Organizing a corporate foam party, where employees find themselves drenching in bubbles while surrounded by pulsating strobe lights and loud music, may appear to be an extravagant approach to boost workplace morale. However, for KMC Solutions, one of the premier outsourcing firms in the Philippines, this event fits into an increasingly vital strategy designed to attract and retain talented professionals who have the flexibility to work from anywhere.

Historically, the Philippines has garnered a reputation as the call center capital of the world, known for its high turnover rates and low profit margins. Now, in a significant shift, companies such as KMC Solutions are attempting to elevate their positioning by recruiting highly skilled professionals, including software developers and data analysts. This new direction allows wages and job responsibilities to be decided by the client directly, rather than being handled at arms length by the outsourcing provider.

As Gian Reyes, KMCs head of marketing, explains, the paradigm has shifted from merely staffing a call center with a certain number of agents, where the client has little knowledge about the provider's employee payments or even their identities, to a model where clients demand impactful staff who contribute significantly to their operations. This evolution in the outsourcing landscape presents unique challenges, especially as team members often work remotely from locations far removed from the client's headquarters.

KMC Solutions has successfully navigated this transition, witnessing a remarkable fourfold increase in its number of outsourced employees since 2020. The companys revenues skyrocketed from $69.6 million to $82 million during this period, reflecting the growing demand for skilled labor. KMC operates by charging clients a monthly fee to serve as the legal employer, managing payroll and compliance, while seamlessly integrating outsourced personnel into the clients team.

To foster camaraderie and improve employee retention, KMC has adopted a variety of strategies, including hosting foam parties, providing free ice cream every Friday, and even offering cars and Vespas in annual raffles. Such initiatives are designed to cultivate a sense of community and belonging among employees.

Rival company Outsourced, also located in the Manila region and ranked 317th in the FT/Statista listings, has similarly embraced innovative engagement practices. They organized an online singing competition on Valentines Day that attracted around 400 of its outsourced employees, with 70 percent participating from home. Mike Larcher, the company's chief executive, emphasized the dual focus of their operations: to find the best talent available and to ensure that those employees remain with the company long-term.

Both KMC and Outsourced are part of a broader trend of businesses aiming to connect multinational firms with highly skilled Filipino professionals, particularly as many Western countries grapple with a shortage of skilled workers and an aging workforce. The Philippines, with an average population age of just 26, compared to 39 in the United States, presents a compelling opportunity for companies seeking younger, tech-savvy talent.

According to the Philippine Statistics Authority, the average monthly salary stood at 18,423 pesos (approximately $339) in 2022, significantly lower than the average US salary of $4,588 during the same year, as reported by the US Bureau of Labor Statistics. KMC's diverse clientele, primarily from the United States and Australia, includes businesses in sectors such as e-commerce, fintech, and cloud-based software, with notable clients like Zoom employing nearly 1,000 workers through KMC.

This shift in the industry reflects an evolution from the Philippines traditional role in call centers, which began in the 1990s due to the nations strong English proficiency and neutral accent. Even today, the Philippines outperforms countries like Switzerland and Spain in English language skills, according to training provider EF.

As Outsourced and KMC continue to report increasing client demands for a broader array of professional roles, Larcher noted, People have started to realize that you can offshore anything. The requests range from architects and quantity surveyors to paralegals and accountants, indicating an expansive growth in the services offered by outsourcing firms.

As of 2024, there are approximately 1.8 million Filipino employees engaged in the business process management sector, as per data from the IT and Business Process Association of the Philippines (IBPAP). This figure is expected to rise to 2.5 million jobs by 2028, highlighting the sector's rapid expansion.

Jack Madrid, the chief of IBPAP, stated the necessity for the Philippines to evolve beyond its initial identity focused solely on English fluency and basic communication skills. He advocates for swift advancements in addressing the emerging talent challenges while rebranding the Philippines as a provider of high-value talent capable of thriving in the era of artificial intelligence and the digital economy.

Madrid emphasized, 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. However, industry leaders acknowledge the pressing skills gap that exists. Angela Lucus, business development director at Booth and Partners, which focuses on employer of record services and ranked 133rd, lamented the unfortunate reality that the company sometimes has to turn down contracts related to AI due to a shortage of qualified candidates.

Lucus continued, If only there were programs where people could easily upskill... were just lacking that right now in our educational system. Ronald Mendoza, the under-secretary for strategic management at the Philippines Department of Education, noted that ambitious reforms in education and training are on the horizon. However, these efforts will rely heavily on forming sturdy partnerships with the private sector to secure the necessary resources.

In their quest to portray careers in outsourcing as stable and aspirational options, these companies are exploring innovative in-work training programs. Notably, Lucus mentioned that the average tenure of an outsourced worker at Booth and Partners is three years, a stark contrast to the overall industry average of just 12 months.

Reyes remarked that the burgeoning BPM sector could significantly alter the long-standing trend of Filipinos seeking employment abroad, where they traditionally send remittances back home. Were 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 highlighted the importance for multinational corporations to reconsider how they engage with outsourced workers, emphasizing the necessity to communicate the value and impact of their contributions. This sentiment was echoed when JPMorgans CEO Jamie Dimon visited the Philippines, where the bank employs around 20,000 individuals. As Madrid described, It was like the return of the king, with Dimon acknowledging the Philippines as the third-largest country for JPMorgan, which serves as a poignant example of how corporate culture and brand messaging should be effectively communicated.