More Filipino firms resorting to outsourcing

NEARLY 5,000 companies nationwide employed outsourcing, or off-site contracting/subcontracting, in 2014, according to the latest data released by the Philippine Statistics Authority (PSA).

Data showed 1 in 7, or at least 4,978 establishments, engaged in contracting out/subcontracting of a business process to a third party in 2014.

This group represents 14.1 percent of the estimated 35,214 establishments employing at least 20 workers as of June 2014.

“The term ‘outsourcing’ or ‘off-site contracting/subcontracting’ in this report refers to jobs/services done outside the premises of the establishment, which is different from work processes done by contractor within or inside the premises of the establishment that involved agency-hired workers,” the PSA explained.

The PSA said off-site outsourcing is varied across industry groups, but was most common in agriculture, forestry and fishing, where nearly one-fourth, or 23.2 percent, of 1,370 establishments were engaged in off-site contracting and subcontracting.

Establishments engaged in outsourcing represent more than 15 percent of their respective industry groups.

The bulk of establishments engaged in off-site outsourcing was confined largely to wholesale and retail trade, and repair of vehicles and motorcycles, 25.1 percent or 1,247; and manufacturing 21.6 percent or 1,074.

Together, these establishments accounted for 46.6 percent, or 2,321 firms, of the total establishments that resort to outsourcing.

“The practice of contracting out jobs/services emerged in the 1980s as a response of firms to deal with the increasing competitions brought about by globalization of trade. This flexible measure allows establishments to cope with the fluctuating demands for their products in the market and reduce cost by concentrating on their core business and outsourcing noncore activities [e.g., back-office jobs, logistics and courier services, HR and training services, etc.] to third parties,” the PSA explained.

In terms of ownership, most of the establishments were owned by Filipinos at 89.2 percent of the total firms that outsource operations.

The data was obtained from the 2013/2014 Integrated Survey on Labor and Employment (ISLE). The ISLE is a nationwide sample survey covering 8,399 establishments with at least 20 workers.

July 3, 2016



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