Heroes in Business - Eric Mulvin Why Is the Philippines an Outsourcing Hub? Part 1 Episode 27

Episode Date: August 12, 2023

Eric Mulvin Why Is the Philippines an Outsourcing Hub? Part 1 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.

Welcome to the Contact Center Cactus Chat Podcast. I'm your host, Eric Malvin, and I'm joined by my co-host today, Jake Kayan, coming from the Philippines. Welcome, Jake. 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. excited to do this again. Yeah, great to get back in the studio with you. He's coming from Dumaguete, Philippines. I'm out here in Tempe and today we're gonna 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 were going to be diving in that today and talking about that like what are some topics people can expect

to hear today yeah just you know if you 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 the Philippines has has this in the industry who is one of the most rapidly growing growing in the country and here's the reason why so number one we can talk about you know how people in the Philippines got the English language. So yeah, to start with, you know, we were colonized by the Americans for 48 years. And yeah, that really gave us the, you know, the first of all, some of our grandparents are really speaks really good English and you know for that yeah the family culture alone when somebody who has that knowledge and

skills will be passed on to the next generation and I can I remember when I was a child Eric that there was an old person who really speaks really good English and they said you know it's because you know he was with the Americans during the war and you know for some families they got that passed into their you know grandchildren and that's the reason why we have this good English speaking people in the Philippines and also with the you know we've been really inclined with the foreign media. We watch a lot of American movies.

And that's also influencing most of the people to speak better English. Also, you bring up some great points, points Jake because there's no way we could have this conversation about yeah why is Philippines a leading hub for outsourcing without talking about the history and exactly yeah that that America taking control of the Philippines for all those years does play a huge role you're right and uh 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 U.S. 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 we've gone 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 it never stopped just because the u.s you know okay philippines you get your own government and president but the influence it never left they you know like yeah you're there you've got kids uh similar age to mine. I mean, what kind of stuff do they usually watch? 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 or subject in school

Which they are required to you know speak their own dialect and yeah that's uh that's how strong the influence of the us or americans here in the philippines and uh even my kids uh i i can really say that they've been influenced by the foreign media you know the news and all the the stuff that they watch like the cartoons and all other things are speaking english and they also speak english uh more uh so yeah and the kids too like before it was where uh like kids growing up they watched 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 they're just all day they're watching these American like influencers okay and so yeah what however it is like it's it's

that American influence so that's one reason because we're dealing with customer experience, and we've got to have empathy on the phone if we're doing a good job. And how do you relate to a customer that's on the other side of the world that you don't have much in common? But 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 movies, culture, you know, there's a lot of overlap. So, yeah. Yeah. the effectivity of it like you know when somebody calls you try to convince you to sell something and you know try to uh you know just to have a conversation um if you're an american and you're

listening to someone that you know who's struggling to speak uh english or or you someone who you don't understand um you know the the the barrier up, you know, you don't want to continue talking or, you know, just to get that being effective in how to talk to Americans, you know, you have to speak, you know, good English or at least they should understand what you're talking about. So, yeah, that's something that Filipinos have because we speak better English. And that's one thing that will make the business effective when you're working with Americans or trying to work, you know, expand the business for American consumers or American customers. So that's one of their reasons.

So we talked about history, the American influence. What are some of the other reasons that you've seen? Like, why is it you're 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 that 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 and i just

got to find a company that i can 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 other reasons why people automatically jump to the philippines of course when you do business you need to look for someone who has a really good uh you know work ethics we're very versatile also and um you know we can ethics. We're very versatile also. And 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 work ethics itself, it is part of the business where you can, you would want to to make people effective and efficient and what you do is that they should possess these kinds of you know things and yeah that's one thing and I believe that's the most important I mean second to you know the

the English speaking capability is to have that really good work ethics and also along with that in comparison to other countries who was doing the outsourcing Philippines has better interest 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 yeah mm-hmm you know and that that it's 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, when we started up Pacbiz 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 in outsourcing for the past several decades and within the last couple years there's been a huge boom in outsourcing to countries all over the world and so countries like in Central America in uh in in like places like Mexico and Colombia and in Africa in the Bahamas the

Caribbean's there's all these new places that were 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 infrastructure is not there. Or there might be challenges. And you wonder, why do businesses always cluster together? And you see these, like even in Dumaguete. It's because of the infrastructure.

There's good internet, good power. That's where you want your business to be. And it's a big deal because your power goes out and you can't take calls anymore yeah and um so i do that eric uh it's uh the wages and labor uh also of the philippines and our other countries who have been you know good places for outsourcing this that's what makes business grow like you're paying low wages and labor's to your workers who are also performing as to you as good as what you have there in the US so that's that's one yeah you know so that's one factor so and. So that's one factor.

So that's interesting too, because I want to do a little bit of comparing Philippines with some of the other countries. And again, that's how the Philippines really got their start in the outsourcing. And I think India as well is because of that low wage, low labor costs. And 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 that like Pakistan, for example, it's another country that's just starting to really

boom in, in outsourcing, but we're seeing firsthand effects. You know, what, what happens when the infrastructure isn't there, um, businesses they're, they're, they're getting the experience they're looking for, but maybe the calls drop all the time or they're having, like the agents can't take calls. So that's a big deal. But going back to the labor, so where do you see, like 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've got people that could manage things now manage the call center we lead these team of people and so now there's gonna be more money so what do you what trends do you think is gonna happen over the next five to ten years because of that? You know, I would like to compare Philippines to, you know, India and the other country. We mean the increase of labor costs for for Philippines and in comparison, we are, you know, not decreasing as fast as they do.

So the we yeah, on what i've read you know they we we are uh you know i believe that in in the coming years we are still considered as the the lowest cost for you know labor and wages and i think that's another advantage that we have. Probably because of other outsourcing countries like India, they have increased a lot higher compared to the Philippines. So that would affect the chain of labor. All over the country is increasing. So that's going to be at this advantage on their end, which makes the Philippines the most efficient

when it comes to outsourcing. Yeah. So the wages thing is interesting. And that, you know, it's great that you had some research to back up what you're saying because I assumed some things. And yeah, I guess that other countries,

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 u.s or uk everywhere you know in the last couple years home prices have doubled in some places you know grocery costs everything has gotten expensive well guess what that's the same thing in everywhere else in the world everything's gotten more expensive that is more groceries cost more school you know taking care of your kids costs more. So, um, so everyone needs to make more money too. So it's, it, it is go hand in hand. Um, so it makes sense to see that it is going up,

but that's also where you're also seeing these other countries come in it. But even then, you know, Philippines, I don't know, did you get any data on, um, how much the industry is expected to grow in the Philippines over the next couple of years no i haven't but the increase was uh we uh you know the you know it's big eric it's you know it's it you know it's indirectly affecting all other things here like the infrastructures um and you know the the the cost of living and in the in other areas because we need to improve also the transportation there's a certain number uh who you know amount of money that's being lost because of people are or being late working in the office and that's a big amount because they can't get to the office on time because uh traffic and yeah and that's a big amount because you can't get to the office on time because uh traffic and

yeah and that's that's a big problem yeah and that's that's the reason why uh the transportation also in the philippines uh is improving uh a lot improve there's you know the also we are we're providing more jobs to uh you know people who are working in the construction because we need more offices to accommodate all other businesses who are coming in 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 the Mugere, some hotels are being, they transitioned from, you know, having the hotel into an office.

Oh, really? Yeah, it's really effective. That's surprising. It is. It's so funny because in the U.S. right now, the opposite is happening because there's so many people in the u.s right now the opposite's 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 it is dropping there's businesses that are

actually shifting from um they were 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 a residential. This is in the news like just today. So it's, it is interesting where the shift is, you know, in the U.S. work from home. And I'm glad at Pacta is we got work from home. So, you know, some of those challenges, 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. All right. So Jake, you know, you're talking about the investment back into the Philippines and the impact. Now, the Philippines, because of this boom in outsourcing all these years, now they're investing back into, we talked about infrastructure, infrastructure, transportation.

You know, we're making it easier for businesses to do business in the Philippines, to hire people, 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 something that I saw here, because something that I think Philippines, Dumaguete, where we're based, and Phoenix, something they have in common, even though we're 7,000, 8,000 miles apart from each other, is we're both call center cities. Phoenix really had, this was one of those places in the country where there were call center jobs here all over. Now our industry has grown a bit, but growing up, I mean, even me, I worked in, I think I had two different call center jobs before I started my first business, which led to Pacbiz. Never thought I'd own my own call center. jobs before I started my first business, which led to Pacbiz.

Never thought I'd own my own call center. But the point is that what happens, what I've noticed here in Phoenix is those people that were my managers and supervisors back in the early 2000s are now leading teams or call center operations. 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 in 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 5,000 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, they're leaders at different call centers. And we're able to bring those people in.

And which, again, 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, they'll get that experience, too. But it's going gonna take a while. So that means that we could take on more challenging projects, bigger opportunities, and we're gonna 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 what do you think about that? Right now, we have estimated of 1.8 million Filipinos are working with the outsourcing business. That's a lot. And it will continue to increase in the coming years. And 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 here the owners

of buildings have recognized the potential of the outsourcing businesses like yeah you know knowing that others other who have been, they build their, they have their buildings and they want to, and now they are converting it to become an office for customers. They used to have this dormitory. I just recently, because I was looking around for buildings and they said that this was, we removed the walls just to accommodate and transition to become a call center office. Yeah, they recognize the potential and that's also one thing. These people are looking after what's going to come next and I know they see this business as you know the future of the country. That's great and it's great that I think because of

Philippines having the call center industry for the last couple decades now you've got people that they're 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 um 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, um, and which seemed like that was the theme of this episode is, uh, so that's, that's a big reason, you know, between the American influence, the,

and all of the, you know, learning English as a kid growing up, everybody's getting that, uh, 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 it's nice to see 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. Thanks, Eric. stories so i appreciate you doing that thanks eric and yeah hopefully uh uh we we can you know we this this is something that uh you know also shared to other people other companies about how effective filipinos are and the philippines also as well with with uh you know outsourcing business so

these are the things and uh that you can expect with uh with the business uh working work by filipinos so i hope this helped all right jake yeah well uh next episode i want to talk more about culture the philippines culture um talk a little bit about maybe some things to look out for if you're working with the Philippines for the first time. And 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 list there we can talk about next episode. Yeah, I believe we covered everything, Eric. All right.

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 is a hub. Why are people picking the Philippines to outsource? And so if you guys want to learn more, again, on this podcast, we talk about outsourcing, customer experience, managing a call center, anything all around in between that. anything all around in between that. And so thank you guys 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.