Setting up an Offshore Shared Service Center: 14 Factors to Consider

Categories: Advice for Doing Business in the Philippines, Advice for Start-ups and Entrepreneurs

Companies usually transpose the meanings of shared service centers and business process outsourcing (BPO). However, these two differ despite both rendering services for an enterprise.

While outsourcing requires a third-party organization to perform duties for a company, shared service centers prefer to accomplish the work within the network.

With shared service centers, employees work with business units in carrying out transactions. Thus, service centers are more personalized—giving companies the rein in finance and large-scale management.

Knowing how to set up an offshore service center in the Philippines helps a great deal in team recruitment and the rest of the aspects involved in managing your business.

The Philippines has a share of the biggest service centers including Emerson, Shell, Chevron, and ANZ. These service centers have become successful primarily because of the standardized internal services therein, and a seamless integrated system that unifies all business units and follows an exemplary service delivery model.

To set up an offshore service center, here are the factors you should consider:

1. Choose a great location.

The Philippines is one of the best sites to setup a shared service center. Not only will you find job hopefuls willing to serve in the industry, but also recruit hardworking individuals for your core team.

Asia, particularly the Philippines, is home to IT industries and services. Employees here need little, if no training at all, in English fluency.

The government highly supports the shared service and BPO industries and have proven the competency of Filipinos. To keep operations working smoothly, companies rely on the solid telecommunications in the Philippines.

As a Center of Excellence, the Philippines has a lot of existing infrastructures and experienced and skilled people in the shared services industry. The industries and the government work hand in hand to help boost the economy, thus it is easy for international companies to establish their offshore branch in the Philippines.

Filipino talents and employers are known for their commitment to deliver what their clients need, regardless whether these teams have a great number of manpower or consist of only several people to perform the job.

In addition, the Philippines has several enterprises registered with the Philippines Economic Zone Authority (PEZA). Such businesses are established within an eco-zone. Examples of these PEZA-registered industries are export manufacturing enterprises, IT service export, tourism, medical tourism, logistics and warehousing, agro-industrial biofuel manufacturing, and facilities providers.

On the other hand, you can establish a regional operating headquarters (ROHQ) in the Philippines, as well as in other Asia Pacific regions. You can earn your income from the country through general administration, business planning, and procurement of raw materials, corporate finance services, sales promotion, training, and technical support.

If you would start your offshore service center in the Philippines, you must remit at least $250,000 to the government.

2. Check your costs.

Determine the amount needed to be spenton the workforce, infrastructure, and equipment. Study the number of employees you want to hire and check whether your remuneration costs are enough to cover as many people in your team.

In the same manner, coordinate with offshore building owners for the office rental and utility costs.

3. Review the site’s tax and regulations.

Countries differ in the rules and regulations they ascribe to foreign investors. In the Philippines, corporations follow a lengthy procedure in setting up the business. Some of these procedures are not present in the regulations in the US.

For example, your ROHQ has to pay 12 percent of the value-added tax (VAT) if your gross sales for the year exceeds PHP 1,919,500.00. Excise taxes are required from companies that manufacture wines, oils, tobacco, fireworks, and films.

Nevertheless, knowing about the location’s business regulations helps in setting up the business, regardless which country that is.

4. Research cultural and time zone differences.

Since you will be working with various people, and in a different country at that, knowing cultural differences will not hurt. This prevents any conflicts between you and your employees.

Hire consultants and be considerate of any cultural practices in the country. If negotiations result in an impasse, consider giving incentives and be open to compromise.

5. Attract the best talents.

You will need a trusted recruitment agency in Manila to look for your team. Because the job market in the Philippines is tough, a recruitment agency can hand-pick the best applicants to do the tasks in your company. Such agency already knows what to look for and where to find these talents.

Retain these talents through incentives and benefits such as flexible schedules and bonuses to build loyalty among your employees. A good recruitment agency will lead you towards impressive and effective HR strategies.

6. Keep the service center close to your employees.

It is difficult for employees to work in shifts, and the closer the site to them, the better. It will be twice better for those locations to be surrounded by offices and other amenities.

Millennials, in particular, are more motivated to work when they can use technology to their advantage. Also, companies located in techno hubs attract more applicants. So, consider comfort for your employees as well.

7. Implement the top-to-bottom approach.

Manage shared services from your rank, carefully disseminating information to your subordinates. Organize the roles of each department and officials, and keep employees informed about their tasks.

Keep communication lines open, especially since your company will handle several systems.

8. Train your employees.

Develop your employees’ skills. Sponsor workshops concerning shared services and IT. Explain the automation process to them.

Invest in technology and educate your staff how to make these pieces of equipment work for the team.

9. Follow benchmarks as you set up your offshore service center.

Acquire benchmarks by researching the best-shared service centers in the country. Determine the market and the competition. Use these data to gauge the progress of your company.

10. Know more about security and data protection.

Data infiltration can break down a service center. It would be best to assure your staff that their personal data, as well as the data of your clients, will be protected from hackers and unauthorized use.

11. Implement better business practices.

It is not enough that you understand cultural and time zone differences. Part of the reason you need to establish an offshore service center is to provide a more personalized service to foreign clients.

On the other hand, it allows you to deliver your services in a global perspective, services and goals which may not be available or helpful to local clients.

Streamline your accounts and keep honest transactions with clients. Make your shared service center work for all the stakeholders of the company.

12. Realize the return on investment (ROI).

As you are building your offshore service center, you might forget how to compare your costs to what you have earned. Better yet, project such figures even before you have implemented the business offshore.

13. Study non-HR factors.

HR aside, you need to review a country’s economy, its business environment, the assistance of the government, the trends in the industry, and corporation laws.

These things make up a strong and capable service center. Take these factors out of the equation, and you might just find it difficult to keep the company afloat offshore.

14. Integrate the process of establishing the center and the specific goals you have for your team.

At the end of the day, you must go for quality and a clear direction. Stay close to your company’s mission and vision, no matter how hard the venture is.

While setting up an offshore service center may seem to be a difficult task, rest assured that you can make this undertaking an easy one by bearing in mind these factors. More importantly,  both employers and employees will benefit from an offshore service center — wages and salaries will remain to be competitive, with technical roles targeted in the recruitment process. Establishing offshore service centers are both prestigious for the employer and the employees, and generally a welcoming partnership in the global market.




Manila Recruitment is recognized as the leading recruitment firm in the Philippines for headhunting, executive search, expert, technical and IT recruitment. We share an unrivalled passion to help your business succeed by understanding your goals, then sourcing and providing you with your number one asset – driven, dedicated and exceptional people!

Experience the Manila Recruitment difference, and give your business in the Philippines a competitive advantage by contacting us today. Whether you are exploring an offshore solution, or are an established entrepreneur, SME or Multinational in the Philippines, our team has the experience and a tailored recruitment solution to introduce you to the top talent in the Philippines.

Contact our Manila Recruitment team at