07 December 2011

India No More the Capital for Call Centers?

India dominates global outsourcing market. Banking and financial services contribute nearly 40 percent to India's outsourcing industry. By virtue of certain advantages India has been able to maintain its supremacy over its rivals in the BPO industry but there are a number of other countries, which can give India run for its money in Business Process Outsourcing.


Some of the closest competitors of BPO India are China and Philippines. The Philippines advantage, besides skilled are English educated work force and familiarity with American work culture and lightly accented English language. Another comparative advantage the Philippines enjoy is the superiority of its telecom infrastructure which is more safely set up and maintained.


The workers in Philippines are more familiar with foreign languages like Spanish, German, French and Japanese and are used to the American culture too. Philippines are the second largest BPO industry in the world which has been snapping at India's heels for a while now, with an industry built on cheaper manpower, tax breaks and government investment in infrastructure. The island nation currently ranks number one in the availability of knowledge based jobs, workers and fourth in labor quality in all of Asia.


Executives say the growth was not by wage considerations. Filipino call center agents typically earn more than their Indian counterparts but executives also worth the extra cost because American customers find them easier to understand than they do Indian agents.


 Many small and medium sized American companies appear to have been moving their feet for the Philippines over India as their BPO headquarters. Many global companies like AT&T, JPMorgan Chase and Expedia have already shifted work for their outsourcing needs.

Analysts also point out that during the financial crisis, the Philippine government invested heavily in infrastructure that allowed the nation to compete better globally. Moreover, IT and outsourcing enterprises in the Philippines enjoy a 100 percent tax exemption for up to eight years. The island country also provides cost benefits for infrastructure, operational expenses and business continuity.

It is also a challenge for India to continue maintaining its talented task force in the BPO sector because it is also facing competition with China, Mexico, Malaysia and Canada.


Philippines are expected to grow at a stable rate annually in BPO exports over the next five years. India's output for the demanding services have always ranked as satisfactory but they need to push themselves from satisfactory to excellent. They should instead focus on launching more innovative products and checking staff turnover.  The Indian government too, should sit up to take note and work towards promoting business friendly policies.