Low labor costs and high-quality labor force will continue to make the Philippines the best country for Australians to invest in, according to the Philippine Institute for Developmental Studies (PIDS). In their policy note, PIDS visiting research fellow Peter K. Ross and entrepreneur Mike O’Hagan stated that Australian enterprises can provide a lot of opportunities for the local business process outsourcing (BPO) market. Small and medium enterprises (SMEs) from Australia can be a potential market for micro-offshoring services offered in the Philippines’ BPO industry.

According to Ross and O’Hagan, the extent and the competitive nature of the Australian SME sector also suggest that the growth of such clients is most likely to continue. This can provide entrepreneurial opportunities for local Filipino SMEs searching for a way to penetrate and tap into this market.

The advantages linked to the Philippine BPO sector is that it’s one of the top BPO destinations worldwide and it has a well-educated work force increasing 600,000 tertiary graduates, 3,000 of which are certified public accountants; and these numbers grow as a new year enters the fray. In addition, the country’s location also favors Australian firms because there is only a two-hour difference to the Australian Eastern Standard Time.

Furthermore, the Philippines also enjoy competitive labor rates compared to the salaries in Australia. Data that was obtained from Payscale, labor rates in 2016 for the bottom 30% in Australia was at 1.38 million in Philippine currency, while the top 10% receive P2.05 million every year. This resulted in a median annual pay of P1.58 million in Australia. In the Philippines, the bottom 10% earned at least  P103,630 and the top 10% earned P308,963 a year. This resulted in a median annual salary of P192,241.

While BPO rates are said to be confidential and can vary depending on the client’s requirements and employee experience, the full cost of an administrative or customer – service worker would be around 15,000 Australian dollars, maximum would be 20,000 a year, less than half of the Australian salary for an equivalent job.

Despite all of these advantages that the BPO industry in the Philippines possess, the sector is still plagued by challenges, like government red tape, conflicting government requirements and poor infrastructure and even traffic congestion. In addition, the outsourcing sector in the country is also faced with expensive, unreliable utilities, as well as claims that adjudications of labor cases are biased. The extensive labor laws also make it difficult to fire Filipino workers.

This places more pressure on firms to carefully document every employee activity in case they need to lay off some employees. There are respondents that felt the adjudications of labor cases before the National Labor Relations Commission tends to be biased in favor of the employees. Nonetheless, most respondents advised that labor laws can be navigated; however, firms needed to be aware of and abide by all of its provisions.

To conclude everything, the Philippines is still an avenue for outsourcing, especially if you’re a firm based in Australia. There may be some problems along the way, nonetheless; it’s still equipped with skills that will get the job done.