26 Jul 2023 – PHL slips 3 spots in global ranking of destinations for outsourcing business services

July 26, 2023 | 12:32 am

By Revin Mikhael D. Ochave, Reporter

THE PHILIPPINES has dropped three spots in a global ranking that measures the attractiveness of countries as a destination for offshore and outsourcing services, according to a report by global management consultancy firm Kearney released on Tuesday.

In Kearney’s 2023 Global Services Location Index (GSLI), the Philippines slipped to 12th out of 78 countries in terms of attractiveness as an offshore location of business services, from 9th spot in the last index in 2021.

“The Philippines continues to be the business process outsourcing (BPO) engine of Asia,” Kearney said, adding that it is home to over 1,000 BPO firms that employ over 1.2 million.

However, the Philippines dropped out of the index’s top 10, replaced by Mexico.

“(Philippines) slipped three spots in this year’s GSLI, primarily because of the rise of Mexico and Colombia as nearshore capability centers with proximity to the United States,” it said.

India topped the index, followed by China and Malaysia.

“Overall, the top three countries — India, China, and Malaysia — continue to lead thanks to their immense cost advantage, abundant talent pool, and strong skills,” Kearney said, adding that India and China showed strong talent regeneration capabilities.

The rest of the top 10 included Brazil, United Kingdom, Indonesia, Vietnam, United States, Thailand, and Mexico.

Kearney’s biannual index measures four dimensions consisting of financial attractiveness; people skills and availability of the workforce; business environment; and digital resonance.

For the 2023 ranking, the Philippines had an overall GSLI score of 5.65. The country had a score of 2.77 in financial attractiveness, 1.30 in people skills and availability, 1.09 in business environment, and 0.50 in digital resonance.

Arjun Sethi, Kearney Asia-Pacific region chairman, said that talent regeneration, or the country’s ability to rapidly reskill to meet changing demands is vital to maintain and improve an offshore location’s attractiveness.

“A country’s ability to reskill and redeploy its workforce in response to changing market demands and technological disruptions is key to improving its attractiveness as an offshore location for business services,” Mr. Sethi said in a separate statement.

Jack Madrid, Information Technology and Business Process Association of the Philippines  president, told BusinessWorld he was not surprised the Philippines’ ranking slipped as other locations are improving.

“Because of the strong demand for totally offshoring business, there is also an attraction for locations that are closer to North America. That’s why you have countries like Mexico, Colombia, and Costa Rica, although they are much smaller in scale compared to the Philippines and India, they’re also growing their share of the global IT-BPO market,” Mr. Madrid said via mobile phone interview.

“We should just focus on our strength because we are a leader in customer experience. We are the world’s number one experience hub, maybe not in number but in reputation and country branding,” he added.

Mr. Madrid said the drop in the Philippines’ ranking serves as a reminder to implement workforce upskilling and reskilling to meet the surging demand and new technologies such as artificial intelligence.

“As we go on this digital transformation journey, the skills needed will be more digital in nature and that is what we need to focus on. Let’s not worry too much about surveys. But it is a reminder of the need to upskill and reskill. Technology is moving very fast,” Mr. Madrid said.