The Philippines is emerging as an important supplier of labor to the global offshoring market, but new research finds that although the country has marked advantages, it must overcome significant obstacles to compete with nations such as India. The stakes are high: from 2003 to 2008 alone, the McKinsey Global Institute (MGI) estimates, an additional 2.6 million offshore services jobs will be created around the world, offering a valuable source of employment and exports for the low-wage countries that capture them.¹ The full report, The Emerging Global Labor Market, is available free of charge online.

Offshoring is already important to the Philippines. In 2003 the country supplied $1.7 billion worth of offshore services to the world economy (Exhibit 1); today around 100,000 people are employed in call centers. Low costs are one reason for the country's emergence as an offshoring location. Among the ten countries we examined for this article,² the Philippines has the second-lowest hourly wage for offshoring professionals, at 13 percent of the US level; the salaries of Indian workers were the lowest, at 12 percent; wages in Malaysia are around twice that level.