For the last couple of decades, most global brands and enterprises have set up offshore offices around the world. As one of the top outsourcing destinations in the world, the Philippines is a known hub for offshore offices, where companies can take advantage of lower business costs and a highly talented workforce.
In the west, for example, goods and services are expensive because of the costly labor required to produce and distribute them. On the other hand, a developing country such as the Philippines, offers a vastly inexpensive labor pool that allows businesses to produce goods and services at a lower cost. As such, factories and offices are relocated to low-cost economy countries to take advantage of the cost differentials.
If you want to start a business in the Philippines, here’s a comprehensive guide about setting up an offshore office.
Why Set Up an Offshore Office in the Philippines?
There are a number of reasons business owners and foreign investors choose to start a business in the Philippines. Through the decades, the country has become a trusted offshore location for some of the biggest brands and enterprises in the US, Australia, and the UK.
Here are some of the top reasons you should set up an offshore office in the Philippines.
1. Top 3 Digital Nation
The Tholons 2017 Services Globalization Index puts the Philippines 3rd on its list of top digital nations, while Manila is ranked 4th on their list of top super cities.
This list of top outsourcing destinations in the world uses digital innovation as its primary gauge and also reviews start-up diversity, start-up ecosystem and government incentives to promote entrepreneurship and digital transformation.
2. Globally Competitive Workforce
In the Philippines, English is the language of instruction in schools and the primary language used in business. You may have already heard or discovered firsthand how most Filipinos speak English well.
Their culture as a people has also been greatly influenced by the West, so working with your offshore office staff in the Philippines can be as easy as working with a local contractor.
The workforce in the Philippines is some of the best in the world. They are highly educated and experienced professionals in their chosen fields. Additionally, Filipino workers are known for their dedication and diligence when it comes to work.
3. Better Control Over Business Operations
Some businesses choose to outsource their business functions to remote workers or freelancers. While this may save them overhead costs, it doesn’t afford them control over the quality of work produced by team members.
When you set up an offshore office in the Philippines, you can better control the daily business operations and manage the sharing of knowledge within your team.
You can expect a higher level of discipline and commitment from your staff members in an offshore office rather than remote workers you’ve never personally met.
4. Geographical Advantage
An archipelago situated by the equator in Southeast Asia, the Philippines boasts of a tropical rainforest climate. This makes it an ideal business location—no harsh winters or unbearable summers that the labor force needs to endure.
Its strategic location makes it a critical entry point to over 500 million people in the ASEAN market. The country boasts of international shipping and air lanes suited for European and American businesses.
5. Technological Innovation
When it comes to digital innovation, Filipinos are never far behind. Telecommunications companies, internet service providers, real estate developers, airlines, and transportation services are constantly pushing their limits to ensure that the country keeps up with the newest innovations available.
Central business districts and developed cities such as Manila, Cebu, Davao, and more all boast of readily available office spaces that are equipped with state-of-the-art infrastructure.
All these advancements in the Filipino way of life and business have greatly contributed to the success of the IT-BPO industry in the country and the economy in general.
How to Set Up an Offshore Office in the Philippines
There are three different ways you can set up an offshore office in the Philippines.
- You can hire a BPO company that will do everything for you—from setting up your office to managing day-to-day operations.
- You can get into a seat-leasing deal, where all you need to do is pay a per-person fee to house your staff in a shared office space and handle the payroll arrangements.
- You can DIY it. Complete the paperwork yourself, rent an office space, hire your own people, and start a business in the Philippines.
The model you choose depends on the type of business or operations you need. If you want to have full control over your offshore office, then you may want to do everything yourself. Of course, you can have a team of business consultants who can help you along the way.
Here are the things you need to accomplish to set up an offshore office and start a business in the Philippines.
1. Business Registration
Companies in the Philippines may be registered as a foreign branch, a foreign representative office, a 100% foreign-owned domestic corporation, a 60/40 owned domestic corporation, a partnership, or a sole proprietorship.
The pertinent government agencies in the Philippines you need to register with may include the Philippine Securities and Exchange Commission (SEC), the Department of Trade and Industry (DTI), and the Bureau of Internal Revenue (BIR).
Some foreign-owned companies are also eligible for tax incentives and government issued exemptions from the Philippines Economic Zone Authority (PEZA) and the Board of Investments (BOI).
You may want to talk to a local business consultant or corporate lawyer to make sure that you start a business in the Philippines correctly.
2. Choose an Office Space
After completing the necessary business registrations and permits, you can now look for an office space in the city of your choice.
Within the Metro Manila, you can find several cities to your liking. These include the areas of Makati, BGC, Ortigas Center, Alabang, Eastwood City in Quezon City, or Mandaluyong. You can also consider large cities outside the Metro such as Davao and Cebu, depending on the nature of your business.
Some office spaces for rent are already equipped with the necessary furniture, IT infrastructure, and hardware. However, it would be best if you can customize your own office space that will work best for your particular business needs.
3. Internet Service Provider Coordination
There are several internet service providers in the country, and while they are updated with the latest technologies, not all ISPs provide good service to all areas in the country.
As such, it’s important to choose the right ISP that can provide the right bandwidth and speed that your new offshore office needs.
4. Workstation and Hardware Purchase and Setup
No office is fully productive without reliable and stable hardware. The workstations in your office are where your employees produce the necessary output for the successful operations of your offshore office, so furniture design and layout matter. Set up your workstations along with the necessary hardware each employee will need.
IT engineers and business consultants can help you identify, purchase, and setup the appropriate office desks or cubicles along with the computer hardware, networking equipment, and high-speed internet connection, WAN, LAN, VPN, or a VOIP system as needed.
Factors to Consider in Setting Up an Offshore Office in the Philippines
Your offshore office in the Philippines is now ready for its daily operations. But, before you officially launch your new business operations, make sure that you’ve considered these important factors.
1. Strategic Location
A great location is one of the top factors to consider when you start a business in the Philippines. Accessibility, parking, and traffic need to be taken into consideration.
Research shows that 29% of employees show up late to work at least once a month, and nearly half of them cite gridlock and traffic as an excuse.
Choose a strategic location that’s accessible by public and private transportation to make it easy for clients and employees to go to the office.
Determine the budget you can spend on the office space, workforce, infrastructure, and equipment. This will help you properly allocate funds when you’re choosing the location and customizing your office space. The cost also impacts the net income of your business and determines the level of reserves it can manage.
You also need to ensure that your new office is not burdened with inflated office lease, unnecessary expenses or other additional charges. This will help you prevent your business from spending more than what you can actually afford. It is also important that you don’t settle with a substandard office space in a poor location and working environment.
3. Time Zone Difference
Consider the time difference between your headquarters, other offshore offices, and your office in the Philippines. You may need to adjust the working hours of your employees, especially if they need to work closely together with HQ or need to service customers in a different time zone, as is the case with most call centers and BPO companies in the Philippines.
Hiring and recruitment is critical to the success of any company. Without talented and dedicated employees, no business will ever thrive. Consider the number of employees you want to hire and if your remuneration costs are enough to cover as many people in your team.
Then, determine whether you want to handle recruitment on your own or want to partner up with a recruitment firm. The main advantage of working with a recruitment consultant is speed and skill fit, as recruitment firms already have a talent pool they can tap for particular positions. Furthermore, a recruitment firm ensures that you have the perfect fit in terms of educational and professional background, skills, and work culture.
5. Staff Training and Retention
One of the worst scenarios of offshoring is investing in the training of employees only to receive their resignation letters within just a few months of service. So, you end up hiring another batch of employees, and the vicious cycle continues.
This is why it’s important to have an employee training and retention strategy in place. It will not only prevent attrition, but will also keep your employees engaged and satisfied, thereby amplifying productivity and performance.
6. Data Security
Data infiltration can destroy your whole operations, as well as the reputation of your business. An IT consultant and data engineer can help you ensure security, especially if you’re handling sensitive or confidential client information.
Setting up an offshore office in the Philippines doesn’t have to be too difficult for foreign investors and brands. Talk to a business consultant or partner up with an outsourcing company to make the process smoother and quicker. Start a business in the Philippines this 2018.