India was undoubtedly the favorite offshore destination for global organizations for call center operations since over a decade. However, since the last few years this trend seems to be changing, it is estimated that the contracts coming for voice processes to India has fallen considerably.
According to the latest estimates by NASSCOM, the trade body for IT/BPO, the Indian BPO industry will grow at a rate of only 12% this year as against the growth rate of 19% by Philippines BPO industry.
Indian voice BPO industry is struggling hard to regain its lost position as the leader in the industry today. The industry is facing an intense competition from new generation BPO destinations abroad coupled with reduced spending decision on outsourcing by recession hit clients in America and Europe. In short, the industry is finding hard to repeat its success in the global market that it had achieved before the 2008 Wall street crisis.
While the Indian BPO industry is struggling to keep the business from going abroad, the Philippines BPO industry is climbing new heights. Last year, Philippines call center industry outperformed Indian voice based BPO and became the world’s favorite call center hub with $7.6 billion business when compared to India’s $7 billion. The country also has outpaced India in terms of employment generation. It is anticipated that about 6, 40,000 Filipinos are employed currently in call center and the Business Process Association of Philippines expects the number to go up to 1.3 million by 2016.
One main reason for the growth of contact center industry in Philippines is the cultural and language affinity of its people with U.S. In addition to it, Philippines provide trained manpower required for the industry and allow the companies to enjoy tax incentives. Thanks to the country’s government initiatives to flourish the industry. Back in India, the government has not done much for the BPO industry and moreover withdrew the tax benefits enjoyed by the IT/BPO companies. Recently, NASSCOM was also in the national news papers for their step-motherly approach towards BPO industry.
Indian BPOs to keep in pace with the competition poised by Philippines are spreading out to different geographical locations and moving up the value chain. For example, Aegis, Indian based BPO company have set up their voice delivery center in Manila, Philippines to take advantage of the competition and is one of the strongest player in the country employing 13,500 Filipinos.
Many companies like Hinduja who were into pure ‘voice’ business are now offering additional services that require services of dental workers, nurses, doctor to handle medical claims; accountants to handle loan maintenance and portfolio, and lawyers to handle legal processes.
Data Analytics, preparing investment reports for banks, carrying out procurement and recruitment services, providing legal services are some of the other non-voice process that is picking up in the BPO industry of India.
The transition of the voice BPO to non-voice BPO is also evident in the revenue split. The contribution rate of revenue by voice process in India is only 20% while that of non-voice process is 10-15% higher than that of voice based services.
It seems like the non voice based services is what is going to drive the Indian BPO industry. However, according to industry specialists, the biggest challenge for the companies is to attain productivity for these high value services.