Outsized Outsourcing Opportunity in the Philippines?

India has long been seen as the country of outsourcing – nearly $100 billion in revenue last year can be attributed to it, but those days might be drawing to a slow but steady close according to this article from U.S. Global Investors. The article explains how the Philippines does have a history of outside money filtering in through workers travelling working in other countries and sending their earnings home, but now more workers are staying in country and working as an outsourcing resource. The expansion of call centers, IT outsourcing groups and others “bloomed in recent years”, and the article indicates that this growth isn't likely to slow anytime soon: <em>CLSA finds that the Philippines is “increasingly being established as the favored service center, along with India” for outsourcing. Multinational companies are choosing to be in both locations. Three hundred multinational companies are currently involved in the outsourcing business in the Philippines, says CLSA. Attracting these multinational companies will become easier for the outsourcing companies, as the cost of capital has recently been significantly reduced. In the past, the Philippines had “one of Asia's highest cost of capital.” In late 2011, the real lending rate was 1.5 percent compared with the 10-year average of 4.2 percent. According to CLSA, bank lending increased 19 percent year-over-year in July 2011, “the fastest growth since March 2009.” A mix of government spending, narrowing budget deficit, and rising export numbers means the Philippines will be able to expand and heed the call of companies who look to outsourcing as part of their business plan. With an increase in capabilities and outsourcing centers, the Philippines may very well take India's reputation as the place to go for reliable, efficient workforces.

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