Posted by: traveljunkies | February 7, 2010

India Vs Philippines – The Philippines Edge On Outsourcing Options For Medium Businesses

India has long been considered the outsourcing capital of the world. India raked in over US$7 billion of the offshore BPO industry, more than 60% of the offshore component worldwide. Estimates point to nearly US$50 billion by the year 2012, helped along in no small part by the global financial crisis we’re currently experiencing. With industry growth at nearly 35% each year for the last five years, it’s no wonder the Philippines are looking to gain market share.

Outsourcing in the Philippines is taking flight primarily through call centers that have sprung up across the country. Primarily centered around Manila, Cebu, and Davao City, the abundance of talent at a lower cost has made the Philippines a much more viable option in recent years, especially where medium-sized businesses are considered. Below are some examples where the Philippines maintains an edge over India:

  1. Skilled Workers – The lack of skilled workers in India has caused prices to increase in recent years, while the talent pool in the Philippines remains largely untouched. The current lack of options in the Philippines allows for higher employee retention and continued growth with their offshore counterparts.
  2. Cost – Simply put, the Philippines remain a less expensive option. In some specific industries, employee costs in India have risen to approximately 60% of comparable costs in the US, with the Philippines only achieving roughly 30% for those same positions.
  3. Cultural Adaption – When it comes to call centers and customer facing positions, having employees that understand well the intricacies of American culture provides huge qualitative benefits. Less cultural training also leads to less employee acquisition costs, which can become quite extensive compared to India.

While India remains the BPO leader for offshoring, the Philippines are quietly and quickly emerging as a superpower in the outsourcing industry. As the financial crisis continues, the Philippines government is heavily investing in infrastructure that will allow them to better compete on the world stage. While it remains to be seen what an Obama government will do with the outsourcing industry, it’s clear that the Philippines are currently in a “Golden Age” as it relates to BPO growth.

Justin Cooke is an author and partner at TryBPO Outsourcing Solutions, an outsourcing company in Davao City, Philippines. TryBPO offers outsource consulting to small and medium sized businesses around the world.

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