How outsourcing transformed the Philippine middle class

A vast expansion of call-centre and data-processing jobs in the Philippines has reduced the need for educated Filipinos to look overseas for work

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Job seekers at a recruitment fair for call centre agents in Manila. The rapid expansion of the Philippine BPO industry is giving young Filipinos the chance to find middle-class jobs that previously only existed outside the country. Photo: AFP

Published: 2:45pm, 29 Dec 2016Updated: 11:49pm, 6 Jul 2017

Business Process Outsourcing (BPO) provides the Philippines with 1.3 million jobs and US$25 billion in revenue. By 2017, BPO is expected to provide more foreign revenue than remittances – the republic’s traditional source of foreign exchange.

Furthermore, the World Bank estimates that BPO revenues could soar to well over US$50 billion and provide some 2.6 million jobs by 2020.

What is BPO? Very simply, it’s the outsourcing of services by companies to others. For instance, a software company in California could contract out its technical support or customer service hotline to a call centre in Southeast Asia.

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A good example of how this works is the way in which the global financial industry (i.e. banks such as JP Morgan, HSBC and Goldman Sachs) have relocated much of their low-level data processing to countries such as the Philippines and India.

This trend was accelerated after the 2009 Global Financial Crisis as European and North American banks coming under greater regulatory scrutiny and cost pressure started “off-shoring” increasingly complex functions such as risk and fraud management, portfolio management and financial modelling.

An American language trainer talks to retrenched workers applying for English proficiency training for business process outsourcing jobs during a government job fair in Manila. Photo: AFP

While India has claimed the lion’s share of these services, the Philippines, with its large pool of English-language graduates, has been a strong competitor – outclassing its Asean rivals.