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Call Center Cactus Chat

Episode 27: Why Is The Philippines an Outsourcing Hub? (Part 1)

Jake rejoins Eric to talk about why (and how) the Philippines came to be first in line when it comes to businesses looking to outsource professional remote services.

Listen to the Podcast:


Eric Mulvin: Welcome to the contact center cactus chat podcast. I’m your host, Eric Mulvin. And I’m joined by my co host today, Jake Cayang coming from the Philippines. Welcome, Jake.

Jake Cayang: Hello. Hi, Eric. Yeah, it’s been months since the last time we did this. And yeah, I’m pretty excited to do this again.

Eric Mulvin: Yeah. Great to get back in the studio with you. He’s coming from Dumaguete, the Philippines. I’m out here in Tempe. And today, we’re going to be talking about why is the Philippines one of the leading hubs for outsourcing. There’s a reason why when you think of outsourcing, and you think of some people answering the phones not in the US, the first place that comes to mind, or one of the first is the Philippines. So why is that? So Jake, and I are we’re going to be diving in that today. And talking about that, like, what are some topics people can expect to hear today?

Jake Cayang: Yeah, just, you know, a few question, why is it why is it the Philippines? You know, there’s so many places that, that they can try to do it. But you know, why is it like, the Philippines, as has this, in the industry is one of the most rapidly growing growing in the country. And here’s the reason why. So number one, we can talk about how people in the Philippines got the English language. So yeah, to start with, you know, we we were colonized by the Americans for eight years. And, yeah, that really gave us the, you know, the, the first of all, yeah, that we are some of our grandparents are really speaks really good English. And, you know, for that, yeah, family culture alone, when somebody who has that knowledge and skills will be passed on to the next generation. And I feel I remember when I was a child, Eric, but there was an old person who really speaks really good English. And they said, you know, it’s, it’s because, you know, he was with the Americans during the war. And, you know, for some families, they got that basket into the, their, you know, grandchildren. And there’s a reason why we have this good speak English speaking people in the Philippines. And also with the, you know, we’ve been really inclined with the for foreign media, we watch a lot of American movies. And that’s, that’s also influencing most of the people to speak, speak better English. And

Eric Mulvin: Yeah, also, you you bring up some great points, Jake, because there’s no way we can have this conversation about, yeah, why is Philippines a leading hub for outsourcing without talking about the history and

Jake Cayang: Exactly.

Eric Mulvin: That, that America, taking control of the Philippines for all those years does play a huge role. You’re right. And you mentioned a little earlier, before the show how Philippines is the most westernized Asian country? And so that’s a, that’s a big deal. But why is that? It’s because, yeah, the influence of the US. And not only is it made English so prominent, in fact, you know, I think it was a recent meeting we had, where you were telling me or one of you guys were telling me that they’re starting to teach English, not English, Visaya the local language in the schools, because the kids aren’t learning the local language. They’re learning English, and they’re starting to forget about the local language. That’s how it’s almost like, too far. Like, okay, we’ve done so good at getting English into the Philippines. It’s now you know, taking over the normal language, but that influence had never stopped just because the US, you know, okay, Philippines, you get your own government and President, but the influence never left. They, you know, like, yeah, you’re there. You’ve got kids, similar age to mine. I mean, what kind of stuff do they usually watch?

Jake Cayang: Yeah. You know, lots of American stuff. And to be honest, yeah, most of the kids you know, in their generation, they’ve been having trouble, you know, speaking our own dialect. And, you know, that’s the reason why the government implemented the curriculum was subject in school, which they are required to speak their own dialect. And yeah, that’s, that’s how strong the effluence of the US are Americans here in the Philippines. And even my kids I can really say that they’ve been influenced by the foreign media, the news and all the stuff that they watch, like the cartoons and all other things are speaking English and they also speak English more. So yeah.

Eric Mulvin: And the kids to like before it was were like kids growing up they want watch Disney Channel all day. And now they have like an American accent because they’ve been watching Disney Channel. Now, it’s YouTube, it’s, you know, Twitch, it’s, you know, Instagram, Facebook, you know, there’s just all day they’re watching these American, like influencers? And so yeah, well, however it is like it’s it said American influence. So that’s one reason because, you know, we’re dealing with customer experience and we got to have empathy on the phone if we’re doing a good job, and how do you how do you relate to a customer that’s on the other side of the world that has, you don’t have much in common, but there, there is a lot of overlap because of that, you know, American influence in the Philippines, and I think the Filipinos probably can relate more to the Americans, or they could at least talk more, you know, if we’re talking sports, or, or movies culture,

Jake Cayang: Yeah, exactly.

Eric Mulvin: there’s a lot exactly overlap. So, yeah.

Jake Cayang: Yeah. And the effectively of it, like, you know, when somebody calls, you try to convince you to sell something, and, you know, try to go, you know, just to have a conversation. If you’re an American, and you’re listening to someone that you know, is struggling to speak English, or, or you someone who you don’t understand, you know, the barrier is really up, you know, you don’t want to continue talking, or, you know, just do to get that being effective, and how to talk to Americans, you know, you have to speak good English, or at least, they should understand what you’re talking about. So, yeah, that’s, that’s something that Filipinos have, because we speak better English. And that’s, that’s one thing that that would make the business effective when you’re working with Americans or trying to, you know, work, work, you know, expand the business for former American consumers or American customers. So that’s So another reason.

Eric Mulvin: So we talked about history, the American influence, what are some of the other reasons that you’ve seen? Like, why is your your there? Right, you’re seeing it, you grew up, seeing the call center industry, blow up to what it is today. So I mean, you’re just talking about your life here. So what else do you see out there? Why, why is it the Philippines are really stepping out? For Yeah. Because I’ll be honest, I get businesses all the time that talk to me. And they’re like, I know, I want to outsource to the Philippines, I just got to find a company that I could work with. And so they they made a decision that they’re going to outsource, and it’s specifically to the Philippines. So what are some of the reasons why people automatically jumped to the Philippines.

Jake Cayang: Of course, when you do business, you need to look for someone who has a really good you know, work ethics, were very versatile. Also. And, you know, we can go from task to task can assign someone to do a lot of things, the business advantage of having to work with one person, you can do a lot of things, and that’s very common with Filipinos. The word ethics itself, it was part of the business where you can you would want to make people effective and efficient. And what they do is that they should possess these kinds of things. And, yeah, that’s one thing. I believe that’s the most important. I mean, second to, you know, the English speaking capability is to have that really good work ethics. And also, along with that, in comparison to other countries that it was doing the outsourcing. Philippine says better integration, IT infrastructure, infrastructure, I believe, and our, the power outage here is, you know, not as worse as any other countries. So, also, that’s,

Eric Mulvin: Yeah, so infrastructure you know, and that, that is something that is overlooked, I think, you know, when you’re thinking about working with, like, for me setting up shop in the Philippines, you know, when we started up Pac-biz eight years ago, I wasn’t thinking about like, what’s the internet like in the Philippines? What’s the power? Like, pretty quickly, I was thinking about that all the time. But yeah, the, you know, it’s interesting, you know, one of the things I’ve noticed, so Philippines and India, you know, they’ve led the world and outsourcing for the past several decades. And within the last couple of years, there’s been a huge boom in outsourcing to countries all over the world. And so countries, like in Central America and and We’re in like places like Mexico and Colombia. And in Africa, in the Bahamas, a Caribbean’s there’s all these new places that are never thought of before as places that you could outsource to, and they’re starting to evolve and grow. And I’m meeting people all the time. They’re like, Hey, I’ve got, you know, I want to start a business a call center in this country or that country. And the, the infrastructure, you know, is not there like, or there might be challenges. And you wonder, why did businesses always clustered together and you see these, you know, like, even in Dumaguete, the, it’s because of infrastructure, there’s good internet, good power. That’s where you want your business to be? And the it’s a big deal, because your power goes out, and you can’t take calls anymore.

Jake Cayang: Yeah. And to do that, Eric, it’s the wages and labor, also the Philippines and our other country. So I’ve been, you know, good places for outsourcing. That’s, that’s what makes the business grow like you’re paying low wages, and Labor’s to your workers, who are also performing as to get us as good as what you have. There in the US. So that’s, that’s one, you know one factor.

Eric Mulvin: Yeah. So and that’s, that’s interesting, too, because I want to compare do a little bit of comparing Philippines with some of the other countries and again, that’s how the Philippines really got their start and outsourcing. And I think India as well is because of that low, low wage, low labor costs. And what’s that’s where the really interesting thing is, because these other countries that are starting to come up, they’re cheaper, they’re coming in even lower price, lower wages, lower labor. And so it’s interesting to see, because that was a competitive advantage for the Philippines. But maybe today, you know, that might not be I know, the Pakistan, for example, that’s another country that’s just starting to really boom in an outsourcing but we’re seeing firsthand effects, you know, what, what happens when the infrastructure isn’t there? Businesses, there’s they’re getting the experience they’re looking for, but maybe the calls drop all the time are there have like, the agents can’t take call? So? So that’s a big deal. But going back to the labor? So where do you see, like with, with labor costs increasing in the Philippines, because if you’ve been in the call center industry for 10/20 years, your wages are going to be higher, right? You got people with lots of experience, you got people that can manage things, now manage the call center, we read these to people. And so now, there’s going to be more money. So what do you what trends do you think is going to happen over the next five to 10 years and because of that,

Jake Cayang: You know, you I would like to compare Philippines to you know, India’s in India and other countries. We mean, the increase of labor costs for, for Philippines, in comparison, we are not decreasing as fast as they do. So, the we, yeah, based on what I read, you know, they, we are, you know, I believe that in the coming years, we are still considered as the lowest cost for you know, labor and wages. And I think that’s another advantage that we have, are probably because of them, I mean, other outsourcing countries like India, they they have increased a lot, a lot, a lot higher compared to Philippines. So that would affect, you know, the, you know, the chain of labor and countries all over the countries is increasing. So that’s, that’s gonna be disadvantage pn there end. Which makes the Philippines the most efficient when it comes to outsourcing.

Eric Mulvin: Yeah, so wages thing is interesting. And that, you know, it’s it’s great that you had some research to back up what you’re saying, because I, I assume some things and yeah, I guess that other countries, but But you did confirm, you know, one thing that I know for sure is that it is going up that you know what it costs to get the support that you might have gotten 10 years ago, from India or the Philippines, it’s not going to cost the same because just like here in the US or UK everywhere. You know, in the last couple of years home prices have doubled in some places, you know, grocery costs, everything has gotten expensive. Well guess what? That’s the same thing and everywhere else in the world. Everything’s gotten more expensive. That is more groceries cost more school. You know, taking care of your kids cost more so. So everyone needs to make more money too. So it’s, it does go hand in hand. So it makes sense to see that it is going up. But that’s also where you’re also seeing these other countries coming in. But even then, you know, Philippines? I don’t know, did you get any data on? How much the industry is expected to grow in the Philippines over the next couple of years?

Jake Cayang: No, I haven’t. But the increase was, though we, you know, it’s big Eric, it’s, you know, it’s it, you know, it’s indirectly affecting all other things in here, like the infrastructures. And, you know, the the cost of living and in the in other areas, because we need to improve. Also the transportation, there’s a certain number, who, you know, the amount of money that’s the last because if people are, are being late working in the office, and that’s a big amount, because a year

Eric Mulvin: They cannot go to the office on time, because traffic and, yeah

Jake Cayang: Yeah, and that’s, that’s

Eric Mulvin: Big problem.

Jake Cayang: Yeah, that’s, that’s the reason why the transportation that also in the Philippines is improving, a lot improve, there’s, you know, the also we are, we’re providing more jobs to people who are working in the construction, because we need more offices to accommodate their business businesses who are coming in and work and source their business here in the Philippines. So there’s really a lot and you can really see the buildings are being, especially here in our city. In Dumaguete, some hotels are being they transition from, you know, having the hotel into an office, and

Jake Cayang: yeah, it’s really effective,

Eric Mulvin: oh, really,

Eric Mulvin: that’s surprising

Jake Cayang: it is like, there was

Eric Mulvin: So funny because in the US right now, the opposite is happening, because there’s so many people that are working from home, and they’ve never come back to the office, that the the office, real estate market is tanking right now, like it’s is dropping those businesses that are actually shifting from there, we’re going to build a big project with like a bunch of buildings in downtown Phoenix. And instead of a bunch of office buildings, it’s now residential, this is in the news, like just today. So it’s interesting where the shift is, you know, in the US work from home and I’m glad that Pac-biz as we got work from home, so you know, some of those challenges and and we’re also based in Dumaguete, we’re not in Manila, or Cebu. And so people don’t have, you know, an hour long commute to go two miles, you know, or some crazy journey to get, you know, across town, it’s pretty easy to get to the office, nice, small town we’re in. Alright, so Jake, you know, you’re talking about the investment back into the Philippines and impact now the Philippines because of this boom, in outsourcing all these years, now they’re investing back into it. We talked about infrastructure, infrastructure, transportation, you know, we’re making it easier for businesses to do business in the Philippines, to hire people are building more offices, which in turn, create more growth. So you’re seeing the impact of that, which is great. But I also want to talk about the something that I saw here because something that I think Philippines Dumaguete de where we’re based, and Phoenix, something they have in common even though we’re seven 8000 miles apart from each other is we’re both call center cities. Phoenix really had, this was one of those, like places in the country where like there were call center jobs here all over. It’s not now our industry has grown a bit. But growing up I mean, even me I’ve worked in, I think I had two different call center jobs before I started my first business which led to Pac-biz never thought I’d own my own call center. But the point is that what happens what I’ve noticed here in in Phoenix is those people that were my managers and supervisors back in the early 2000s, are now leading teams or call center operations, or you end up with all this talent and all this experience in the call center space. And so if other people want to start a call center Phoenix, well, you’ve got lots of people to hire from lots of people with experience. So it makes it it makes it continue to be a great place to put a call center even today. And I think the same thing about Dumaguete where we’ve had call centers, some with 5000 employees that have been there since early 2000s At the start of the outsourcing boom. And so we’re now able to take advantage of that because now there’s all these people that again, are supervisors They’re training their leaders at different call centers. And we’re able to bring those people in. And which again, it if you’re people, like, if you’re a business that’s looking to invest in the Philippines, and you have all this talent, and they have years and years of experience, like, where are you going to find that, and these other countries that are coming up, that, you know, maybe in 10 years old, they’ll get that experience too, but it’s going to take a while. So that means that we can take on more challenging projects, bigger, bigger opportunities, and, you know, we’re going to be able to handle more responsibility compared to maybe some of the other countries. So that’s my big picture. Take on it. I don’t know, but you’re living it. So, yeah, you think about that.

Jake Cayang: Right now, we have estimated of 1.8 million Filipinos are working with outsourcing business, that’s a lot, and it will continue to increase in the coming years. And, you know, with the buildings that are being constructed, for sure, that will be filled up with a lot of businesses. And I believe also that some of the business owners hear that owners of buildings have recognized the potential the outsourcing businesses, like Yeah, you know, knowing that others other who have been, you know, they build their they have their buildings, and they want to, and now they are converting it to an to become an office for call centers, they used to have this dormitory, I just Just recently, because I was looking around for buildings. And they said, this was the we removed the walls just to accommodate and justice to ended index position to become a call center office. Yeah, they recognize the potential. And that’s also one thing, you know, this people are looking at looking after the what’s what’s gonna come next. And I know, they, they see this business, as you know, the future of the country,

Eric Mulvin: That’s great. It’s great that I think because of Philippines having the call center industry for the last couple of decades, now you’ve got people that there, they could make that investment, they see what’s happening. And it makes the Philippines more ready more equipped to handle more, because if we didn’t have the office space, if we didn’t have the infrastructure, those are big deal. Like, if we didn’t have the internet capacity, when COVID started to have people working from home, we would have been stuck, no one could have come to the office, it would have been you know, so that’s all the infrastructure stuff is so important. So which seemed like that was a theme of this episode is. So that’s, that’s a big reason, you know, between the American influence the end all of the, you know, learning English as a kid growing up, everybody’s getting that, to the infrastructure and to the whole country, really positioning itself to take advantage of what’s happening in the world, which is that people are outsourcing more and more and more to the Philippines and turning that into growing their businesses and creating more jobs. So which is really transforming the Philippines. And it’s great to hear because traffic is not the best there. So nice to see any any improvement there. But I think that wraps up our conversation for this episode. Jake. So thank you, I appreciate the research you did, it was really great to come up with some stats and statistics instead of just stories. So I appreciate you doing that.

Jake Cayang: But Thanks, Eric. And, yeah, hopefully, we can, you know, this is this is something that, you know, also shared to other people, other companies about how effective Filipinos are, and the Philippines also, as well with with, you know, outsourcing business. So these are the things and that you can expect with with a business working work by Filipinos. So I hope this helps. All right,

Eric Mulvin: Jake. Yeah, well, next episode, I’m gonna talk more about culture and Philippine culture. Talk a little bit about maybe some things to look out for if you’re working with the Philippines for the first time. And like I want to talk about work ethic because people always talk to me about that when they first started working with us. And anything else you got on your What else you got on your list there we could talk about next episode.

Jake Cayang: Yeah, I believe we’ve covered everything Eric. And

Eric Mulvin: So you got a couple more things to talk about. So come check us out on the next episode, where we’ll be wrapping up our conversations on why Philippines isn’t. Why are people picking the Philippines to outsource? And so if you guys want to learn more, again, on this podcast, we talked about outsourcing, customer experience, managing a call center Anything all around in between that and so thank you guys for for watching and listening and come check out the next episode where we’ll continue the conversation with Jake and tell you more about why people are picking the Philippines to outsource. See you next time guys.