How Philippines Got The Edge Over India In The Outsourcing Arena

india vs philippines outsourcing

Since the term outsourcing began making rounds in the international market, the first world clientele has looked towards Asia to create acute profit margins. Asian countries are considered to be the best option for outsourced services as they have the skilled work force and the cheap resources. Further English-speaking skilled employees were easily available.

The Business Process Outsourcing market however, was centered between India and the Philippines for a very long time. Both countries have similar availability of resources and offer similar services. Which country has the edge over the competition? The answer lies in an examination of the market in both the countries.

Index Mundi Asia, pegs the demographics as an advantage to India, as Philippines will never be able to beat the sheer population available to outsourcing firms in India. According to Index Mundi, there are 38 million Filipinos between the ages of 25 and 54 while there are 484 million Indians in the same age group. With the target employee age group being readily available one would think that India has the greatest advantage.

Philippines and the sector growth

The BPO sector in Philippines is rapidly gaining ground. The Information Technology and Business Process Association of the Philippines (IBPAP) pegged the growth of the sector. According to the IBPAP, 776,794 employees were hired in 2012 by the Philippine Information Technology when 137,066 new openings were created. These new openings reflected a total growth of nearly 21 percent from 2011 to 2012.

Jomari Mercado, President and CEO of IBPAP spoke about the growth of the sector when he said, “this number keeps them on target to reach 1.3 million in employment by 2016. We have received impressive support from President Aquino and his teams in the executive branch and we were able to pass key legislation needed by the industry.”

The legislation that Jomari Mercado is crediting refers to the “Data Privacy” act. The act provides protection and shelter to the Philippine outsourcing industry. Since the BPO industry deals majorly with sensitive data material like the transfer of bank financial data and patient records, securing International data privacy standards furthers security for the client.

Outsourcing firms in the Philippines were often centered in the Metro Manila. With the growth in employment, centers in Cebu and Davao are now open to cater to the growing industry. Spurring the employment rate even further is the online learning platform “Kalibrr”. The platform was formed as a startup in order to help Filipinos who wanted to find employment in the BPO industry.

The Indian pitfalls

While Philippines has definitely carved out its own niche in the outsourcing arena, India is losing its foothold slowly but surely.  A lack of clear communication channels is what is creating the lag in employment in India according to industry insiders like Dheeren Singh, a manager at GNXT recruiters, an Indian human resources firm.

The major drawback for the voice segment market in India is the Indian accent that despite training lingers in speech. With callers from other countries recognizing the accent, the unrest over locals losing jobs grew in countries like USA, UK and Australia. Callers were also dissatisfied as they claimed to not understand the Indian accent.

The largest market in India for outsourcing was the voice segment, with the global economy failing and people demanding jobs back, India has lost nearly 10 percent of its share over the past five years. The flip side to the coin, however is that Philippines landed the jobs that India lost.

The Filipino edge

In the Philippines, the locals leave lower paying day jobs for jobs in the BPO sector. They also have a profound interest in the American culture and language which means that they speak English free from accents.

With the lack of express governmental support and a poor infrastructure, India has set itself up to lose the outsourcing market. BPO jobs are not considered secure and safe with the working hours structured to suit the client country. With a lot of people refusing to take the jobs, the companies are quickly losing the skilled, qualified employee base. With a dwindling employee base, companies are losing clients faster than they can recruit.

The future

India has not however given up in the race to more clientele in the BPO arena. DS Rawat, the secretary general of the Associated Chambers of Commerce and Industry of India claims, “We have a bright chance if we concentrate on three things – strengthen our infrastructure and create world-class infrastructure, particularly in the states; we create the Human Resource Development centers; and we really need to become aggressive to bring some of the top companies.”

India seems to be caught in a race with Philippines over contracts in the outsourcing arena. Having lost voice contracts, India is looking at new ways to enhance its resources and get back on the lead.




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