning across macro-economic, political and education system
  • Global services sector overview across market characteristics, market activity, enabling ecosystem, government incentives and key cities
  • Assessment of key cities across talent pool, cost, market activity and operating environment
  • Future outlook providing perspectives on industry growth and arbitrage sustainability
  • Implications for buyers and service providers

Some of the findings in this report, amongst others, are

  • Between 2006 and 2011, the IT-BPO industry in the Philippines increased at a rapid pace (CAGR of 28%), with the country being viewed as world leader in voice BPO
  • Most current activity is focused on transactional processes while credible activity is seen in complex processes; although at relatively small scale of operations
  • The industry is diversifying its service focus with non-voice work contributing about 20 percent to it; geographic diversification beyond U.S. is gaining traction
  • The government has put a number of incentive programs to attract investors and is firmly focused on the development of the industry on an ongoing basis through grants and infrastructure developments
  • Leading service providers and buyers are operating delivery centers in the Philippines with multiple examples of players having more than 1,000 FTEs in F&A / transaction processing; most global in-house centers of mature buyers have attained more than 2,000 FTEs; many service providers have scaled even higher, especially for voice work
  • Most IT-BPO activity in the Philippines is concentrated in Metro Manila; evidence of credible activity in Cebu; the emergence of Next Wave CitiesTM provides depth to the industry
  • Operating cost in Metro Manila is the highest while it is 5-15 percent lower in Cebu; operating costs in Next Wave CitiesTM are even lower
  • Significant variation in infrastructure among Next Wave CitiesTM; especially IT/BPO specific infrastructure and air connectivity; concerns regarding crime rate in some cities
  • The Philippines continues to be among the top three preferred destinations in terms of growth plans for both buyers and service providers
  • Everest Group expects the IT-BPO industry in the Philippines to grow at a healthy rate with a potential to achieve US$25 billion by 2016

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