It used to be that only the largest corporations routinely established offshore teams. Not anymore. In the current economic climate, small and medium-sized enterprises (SMEs) can particularly benefit from the savings and increased productivity that result from establishing an offshore workforce.

The growth of Australia’s business and startup communities over the past decade has contributed to the country’s outsourcing industry’s meteoric rise to new heights. According to data from the Australian Bureau of Statistics, the number of small businesses in the country has increased by over 20% since 2014, reaching a total of 3.8 million in 2022.

This growth has been driven by a range of factors, including an increase in the number of young people starting businesses, as well as a shift towards entrepreneurship as a career path for many professionals. The government has also played a role in supporting this growth through initiatives such as the New Business Assistance with Neobanks program, which provides grants to help new businesses get started.

This boom in startups also led to a boom in outsourcing, to be specific, offshoring business tasks to the Philippines.

Many Australian companies outsource their work to the Philippines because of the many similarities that exist between the two countries. Many businesses in Australia today rely on offshoring for an entire range of business services, from information technology and engineering to customer support.

The Philippines is the best option for Australian businesses looking to hire remote workers. The Philippines, with its population of over one hundred million, is quickly becoming a major source of human resources for multinational corporations.

It has been estimated that 220,000 people are employed by Australia’s outsourcing industry, which has a total value of about $AUD12.9 billion (USD9.2 billion). Despite its size, this is a sizable chunk of the worldwide outsourcing industry.

Meanwhile, the Philippines currently holds about 16.5% of the worldwide outsourcing market, as stated by the Philippines Outsourcing Industry Roadmap 2022. After India, the Philippines is now the world’s second-largest provider of outsourcing services.

Why do Australian companies outsource to the Philippines?

There are several reasons why Australian companies choose to outsource to the Philippines:

Lower Costs

Investors aren’t surprised to hear that companies of all sizes from around the world outsource to the Philippines. Reasons for this include the fact that Filipino labor is both high-quality and inexpensive.

For instance, web development, a high demand business task for website setup and maintenance. The cost of web development services can vary significantly based on a number of factors, including the complexity of the project, the skills and experience of the developers, and the location of the company or individual providing the services.

Indeed reports that in Australia, the starting rate for a developer is $48.39 per hour, but in reality hourly rates are $100-$200+ per hour. Costs for an entry-level offshore developer in Asia start at $12-15 per hour, while those for a senior offshore developer top out at $35.

Shortage of onshore employees

As a result of two years of strict border controls and an exodus of holiday workers and foreign students, corporate Australia is finding it difficult to fill jobs and keep firms running.

New data on Australia’s outsourcing industry from IBISWorld’s 2021 forecast showed that the $37.8 billion Australian BPO market had been forecast to decrease by 1.2% in 2019–20 and by another 2.0% in 2020–21.

Today, Australian businesses are adjusting and domestic outsourcing is rising again, but many businesses are developing a mix of both onshore (local talent) and offshore, affordable service providers. The pandemic has clearly hampered industry profits. Post-pandemic, the local skill shortage and the cost-savings being too good to pass up contributes to the rise in offshoring.

Coverage over multiple time zones

Australia is just two to three hours ahead of the Philippines, which means there is minimal time lag when working with an outsourced team. This can be beneficial for companies that need to communicate with their team in real-time.

It is also important to have clear communication channels in place, such as using messaging apps or video conferencing, to allow for easy communication between team members during off hours.

English language proficiency

Filipinos are fluent in English and use it in their daily lives. Australian companies who outsource to the Philippines appreciate the fact that Filipinos speak English with a very neutral accent.

Similar work values

Filipinos are noted for their work ethic, integrity, and friendliness. These values provide an excellent workplace for the entire company. Filipinos don’t skip having fun despite their stringent work ethics.

Skilled workforce

The Philippines has a large pool of highly skilled and educated workers. Beyond IT and customer support, the biggest niches in outsourcing, Filipinos are talented in social media management, content marketing, advertising, graphic design and much more.

Cultural compatibility

The Philippines and Australia share similar cultural values and work ethics, which can make it easier for Australian companies to work with Filipino outsourced teams.

Government incentives

The Philippine government offers various incentives to companies that outsource to the country, including tax breaks and access to special economic zones.

Data privacy

Outsourced workers located remote from the main office are a potential security risk, which is a major worry for many businesses. The outsourcing companies in the Philippines, however, do a fantastic job of protecting their customers’ private information.

What types of services do Australian companies outsource?

Australian companies often outsource a wide range of business functions, including:

IT services

Application (app) and software creation, website development, the upkeep of existing databases, and technical support are just some of the IT services that many Australian businesses contract out to the Philippines.

Customer service

The ability to adapt to changing customer service demands is a huge boon to any business. Phone, email, and Instant Messenger (IM), live chat customer support make sure you’re in touch with your customers when they reach out. Australian businesses give round-the-clock assistance to their clients and customers by outsourcing helplines and email ticketing platforms to the Philippines, boosting their client happiness and loyalty.

Human resources

Many Australian companies outsource their Human Resources (HR) functions, including payroll, benefits administration, and employee training. Outsourcing HR to the Philippines saves on labor costs, as wages and other benefits are generally lower in the Philippines compared to Australia.

Marketing and advertising

The marketing and advertising tasks of certain businesses are contracted out to agencies and other third-party suppliers. Outsourcing marketing and advertising to the Philippines allows Australian companies to be more flexible in their operations and to scale up or down as needed.

Marketing and advertising agencies have specialized knowledge and expertise in their field. By outsourcing, companies can access a team of professionals who have the skills and experience to effectively market and advertise their products or services.

Legal services

Certain businesses choose to delegate their legal work to outside law firms or to individual attorneys. Outsourcing legal services can often be more cost-effective for Australian companies than hiring in-house legal staff, particularly if the company only requires occasional legal support.

Some legal tasks may require specialized knowledge or skills that may not be available within the company’s in-house team. Outsourcing allows companies to access these skills on an as-needed basis.

Logistics and supply chain management

Outsourcing logistics and supply chain management can help Australian companies reduce costs by leveraging the economies of scale and expertise of third-party logistics providers. This can lead to lower transportation and warehouse costs, as well as reduced inventory and handling costs.

Third-party logistics providers have specialized systems and processes in place that can help companies streamline their logistics and supply chain operations, leading to improved efficiency and productivity.

Bookkeeping and Accounts

A bookkeeper, AR/AP clerk, or AP/AR specialist can be hired from the Philippines for as little as $7 an hour. It is expected that our candidates would be familiar with Australian accounting practices and software such as Xero, MYOB, and Quickbooks.

Web Development and Graphic Design

Employing technical personnel from abroad is less of a challenge than ever before thanks to remote project management tools and cloud-based platforms. Web developers, system administrators, and designers are all valuable assets to have on staff.

Content Writing

Getting your message over to your intended audience is a top priority, thus spending some time crafting the perfect phrases to get noticed is essential. Utilize the services of a skilled virtual writer to create some or all of your content needs, ranging from websites and newsletters to blogs, brochures, and presentations.

Filipino writers are adept at connecting with target audiences in fluent English.

Social Media

The assistance of a virtual assistant in managing social media is invaluable. Posting content, handling comments, and scheduling content are all regular tasks outsourced to the Philippines.

The specific social media services that companies choose to outsource can vary widely depending on their industry and specific needs.

What Australian companies outsource in the Philippines?

Some Australian companies that outsource in the Philippines include:

ANZ Banking Group

ANZ Banking Group outsources a variety of functions to the Philippines, including customer service, technical support, and data entry. They also outsource finance and accounting tasks, such as payroll processing and account reconciliation. Additionally, ANZ Banking Group may outsource software development and IT support to the Philippines.

Optus

Optus has put money into improving its infrastructure, training its employees, and reducing its environmental impact. Optus is dedicated to providing Australians with options and maintaining their connectivity.

National Australia Bank

This bank outsources customer service, mortgage processing, and other banking operations to the Philippines.

Ausgrid

This electricity distribution company outsources some of its customer service and technical support to the Philippines.

Star News Group

Since the introduction of Internet material and journalism, competition in the media industry has heated up. The Philippines excels in both the conceptualization and execution stages of content production.

The Philippines is an ideal location for a media corporation to house a remote crew to manage all operations.

Canva

The software company allows aspiring graphic designers to create their own graphics easily and swiftly. More than sixty designers, content creators, writers, engineers, and customer specialists make up their Manila-based workforce.

Macquarie

Macquarie Group Services builds worldwide teams to find talent, possibilities, and cost efficiencies. Macquaries can outsource technical financial services roles and nontechnical work.

All of the aforementioned factors are only the tip of the iceberg when it comes to why Australian companies outsource to the Philippines.

In addition to helping the industry as a whole make more money, outsourcing is fantastic in its efficiency for meeting your company’s operational requirements.