The primary reasons are its low costs and English-speaking talent pool. Together, they prove to be an unbeatable combination. No other country has this advantage. It might be cheaper to set up a BPO elsewhere, but qualified manpower would be hard to come by.
For long, India was the outsourcing capital of the world. However, as more IT companies opened shop, it became harder to get talent. This still is the situation given a choice, young graduates prefer to work during the day than in a night shift. As of 2008, the Philippines has overtaken India to become the world leader in business process outsourcing.
It was an American colony between 1899 and 1946 and the effects still remain. Filipinos understand American culture like no other, and they speak fluent English. The country’s universities produce top graduates that are ready to enter the workforce.
The Philippines is fragmented. It is an archipelago of 7,641 islands, and only 2,000 of them are inhabited. Because of this, there isn’t much manufacturing in the country. Most of the country’s GDP comes from the services sector. The Government has recognized BPO as capable of contributing billions of dollars to the economy, and thrown its weight behind it.