Only 8.6% of Philippine firms outsource to 3rd parties: survey

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Thursday, July 10, 2014

FIRMS with foreign equity or are wholly foreign-owned are more likely to outsource, a survey conducted by the Bureau of Labor and Employment Statistics (Bles) found.

In surveying 26,253 establishments in the Philippines with 20 or more workers, Bles found that the proportions of firms engaged in off-site outsourcing was twice higher in firms with foreign partners or fully-owned by foreigners compared with Filipino-owned establishments.

The survey, conducted in June 2012, found, however, that outsourcing, contracting or subcontracting of a business process to a third party is not widely practiced in the country.


Survey results showed that only 8.6 percent of total establishments surveyed resorted to outsourcing, contracting or subcontracting.


The bulk of firms engaged in such activities were confined to manufacturing (29.7 percent), wholesale and retail trade and the repair of vehicles (21.3 percent), both of which accounted for over half of total establishments that outsourced. Other industries that resorted to outsourcing were accommodation and food service (7.8 percent) and electricity, gas, steam and air conditioning supply (6.9 percent).

While there were more establishments that had 20 to 99 workers, the proportion of establishments engaged in off-site outsourcing was reported higher in firms with workers between 100 and 199.

Establishments that export or partly export engaged more in outsourcing than those that catered solely to the domestic market.

The survey found that the practice of outsourcing had little bearing on the issue of unionism or collective bargaining agreements. “Statistics suggest a higher proportion of establishments resorting to off-site outsourcing among establishments with unions (14 percent), and CBA (14.3 percent) than those without union (8.1 percent) and without CBA (8.1 percent).”

The most common processes that are contracted off-site are finance and accounting services, reported by more than a third of the surveyed firms. Transport services and courier services ranked second and third among processes. Other services that are outsourced are human resource and recruitment, billing and payment, learning and training, and data processing and encoding.

Less popular

Off-site outsourcing was less popular in activities related to packaging, crating, research and development and production and assembly, as these were mostly outsourced to agency-hired workers who performed these duties within company premises.

Very little outsourcing took place in agriculture, forestry, fishing, repair of computers and personal household goods, private education, construction, human health and social work activities and in administrative and support services.

Published in the Sun.Star Cebu newspaper on July 11, 2014.


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