Outsourcing Comparison: India vs. the Philippines

India has lost significant outsourcing ground to the Philippines over the past few years, especially in the business process outsourcing market segment. The Associated Chambers of Commerce and Industry in India reports a 70 percent loss in outsourcing market share with call center and related services. The LA Times reports Philippines BPO revenue at $25 billion, equal to 10 percent of the country's economy. Several factors contribute to the outsourcing popularity of the Philippines, such as accent neutrality, low labor costs and government support.

English Quality and Accent Neutrality

Clear communication is a must when you rely on outsourcing for customer support and other business processes. Without clarity, you run into many roadblocks for getting your business goals accomplished and lose out on any productivity benefits outsourcing is supposed to bring. On the customer-facing side of the equation, your brand reputation rests on the customer experience. If your customers can't get help when they need it most, they're going to turn their eyes to your competition.

Flatplanet reports the Philippines has a 92.5 percent English proficiency rate, and their English comes with the accent neutrality many companies look for in their customer support departments. In addition to a neutral accent, the Philippines has many Western cultural influences that add common slang and English idioms into their vocabulary. Spanish and American influences are common throughout the country's history, especially due to the Spanish-American War and the Philippine-American War.

The youngest generation in the Philippines grew up learning English and immersed in Western influences, increasing their language proficiency and cultural affinity even more. The Philippines media includes American television channels while India does not have the same ease of access. Because of exposure to this media, American accents and idioms are already part of the Philippines culture instead of getting picked up as an adult.

Low Operational Costs

The Philippines also has similar or lower costs than India, so you don't have to pay more to switch your outsourced operations to the country. The typical wage is 75 percent less than an American in the same position, letting you incorporate sufficient customer support resources without going over budget.

This expansion also works out well for workers in the Philippines, as business process outsourcing positions provide higher-than-average wages. Many Filipino workers opt to settle into customer support positions, while Indian workers are averse to the instability offered by a position with high turnover, with Towers Watson reporting a 28 percent turnover rate compared to a 20 percent turnover in the Philippines. The Philippines also has a more employable workforce than India when it comes to English proficiency, accent neutrality and BPO training.

Sophisticated Business Delivery Services

Government support for BPO is a major contributing factor to the success of the Filipino outsourcing industry. Instead of setting up infrastructure and operational roadblocks, the government provides support for expansion, training and technological needs. Many local firms and startups provide technical training opportunities and improved business delivery solutions to support the BPO industry in the country.

The Data Privacy Act is a key piece of legislature, as it requires businesses in the Philippines to adhere to international data privacy regulations for sensitive information. Data breaches are a major global threat, and minimizing vulnerability points provides significant peace of mind for businesses. Adherence to these regulations is also important for your business if you need to comply with PCI, HIPAA or other regulations with minimum data security laws.

Indian outsourcing reigned supreme for many years and remains on top when it comes to IT services. However, with stronger English proficiency, accent neutrality, shared cultural influences, comparable costs and government backing, the BPO industry in the Philippines offers a better strategic advantage for your company.

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Sources:

  • http://assocham.org/newsdetail.php?id=4455
  • https://www.towerswatson.com/en/Insights/IC-Types/Ad-hoc-Point-of-View/2015/01/Trends-and-Data-Insights-for-the-Business-Process-Outsourcing-Industry-Meeting-Gurgaon
  • http://www.abs-cbnnews.com/business/02/18/15/why-staff-turnover-philippine-bpo-industry-falling
  • http://www.asiabriefing.com/news/2015/02/oursourcing-bpo-services-philippines-india/
  • http://www.latimes.com/business/la-fi-philippines-economy-20150202-story.html
  • http://www.flatplanet.com.au/hard-heads-the-bpo-business-case/293-philippines-is-second-most-attractive-outsourcing-location-in-the-world-
  • http://www.adb.org/publications/analysis-philippine-business-process-outsourcing-industry
  • http://www.theatlantic.com/technology/archive/2014/04/outsourcing-is-reshaping-the-philippines-cities/359870/
  • http://outsourceworkers.com.au/trend-spotting-predictions-philippines-outsourcing-industry-2015/

Michael Buenaventura

February 01, 2016