Did the Lives of Filipinos Really Improve Because of Philippine Outsourcing?
31 Mar

By Claire Ponsaran | Posted on March 31, 2017 at 4:07 AM 0 Comments

The business process outsourcing industry in the Philippines has been growing steadily for the past ten years.  Outsourcing to the Philippines began even before that, but it's only in recent years that we've seen surging growth rates in the industry.  The country has been among the world's top destinations for outsourcing, but has this made an impact on the social and economic lives of the Filipinos?

Indicators of Social and Economic Impact

A job in outsourcing promises a monthly pay that's higher than average.  That kind of salary is supposed to pull employees from the lower income group into the middle-class, or push them near the top of this economic bracket.  If this were true, then we'd see an increase in the number of Filipinos who think of themselves as middle-class and who have a lifestyle that's representative of this group.

Other indicators of outsourcing's impact on the lives of Filipinos include the quality of education provided by colleges and vocational schools, and the number of small-to-medium-sized enterprises that have sprung up to accommodate the needs of BPO workers.

Who are Middle-Class Filipinos?

Filipinos who belong to the middle-class income bracket has a household income between P30,000 and P80,000 each month.  This computation is based on 2012 figures unearthed by the Family Income and Expenditure Survey (FIES) of the Philippine Statistics Authority (PSA).  The survey results for 2015 did not show significant change in income inequality compared to 3 to 4 years ago.

A BPO worker who earns at least P22,000 each month and who is the breadwinner of his or her family may still be part of the lower middle income bracket.  But, a family of four that earns around P44,000 monthly is considered part of the real middle class.  Based on calculations by data analysts, Filipinos who earn monthly family incomes ranging from P15,780 to P118,350 belong to the whole breadth of the middle income bracket.

How Much Do Outsourcing Workers Earn?

Tech support and customer service representatives could earn on average P18,000 to P24,000 every month.  Meanwhile, top-level managers and trainers could earn more or less P50,000 monthly on average.

If employees lived and worked in urban areas other than Metro Manila, Cebu or Davao, then their salaries would be lower, ranging from P14,000 to P20,000 monthly, depending on their position, the account they're handling, and company size.

The two most important engines of growth of the Philippine economy—i.e., the remittances from the overseas Filipino workers and the earnings of the BPO/KPO sector—are powered by middle-class people.  Since the average earnings of OFWs range between $300 and $500 monthly, they are among the 51 percent of Philippine households belonging to the low-middle- or mid-middle-income families.  The same can be said about the vast majority of BPO workers who earn about P15,000 to P20,000 monthly on the average.

Most Filipino families have two or more salary earners.  Even if a call center agent in the province only earns P16,000 monthly, it will be enough to categorize his or her family as middle class as long as the other members bring home some money, too.

Did the Filipino Middle Class Benefit from the Growing Outsourcing Industry?

Based on the latest FIES results, an increase of 12% in annual expenditures is observed among households in the middle income bracket (respondents in the 5th, 6th and 7th decile) from 2012 to 2015.

The survey revealed about 41.9 percent of the total annual family expenditures for all income groups was spent on food.  Payments for housing and rent are the second highest expense for Filipinos. Expenses for public utilities, such as transportation as well as water, electricity, gas and other fuels, are the third highest.

All these are followed by miscellaneous goods and services.  This category of expenses may include expensive but necessary purchases, such as laptops and other mobile gadgets, data and network services, and inedible groceries, i.e. shampoo and soap.  In fact, a Kantar study revealed that Filipinos are buying more personal care products compared to previous years.

According to a Nielsen survey in 2014, the Philippines was among the top ten countries with the highest intention to acquire a car within the next two years.  A year later, the luxury car segment in the market saw a 35 percent increase in sales, and most of the customers were Filipinos.  The same growth can be observed in the sales of condominiums.

Nielsen conducted the Global Survey of Consumer Confidence and Spending in 2014.  The survey revealed that nearly one third of Filipinos (30%) have been spending some extra cash on local travel and vacations (up two points from the third quarter of the previous year).  Internationally, we see Filipinos have been busy traveling to other countries and spent close to 10 billion U.S. dollars in 2015 alone.

It seems that middle-class Filipino families are reaping the benefits of working in the outsourcing industry.  Most of them are employed as call center agents, but there are some who do specialized work for KPO companies.  A majority of Filipinos have been working from home as freelancers because of the rise of the gig economy on a global scale.  All these jobs paid well and this helped improved the quality of life of many Filipinos.


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Tags: business process outsourcing, knowledge process outsourcing, offshore outsourcing, Outsourcing, Philippine outsourcing industry, outsourcing in the Philippines, advantages to outsourcing, Philippine outsourcing, breakbpo

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