Manila - the capital of Philipines and one of major asian IT hubs

The Philipines and an outsourcing

The Philippines has emerged as a leading destination for IT outsourcing, catering to a diverse range of international clients. Over the past few decades, the country has witnessed remarkable growth in its outsourcing industry, establishing itself as a global player in the field. The history of IT outsourcing in the Philippines is a testament to its strategic advantages, skilled workforce, and supportive business environment.

In the late 20th century, the Philippines capitalized on the global trend of outsourcing and successfully positioned itself as a top outsourcing destination. The country’s journey in the outsourcing industry began with the recognition of its strengths, such as a large pool of skilled professionals, proficiency in the English language, and a favorable business climate.

As the demand for IT outsourcing services grew, the Philippines adapted and expanded its offerings to cater to a wide array of IT functions. Initially, the country focused on providing business process outsourcing (BPO) services, including call centers and back-office operations. However, as the IT industry evolved, the Philippines ventured into IT outsourcing, providing services such as software development, quality assurance, system maintenance, and technical support.

The success of the IT outsourcing industry in the Philippines can be attributed to several key factors. Firstly, the country’s education system produced a well-trained and skilled workforce, equipped with the necessary technical knowledge and expertise. Additionally, the Philippines has a high literacy rate and a cultural affinity for Western nations, making it easier to communicate and collaborate with international clients.

The Philippine government played a crucial role in fostering the growth of IT outsourcing. It implemented policies and incentives to attract foreign investments, established specialized economic zones, and developed infrastructure to support the industry’s expansion. These initiatives created a favorable business environment and positioned the Philippines as a reliable and competitive outsourcing destination.

The COVID-19 pandemic further highlighted the resilience of the Philippine IT outsourcing industry. The sector quickly adapted to remote work arrangements, ensuring uninterrupted service delivery to global clients. This adaptability and agility have further solidified the country’s reputation as a trusted outsourcing partner.

In conclusion, the history of IT outsourcing in the Philippines is a testament to the country’s strategic advantages, skilled workforce, and supportive government policies. The growth of the industry has not only contributed to the country’s economic development but has also positioned the Philippines as a key player in the global outsourcing landscape.

Early Beginnings of IT Outsourcing

The roots of IT outsourcing in the Philippines can be traced back to the 1980s when multinational companies began to explore offshore opportunities for cost-effective IT services. At this time, the Philippines possessed a solid pool of skilled IT professionals, largely due to its strong education system and English-speaking workforce. The country’s strategic geographical location and cultural affinity with Western nations further made it an attractive destination for outsourcing.

During the 1980s and early 1990s, the Philippines primarily focused on providing Business Process Outsourcing (BPO) services, such as call centers and back-office operations. However, as the IT industry evolved, the Philippines recognized the need to adapt and expand its services to include IT outsourcing. This shift was driven by the government’s efforts to promote IT development and the emergence of more advanced technologies.

Rise of the Philippine IT-BPO Industry

In the late 1990s and early 2000s, the Philippines witnessed a significant surge in IT outsourcing activity. The government actively supported the growth of the IT-BPO (Information Technology-Business Process Outsourcing) industry by implementing policies that fostered a favorable business environment. Various economic incentives, such as tax breaks and infrastructure development, were introduced to attract foreign investment.

The year 2000 marked a significant milestone with the passage of the E-Commerce Act, which provided a legal framework for electronic transactions and bolstered confidence in outsourcing services. Subsequently, major global companies started to establish their presence in the Philippines, creating jobs and boosting the country’s economy.

One of the key catalysts for the industry’s growth was the availability of a skilled and educated workforce. The Philippines boasts a high literacy rate and a large talent pool of IT professionals, many of whom were proficient in English. This language advantage allowed the country to cater to the needs of English-speaking markets, particularly the United States and Australia.

Expansion and Diversification

As the Philippine IT-BPO industry gained momentum, it expanded beyond traditional call center services and ventured into more complex IT outsourcing domains. Companies began to outsource various IT functions, including software development, quality assurance, system maintenance, and technical support.

The year 2003 witnessed a significant turning point with the establishment of the Philippine Cyber Corridor (also known as the “Silicon Valley of the Philippines”) in Metro Manila. This dedicated IT zone provided world-class infrastructure, technological support, and tax incentives to attract global IT companies. It became a hub for innovation and collaboration, further solidifying the Philippines’ position as a leading IT outsourcing destination.

The industry’s growth was further accelerated by the global trend of cost optimization and the increasing need for specialized IT skills. The Philippines leveraged its strengths in the areas of customer service, software development, and IT infrastructure management to attract a wide range of clients from diverse sectors, including finance, healthcare, and telecommunications.

Emergence of Knowledge Process Outsourcing

In recent years, the Philippines has witnessed a shift towards Knowledge Process Outsourcing (KPO), which involves outsourcing higher-value services that require specialized knowledge and expertise. This transition has been driven by the country’s investment in education and the development of a highly skilled workforce.

The Philippine government, in collaboration with various industry stakeholders, has focused on developing educational curricula that align with the evolving needs of the IT-BPO sector. This emphasis on education and training has helped create a talent pool capable of delivering complex and knowledge-intensive services, such as research and development, data analytics, and financial services.

Current Landscape and Future Outlook

Today, the Philippines stands as one of the top IT outsourcing destinations globally, competing with countries like India and China. The country’s IT-BPO industry has become a major contributor to its economy, generating employment opportunities and attracting foreign investments.

The COVID-19 pandemic, while posing initial challenges, also highlighted the resilience of the Philippine IT-BPO industry. The sector quickly adapted to remote work arrangements and accelerated digital transformation efforts, ensuring uninterrupted service delivery to clients worldwide. This flexibility and adaptability have further enhanced the country’s reputation as a reliable outsourcing partner.

Looking ahead, the future of IT outsourcing in the Philippines appears promising. The government continues to prioritize the development of the digital economy, investing in infrastructure, improving connectivity, and promoting research and innovation. The industry is also diversifying into emerging technologies such as artificial intelligence, blockchain, and cloud computing, positioning itself to cater to evolving client needs.


The history of IT outsourcing in the Philippines is a remarkable tale of growth, adaptation, and success. From its early beginnings as a BPO provider to its current stature as a leading IT outsourcing destination, the Philippines has capitalized on its skilled workforce, language advantage, and supportive business environment.

The country’s commitment to education, investment in infrastructure, and proactive government policies have played a pivotal role in attracting global companies and stimulating economic growth. As the industry continues to evolve and embrace emerging technologies, the Philippines is well-positioned to remain at the forefront of IT outsourcing, contributing to its economy and establishing itself as a global leader in the field.

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