In the Philippines, the concept of outsourcing is common to most Filipinos in the corporate world. However, not everybody understands the difference between BPO (Business Process Outsourcing) and KPO (Knowledge Process Outsourcing).
For a lot of Filipinos, the two concepts are often interchanged. In fact, call centers would immediately come to mind when you mention “BPO” or “KPO.” So, if you want to start a business in the Philippines, it’s important to know what sets KPO in the country apart.
BPO vs. KPO: What’s the Difference?
Business Process Outsourcing refers to when large enterprises delegate support tasks and other workflows to third-party providers so that their headquarters can focus on their core business function. Such tasks include customer support, data processing, IT, and more. Most BPO jobs require low-level skills, as the job workflow can be taught during training.
On the other hand, Knowledge Process Outsourcing offers services that are directly related to the core business function of the parent company and requires higher skills and expertise. Some KPO services are insurance market services, legal services, animation, design, marketing, content creation, and other niche processes.
In a nutshell, traditional BPO heavily relied in the efficiency of basic, low-end processes, while KPO demands highly specialized skills and expertise in a certain field.
KPO in the Philippines
The outsourcing industry in the Philippines has significantly matured over the last decade and is constantly improving. Today, the outsourcing is evolving towards the higher-level services of KPO.
In 2016, KPO already comprised 34% of the country’s outsourcing industry, and the Information Technology and Business Process Association of the Philippines (ITBPAP) is seeking to increase that to 42% by 2017 to make up for the impact of automation and Business Process as a Software (BPaaS) products.
Today, the Philippines remains one to be of the top outsourcing destinations in the world, especially when it comes to voice and back-office services. It has also established itself in the fields of animation, design, content creation and publishing—making it a more attractive outsourcing destination for businesses of all sizes. In fact, non-voice services are already growing faster than traditional voice services.
Top KPO Services in the Philippines
Legal education in the west and the Philippines are highly similar, which is why legal and paralegal services in the U.S. are commonly outsourced to Filipinos.
As a previous American colony, the country also has a strong affinity to the west in terms of culture and laws. This KPO service often involves reviewing litigation and transactional documents, drafting contracts, research memoranda, due diligence, patent prosecution, and more.
This job entails its workers to have a professional law degree. Some companies even hire lawyers and attorneys from the Philippines even though they are going to be providing legal services to clients outside their license or jurisdiction.
Banking and Finance
For the past five years, banking and finance services have been the leading KPO offering in the Philippines. KPO vendors in the country provide underwriting, research and analytics, training and consulting, profit and loss, risk mitigation, and other BFSI-related (Banking, Financial Services, and Insurance ) services.
As such, it requires employees to demonstrate strong analytical and quantitative research skills, as well as in-depth knowledge in banking, taxation, and investment. Most would require a degree and license in accountancy.
Healthcare and Medical Services
The Philippines produces approximately 250,000 nursing graduates every year. Because the country has a large pool of registered nurses and nursing graduates, it is one of the top KPO destinations when it comes to healthcare and medical services.
The country also has a talent pool with a background or license in Medicine. The work involves health and wellness analysis, research and development of healthcare services, medical transcription, genetic profiling, diagnostics, and more.
Pharmaceutical Research and Development
Numerous Chinese research and development pharmaceutical firms prefer the Philippines for setting up offshore labs due to lower rental and operational costs compared to other international outsourcing destinations.
Pharmaceutical research entails a strong knowledge of drugs and clinical research, so it hires licensed pharmacists, medical doctors, or scientists with a master’s degree or doctorate. The work also entails genetic profiling, diagnostics, oncology tests, HIV tests, and allergy tests.
Animation and Design
The growth of the animation industry in the Philippines started way back in the 1980s when FilCartoons, Burbank Animation Inc. and Asian Animation provided animation exports to other countries.
By 2008, there were over 50 animation companies in the Philippines. According to the Animation Council of the Philippines, the global animation industry has been increasing by approximately 20 to 30 percent every year. This gives rise to the increasing demand for low-cost yet highly skilled animators.
As of 2010, there are over 10,000 Filipino animators employed in the country, and the number is steadily growing as the technology for the craft becomes more accessible to artists.
Content Writing and Development
Reports indicate that the Philippines is the third most represented country in freelance marketplaces with 1.3 million Filipinos. As a highly educated nation whose formal business language is English, Filipinos are excellent when it comes to content writing and development.
In this digital age where companies are investing in content marketing strategies, the Philippines is emerging as one of the leading outsourcing destinations for content production, digitization, editing and proofreading, and publishing.
Advantages of Setting Up KPO in the Philippines
In the Tholons 2017 Services Globalization Index, the Philippines ranked third on its list of Top Digital Nations, while Manila placed 4th in its list of Top Super Cities.
With the KPO industry growing steadily, there has never been a more perfect time to start a business in the Philippines.
Cost Effectiveness and Efficiency
Lower wage rates, lower rental fees, a healthy real estate industry, and the overall cost of living compound the cost-efficiency of starting a business in the Philippines. An IBPAP report reveals that the labor cost for English-speaking workers in the country is among the lowest in the world.
Its low-cost transportation and telecommunications systems are continually improving, too. Telecommunications and technology companies in the country are continuing to expand to provide the nation faster, more reliable, and more secure networks.
Just check out these case studies that demonstrate how other client companies have added value to their business through knowledge process outsourcing in the Philippines.
Highly Educated and Technically Skilled Workforce
Filipinos value education. According to the Commission on Higher Education, there are over half a million students who graduate college each year. In 2015, there were 656,284 college graduates. This year, the country produced over 1 million college graduates who joined the labor force.
According to the Professional Regulations Commission, the country boasts of approximately 100,000 CPAs, 95,000 physicians, 26,000 electrical and communication engineers, and 22,000 chemical engineers (2006). That census doesn’t even include the nurses, teachers, lawyers, and other professionals that contributed to the statistics through the years.
NSO and CHED claim that in 2010, the country had 119,378 graduates in the medical, natural sciences and allied science; 117,339 business and accounting graduates; 68,811 social and behavioral sciences graduates; 50,734 engineering and architecture graduates; 47,928 IT and mathematics graduates; and 12,269 fine arts, mass communications and humanities graduates.
This shows how Filipinos are capable of handling highly analytical and intellectual tasks in various fields of expertise. As educational attainment is one of the most important requisites in the KPO industry, graduates from Business Administration, Healthcare, Information Technology, and Communication Arts will be qualified for a position.
Adaptability and Hospitality
Filipinos are known for their adaptability and hospitality, having been colonized by Spain, America, and Japan. As a result, the culture of the nation has evolved with a mix of cultures from various influences.
Its people have been greatly exposed to western culture. English is its formal language of business and education, so proficiency in the language is not a question.
As hospitable and accepting people, Filipinos collaborate well with foreigners. After all, it has been part of the socio-economic landscape for hundreds of years.
Local Government Support
The Philippine government recognizes the importance of KPO in retaining its skilled workforce and cultivating the creativity of its citizens. As such, they are offering their full support.
The Bureau of Investment (BOI) is strongly promoting foreign direct investment and are offering tax incentives, economic zones, and more incentives for its foreign investors. The country has a predictable and manageable inflation rate—thanks to the steady remittances of OFWs, numerous foreign direct investors, and efficient central banking system.
Filipinos are hardworking and industrious. They continuously make an effort to improve themselves both personally and professionally. Such values cannot be taken for granted in business and will prove profitable. When you choose to invest in the Philippines through KPO, you are getting the best value for your money.
Make the most of the KPO growth and start a business in the Philippines now. For more information, consult with EnterPh here.