Filipino cities have emerged as key IT/ITES destinations in the latest outsourcing ranking done by Tholons, advisory firm for outsourcing and research, to find out the top 100 outsourcing destinations in the world. Philippines has proved to be a strong opponent to India in the outsourcing field with its cities Manila, Cebu, Taguig and Mandaluyong featuring among the top cities in the outsourcing industry.
The annual rankings still have Bangalore in the top position with Manila attaining the third place rising from the fourth position the city had held in the previous year’s survey. Delhi was consequently pushed down to the fourth position this year. Cebu pushed down Dublin to go ahead by one position among the top ten. India still holds dominance with six out of the ten top cities being from India.
Factors favoring development of Filipino cities as outsourcing hubs
There are several critical factors which favor the growth of the outsourcing industry in the Philippines. Some of them are:
- Accent and cultural similarities of Philippines with U.S.
- Strong and positive perception of careers in BPO industry unlike in India.
- Cost competitiveness as outsourcing to Philippines is much cheaper.
- The initiative of the Philippines government for the growth of the industry through infrastructure development and grants.
Major outsourcing operations in Philippines
Philippines has already transcended to being a hub where major companies in the world are outsourcing their work. Some of the notable operations taking place in the country are listed below.
- The U.S.-based UnitedHealth, is a healthcare provider has outsourced the back office operations of the company to Taguig city.
- Convergys is a US-based company dealing with customer management solutions. The company has instituted 18 call centers in all of Philippines.
- The third call center of EXL is being opened in Cebu city.
- Setting up of business support center by Well Fargo & Co is under way in Taguig in order to deliver back office services and customer service.
- JP Morgan Chase has also expanded in Manila city recently by setting up a facility with 1000 employees.
- IBM has plans to establish the company’s BPM services in the country with focus of customer support services and analytics of really high value.
Expert views on higher outsourcing ranking of Filipino cities
- According to Salil Dani, who is practice director at Everest Group (outsourcing research and advisory firm), outsourcing to Filipino cities is cheaper by around 70 percent for the US companies. IT/ITes market of Philippines is a stellar $14 million which is double the figure a few years before.
- Sanjay Dhawan of PricewaterhouseCoopers stated that the local government in Philippines has paved way for the expansion of the industry. He added that companies do not want to outsource only to a single country (India), and hence Philippines has grown as an attractive option.
- Managing director at Tholons, Ankita Vashistha said that the costs in India are becoming higher with pressure on quality of life and infrastructure. This, according to her, could impact growth.
- Pradeep Udhas of KPMG stated that Philippines has learned from India in several spheres like talent management, handling taxation challenges and best practices.
- Som Mittal, president of NASSCOM dismisses the concerns that India is lagging behind emphasizing that partnership is more important than competition.
The ranking by Tholons shows that Malaysian and Latin American cities have also moved up the list. The report states that this is an indication of the urge to explore new avenues like outsourcing among the Latin American cities.