Benefits of Doing Business in the Philippines

Capital-related

  • Simplified customs procedures
  • Simplified import and export procedures
  • Duty-free importation of capital equipment

Operations-related

  • Training grants for finishing schools (TESDA vouchers)
  • Exemptions on local taxes and permits
  • VAT exempt inputs
  • Permanent resident status for foreign investors and immediate family members
  • Assistance in the promotion of economic zones to local and foreign locator enterprises

Taxation

  • Income tax holiday or a four-year exemption from corporate income tax, extendable up to eight years, with the option to pay a special 5% tax on gross income in lieu of all national and local taxes after the tax holiday
  • Exemption from duties and taxes on imported capital equipment, spare parts, supplies, raw materials
  • Exemption from wharfage dues and export taxes, imposts, and fees

Language and Culture

The Philippines is an English-speaking country and has a natural cultural affinity with the US. These qualities and others make it an attractive BPO location.

  • The Philippines is the third largest English-speaking country in the world
  • English is the principal medium of instruction in education system
  • Filipinos have a natural aptitude for languages and quickly acquire languages and preferred accents

As a result of these qualities, the BPAP Roadmap 2011-2016 shows that the Philippines has a risk index of only 1.76 in terms of skilled English speaking talent availability.

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Source: IT-BPO Road Map 2011-2016

Educational Infrastructure and Talent Pool

The Philippines has approximately 450,000 tertiary graduates annually, of which only 25% are located in the National Capital Region (NCR) while 75% are outside of NCR. The share of talent outside NCR is expected to grow over the next decade.

In 2010, the industry employed 525,000 skilled workers and professionals, up 24% from 2009. The IT-BPO Road Map 2011-2016 projects that the country will grow 25% per year, translating into 1.3 million direct jobs, 3.2 million indirect jobs, and US$25 billion in export revenues.

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Source: IT-BPO Road Map 2011-2016

The Philippines is one of the most cost-competitive destinations for IT-BPO services, amounting to only US$15,000-16,000 per annum per FTE in 2010.

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Source: IT-BPO Road Map 2011-2016

Alignment with Western Standards

The Philippines was a US colony from 1898 to 1946. Its educational system is closely aligned with that of the US, and its accounting and legal regulatory frameworks and processes are based on those of the US as well. Filipinos are the second largest ethnic immigrants to the US, and are well versed in and comfortable with US culture and values as well as entertainment, lifestyle, and work environments.

Dynamic IT-BPO and GIC Industry

Key sectors in the IT-BPO Industry

IT-BPO and GIC services can be broadly classified into three main categories: information technology services (ITO), business process services (BPO), and engineering services (ESO).

 

Information technology services (ITO)

-          Traditional IT services such as application development and maintenance

-          Software product development

-          Hardware and software maintenance

-          Network management

-          Game development is an outsourced service, combining IT and creative work

Business process services (BPO)

 Voice services

  1. Customer care
  2. Technical support
  3. Sales

Non-voice services

  1. Finance and accounting transactions and payroll processing
  2. Specific industry processes such as medical or legal transcription, legal research, and analysis
  3. Animation and other high-end processes

CHART: http://www.bpap.org.previewdns.com/bpap/key_sectors.html

Engineering services (ESO) include engineering and R&D services such as the design and development of engineering projects and products, product testing and improvement, and pure and applied research.

Growth in the IT-BPO and GIC industry

The Philippines’ IT-BPO and GIC industry is experiencing robust growth in all major sectors, particularly in voice-based BPO, non-voice business support and complex services, and IT. The contact center sector grew 20% in 2010, overtaking India, and the non-voice BPO sector grew 30% in 2010.

The Philippine Software Industry Association (PSIA) reported that in 2010, the IT sector grew 28% in 2010 and earned US$725 million in export revenues. About 45,000 professionals are employed in the sector. The health care BPO sector employed approximately 14,000 health care professionals in 2010 and generated revenue of US$102 million, up 11% form 2009. Overall, the IT-BPO and GIC industry posted revenues of $9 billion in 2010.

Allied Industries

A variety of industries provide support to investors during development and operations phases. They include:

  • Telecom
  • Real Estate
  • Facility Developers
    • Providers of hosted and managed facilities
  • Consultants
    • Investment and Operations
    • Recruitment
  • Employee Benefits Support
    • Insurance
    • Training