The staff turnover rate in the Philippine business process outsourcing (BPO) sector has reached an all-time low of 20 percent since 2007, according to a survey by a leading global professional services company Towers Watson.

The annual survey said the Philippine BPO industry has managed to retain employees resulting in a 20 percent turnover rate, an impressive improvement compared to the 33 percent, 24 percent and 26 percent attrition rates from 2011-2013 respectively.

“The continuing growth of the Philippine economy has largely benefited the BPO industry, since it gives foreign investors a positive impression of the country’s business environment.  Scalability, experienced talent availability, foreign language skills, and a share of the graduate pool, all point to a very bright future for this sector. The sector, though fast-growing, has adopted various strategies in talent acquisition including expanding operations outside the National Capital Region (NCR) to tap talent in Cebu, Davao and Southern Luzon.  This has, in turn, minimized talent movements within the NCR, registering the lowest attrition rate in the last seven years,” said Vangie Daquilanea, Global Data Services Practice Head of Towers Watson Philippines.

The sustainability of the BPO sector in the Philippines is anchored on qualified talent availability hence the necessity to expand to other areas to avoid talent saturation in the NCR.

The Towers Watson survey also reported data on geographic differentials in the country, where Central Visayas is found to be about 23 percent lower compared to salaries in the NCR, making it a viable location for BPO companies to operate in. This further supports an international research on the top global outsourcing destinations, identifying Cebu in the top 8.

The overall salary increase in the outsourcing industry in Philippines in 2014 was 7 percent on average and is expected to be stable in the next two years at 7 percent-7.5 percent. The companies budgeting for this salary increase rate typically use a performance matrix where exemplary performers are greatly rewarded, and non-performers are given zero to minimal increases.  This is being done by companies to give emphasis on their compensation principle of paying for performance.

The survey also found that employees in the outsourcing sector in the Philippines typically have a compensation mix where guaranteed compensation is quite high and a minimal annual performance bonus equivalent to about 1 month to 1.5 months’ pay.

Another interesting finding in the Towers Watson survey is the benefit program provisions in the outsourcing sector.

While retirement program, health and insurance coverage are quite common across various industries, the BPO sector prides itself for having the most robust health and wellness programs.  Companies are taking care of their employees by offering program such as stress/risk assessment programs, health screening, counselling, fitness competitions, and smoking cessation programs among others.  Providing these health and wellness programs to employees paves the way for building a culture of health awareness, and ultimately becomes a shared responsibility between employers and employees.

Towers Watson’s annual BPO/Shared Services/Call Center Industry Total Rewards Survey is the largest compensation survey report in the Philippines.

This year, about 80 companies participated in the survey, representing the entire service outsourcing spectrum in the country, comprising information technology outsourcing, knowledge process outsourcing and business process outsourcing service lines.

“Our survey contains comprehensive analysis and findings that provide insights into current compensation practices and trends in the industry, helping companies make informed decisions about total reward programs for its employees,” said Daquilanea.

Towers Watson is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management.

With 15,000 associates around the world, it offers consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management.