Since overtaking India a few years ago in the race for offshoring supremacy, the Philippine outsourcing industry continues its progressive momentum without any traces of slowing down. And now it stands to be a major beneficiary of one of the most important trends in Asia.
According to a recent report, the World Bank has identified the Philippines as a major beneficiary of an aging Asia in its latest East Asia and the Pacific (EAP) Economic Update.
Other Asian countries are experiencing a shift, characterized by their aging population. This can cause a decline in their workforce which, consequently, can greatly affect the economy and growth. This megatrend contrasts the Philippines’ younger workforce.
The World Bank’s EAP chief economist Bert Hofman stated in a videoconference that the Philippines’ young and well-educated workforce will serve as the primary factor that will motivate more companies to expand to the country. This includes companies that are looking to adopt Philippine outsourcing as a business strategy.
The effects of an aging population
An aging population can be attributed to declining birth rates, rising life expectancies, and increases in immigration. It’s a global issue that can have adverse effects on a country’s economy.
For the most part, an aging population also means an aging workforce with a large portion of laborers rapidly approaching the age of retirement. This can cause a shortage in the number of available workers and an increase in government spending, a majority of which is delegated to healthcare and pension for retirees.
With a weakening workforce, international businesses may instead opt to look to other nations as expansion or outsourcing destinations.
Philippines outsourcing amid the aging nations
The EAP Economic Update reports that the population in East Asia is aging faster than any region in history. The countries reported to have an aging population includes China, Korea, and Japan, while younger nations like Indonesia and Vietnam are also supposed to start to rapidly age in the next 10 years.
During this same period, the World Bank’s lead economist Rogier van den Brink says that the Philippines can expect more businesses to either establish offices within local shores, or at least conduct visits to study its investment climate as a relocation destination. The multiple investment upgrades the country’s economy received during the past couple of years will definitely make it an attractive destination for investors.
Van den Brink also adds that this business growth and rising interest to invest in the Philippines is actually happening right now in the Philippine outsourcing industry, which has been consistently posting 20% annual growth in the past few years. This is largely because the business process outsourcing (BPO) sector is predominantly populated by young, well-educated workers.
“You have a young labor force and that young labor force will continue to grow in the next years or so, so over the next five to 10 years, you will have an advantage over the rest of the region in terms of having a younger labor force than they.” van den Brink says. “And I think already you can see what this is doing, this BPO sector which is growing so fast here is basically based on young people with college education. So we expect that to continue.”
An aging Asia as the most important megatrend in the region, obviously presents big opportunities for the Philippines. Aside from its continuously growing BPO sector many other industries, especially manufacturing, also stand to get a significant boost.
Open Access BPO is one of the fastest growing companies in the Philippines outsourcing industry today. To find out more about us and our service, visit our website or join us on Google+.
