BPO Setup in the Philippines

The Business Process Outsourcing (BPO) industry has become one of the pillars of Philippine economy in recent years. The Philippines is regarded as the BPO capital of the world, with the industry employing over 1 million Filipinos, and enjoying a projected annual growth of 17%.

The world’s largest BPO companies, such as The Convergys Group, People Support, and Sykes Asia, have a massive presence in the Philippines. But it is not only these industry giants that have been sustaining the growth of BPO in the country. In many areas nationwide, small to medium-scale BPO operations have mushroomed, giving more employment and economic growth opportunities to people around the country. Local and foreign investors are also given excellent opportunities to be part of the ongoing boom in the industry.

While BPO encompasses various services, such as web development, animation, medical transcription and data entry, voice functions – better known as call centers – dominate the industry in the Philippines, and are projected to do so until at least 2020. The government continues to support the BPO industry with initiatives like the Philippine Economic Zone Authority, and a host of fiscal and non-fiscal incentives.

If you’re looking to put up a call center in the Philippines, you need the help of legal and financial experts who are intimately familiar with the industry. Whether you’re planning a small, medium or large-scale operation, we offer our expertise in all areas of the business, including the following:

Determining business structure

You have a wide range of choices on how to set up your business, as follows:

• Domestic corporation:
• Filipino-owned domestic corporation – has at least 60% Filipino ownership
• Foreign-owned domestic corporation – has more than 40% foreign ownership
• Foreign corporation:
• Branch office
• Representative office
• Regional headquarters
• Regional operating headquarters
• Partnership
• Single proprietorship

The BPO industry is one of the economic sectors where the government allows up to 100% foreign ownership of a domestic corporation, with as little as P5,000 in capital investment.

The business structure will determine the shareholders’ or owners’ liabilities over the business’s assets, debts, and obligations.

Determining registration with PEZA or BOI

The Philippine Economic Zone Authority (PEZA) and the Board of Investments (BOI) offer a slew of fiscal and non-fiscal incentives to companies who qualify for accreditation under either bureau. One difference is that PEZA-accredited companies have to locate in a PEZA Ecozone, while the BOI has no location restriction. You need to look into your operations and the incentives you can potentially get from either a PEZA or BOI accreditation, and determine where you can get the most benefits and enjoy more ease in doing business.

Company registration

In the Philippines, corporations and partnerships are registered with the SEC, and sole proprietorships with the Department of Trade and Industry (DTI). While it is easier to register sole proprietorships,  the sole proprietor may be susceptible to higher liabilities than when it is a corporation.

Registering a corporation or partnership with the SEC involves considerable documentary requirements, as well as processing with various government agencies. In addition to company registration, businesses must also acquire licenses with other agencies and local government units.

Finding the right location

One of the major factors to consider in setting up a call center in the Philippines is whether or not to locate in a PEZA Ecozone. Additionally, you need to look into the widely varying costs of doing business in different parts of the country, and balance these with other factors, like the availability of quality resources.

Planning and developing infrastructure

Equipment is essential to a call center, and makes up a large bulk of capitalization for the business. You will need computers, a telephone connection, a fast and reliable internet connection, office furniture, lighting and ventilation, and others. Equipment and technology needs can also influence your decision in your company’s location.

Developing company bylaws and policies

Company policies have to be aligned with relevant laws covering labor and employment, tax regulations and corporate activities. All these laws can be quite complex, and lack of compliance can lead to costly legal problems.

Recruitment and training

Human resources are integral to a call center operation. While call centers offer job opportunities to many Filipinos, they are also in tight competition against each other in finding and recruiting the most qualified employees. You need to come up with a scheme that will make your company more attractive to potential workers than the competition.

As a priority investment area, BPOs are also given special privileges when it comes to hiring foreign nationals for supervisory and technical positions. The opportunities these privileges present must be closely examined and exploited.