A corporate foam party — getting drenched in bubbles alongside colleagues amid strobe lights and blaring music — might seem an extravagant way to motivate staff. But for KMC Solutions, one of the Philippines’ many outsourcing providers, it fits into an increasingly important strategy to attract and retain footloose talent.
Such companies in the Philippines, long known as the call centre capital of the world, have typically been associated with low margins and high staff turnover.
But now, they are seeking to move up the value chain by recruiting technically skilled professionals such as software developers or data analysts whose wages and day-to-day tasks are determined by the client, rather than managed at arm’s length by the outsourcing provider.
This means KMC has moved on from a staffing model where the client just wants a certain number of calls to be handled and “has no idea how much the provider pays the staff, or even who the staff are”, says head of marketing Gian Reyes.
The company is now grappling with the challenge of integrating and motivating teams working remotely thousands of miles from the client’s headquarters, a task made harder when recruiting for new technical fields in which demand for talent outpaces supply.
The trend has been a boon for KMC, which has quadrupled its number of outsourced employees since 2020, raising revenues from $69.6mn to $82mn.
KMC charges a monthly fee to be the legal employer on record and handles the burden of payroll and compliance. The outsourced worker is embedded in the client’s operations.
“With this shift, companies seek impactful staff who make a difference, who they want to train and still want to report to them,” says Reyes.
As well as foam parties and free ice cream on Fridays, KMC gives away Vespas and cars to outsourced workers through annual raffles, as part of its bid to boost collegiality and staff retention.
Outsourced, a rival business also based in the Manila region that came 317th on the FT/Statista ranking, ran an online singing competition on Valentine’s Day that drew 400 of its outsourced employees, 70 per cent of whom are fully home-based. “Our job is twofold: find the best talent and make sure they stay forever,” says chief executive Mike Larcher.
KMC and Outsourced are among a wave of businesses aiming to help multinationals tap highly skilled Filipinos as the west deals with skills shortages and ageing workforces.
The average age in the Philippines is 26, compared with 39 in the US, according to official data. The Philippine Statistics Authority reported the average monthly salary in the Philippines was 18,423 pesos ($339) in 2022, the latest year available, compared with $4,588 in 2022 in the US, according to the US Bureau of Labor Statistics.
KMC’s predominantly US and Australian clients range from ecommerce and fintech to cloud-based software companies such as Zoom, which employs nearly 1,000 workers through KMC.
The trend marks a shift from the Philippines’ association with call centres, which began in the 1990s when US companies turned to the country because of its strong English proficiency and neutral accent. Even today, the country ranks ahead of Switzerland and Spain in English proficiency, according to training provider EF.
Now, Outsourced and KMC report increasing client demand for a much broader range of roles. “People have started to realise that you can offshore anything,” says Larcher. “We’re getting demands for architects, quantity surveyors, paralegals, accountants . . . every industry essentially.”
In 2024 there were 1.8mn Filipino employees in the “business process management” sector, according to the IT and Business Process Association of the Philippines (IBPAP), which predicts that will rise to 2.5mn jobs by 2028.
“We need to go beyond where we began: English fluency, communication — that’s all given. That’s what got us here,” says IBPAP chief Jack Madrid. “We will need to do more and move faster in addressing the talent challenge.” The former MTV Philippines boss is trying to rebrand the country from a supplier of low-cost back-office labour to one of high-value talent that embraces AI and the digital economy.
“We will need to leverage our demographics and the way to do that is to move up the value chain, looking at revenue per employee instead of just counting jobs,” he says.
However industry leaders admit they face a skills gap. Angela Lucus, business development director at Booth and Partners, which ranked 133rd and focuses on “employer of record” services, says it is “unfortunate” that sometimes the company turns down AI-related contracts due to a lack of qualified candidates.
“If [only] there were programmes where people could easily upskill . . . We’re just lacking that right now in our educational system,” she says.
Ronald Mendoza, under-secretary for strategic management at the Philippines Department of Education, says “bold” government reforms in education and training are coming — but they “bank on stronger partnerships with the private sector to help resource these efforts”.
The outsourcing companies seek to portray working for them as a stable and aspirational career choice, and are experimenting with in-work training programmes.
Lucus says the average tenure of an outsourced worker at Booth and Partners is three years, compared with 12 months in the outsourcing sector overall.
Reyes believes the booming BPM sector could disrupt the long history of Filipinos who go abroad to work and send remittances home: “We’re finding fewer and fewer people inclined to have to move overseas and leave their families here, because they can get jobs in the Philippines that pay them a decent wage.”
Madrid adds that multinational companies, for their part, need to consider how they communicate with outsourced workers — emphasising the value and impact of their work.
When JPMorgan chief executive Jamie Dimon visited the Philippines, where the bank employs 20,000 people, “it was like the return of the king”, he says. “[Dimon] said you’re the third-biggest JPMorgan country — it’s a good example of how corporate culture and brand should be communicated.”
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