India Vs Philippines: Outsourcing outlook

August 24, 2009

Whereas India is still considered to be the preeminent offshore outsourcing destination for IT services as well as in BPO, the Philippines has fast made a name for itself in providing offshore call center and BPO related services. In fact, few can argue that Filipinos, with their relatively neutral accents and better understanding of and affinity towards American culture, aren’t at least better at providing voice related work. Hence, the global economic crisis is affecting the outlook in both countries differently.

In the Philippines, a recent survey conducted by the Business Processing Association of the Philippines (BPA/P) and Outsource2Philippines (O2P), only 16% of surveyed BPO executives said that the impact on business from the global economic crisis was “significant” while 5% said it was “very significant.” Furthermore, four out of five BPO executives surveyed said that the impact was "moderate" or "minor" on their companies while 60% of the executives in firms affected indicated that they have responded by introducing new services. In addition, BPA/P expects job growth this year to be around 160,000 new jobs – less than the 400,000 jobs created last year but nevertheless, a solid performance given the circumstances. 

In contrast, Business Week recently reported that there is a chill in the air in India’s Gurgaon. One reason is due to the fact that higher-value work such as writing software code is typically outsourced to Bangalore and other places where there are top-notch schools while the work sent to Gurgaon is mostly low level call center and BPO type of work. Moreover, some companies have decided to shift customer-facing jobs back to home markets due to quality concerns and the fact that the economic crises has lowered the cost of work homeshored. Hence, Gurgaon now has a 28% commercial real estate vacancy rate while office rents have dropped 25% and are expected to keep falling. In addition, India’s software industry is facing challenges given that IT expenditures are in many cases still being scaled back due to the tough economic environment and economic uncertainty.

Nevertheless, the New York Times has also recently reported that India is feeling less vulnerable as outsourcing revenue, which was predicted to reach US$50 billion in 2010 by a McKinsey/NASSCOM study conducted a decade ago, is still predicted to reach that level. However, it just may take three or four quarters longer and the latest predictions are that revenue will reach US$47 billion this year and US$175 billion by 2020. Moreover, while revenue from hard hit sectors such as banks, mortgage servicing companies and Wall Street firms has fallen, new sources of revenue are opening up from insurance companies, pharmaceutical companies and corporate legal departments who increasingly need to cut costs in today’s difficult economic environment. Hence, Indian outsourcing firms are starting to aggressively learn new skills and set up new operations abroad.

Hence, while the Philippines is well poised to continue growing with much of the growth coming from call center and BPO work, India will need to work a little harder and smarter to maintain its growth trajectory. 


Comments

9 Responses to “India Vs Philippines: Outsourcing outlook”

  1. Michael Hopes on August 25th, 2009 3:48 pm

    No Doubt about that Philippine is growing as a BPO hub for world market.The one of the reason is most of the Multinational Companies believing that Philippine is most Data secured compared to India.and the increasing human resources in Philippine is also one of the reason for it..

  2. custom software Development services on August 26th, 2009 5:26 am

    Outsourcing is the best tool for the companies to improve their profit rate. Check the trends of software outsourcing at http://www.techsol-partners.com

  3. India Vs Philippines: Outsourcing outlook | About Mortgage on August 26th, 2009 9:42 pm

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  4. Jeny on October 13th, 2009 4:51 am

    The Philippines growth in the BPO industry shows only how capable the Filipinos are especially when it comes to call center service and other BPO services. The Philippines has a huge supply of manpower that is IT skilled and very good English speakers.

  5. Massy on April 19th, 2010 8:07 pm

    There is definitely a rivalry there between the countries – who will come out ahead?

  6. VMohanReddy on June 3rd, 2010 6:32 am

    Dear sir,
    In our country very good quality ,high knowledge have manpower in our country if you plan india you can shine business will improve and huge manpower also is available normal rate salary basis and fixed contract employes also available

    Best regards
    vmohanreddy
    hyderabad
    India

  7. amit patel on January 22nd, 2011 12:47 pm

    wellllllllllllllllllllll

    alll i can say is this that filipinno socks in compared to indians

  8. hans juergen on January 31st, 2011 1:35 am

    wellllllllllllllllllllll, amit patel. maybe it’s time you should learn better english.
    better spit out that hot tater and put a sock in it.
    verstanden? comprende?
    go back to farming…

  9. sean labor on February 26th, 2011 6:32 pm

    – Well, Truly, The Philippines…Without any Shadow of a Doubt is Now the WORLD Leader in BPO…

    – I’ve been in the BPO Industry since 2008.CUrrently, Im working as a Technical
    support Analyst with the World’s Networking Giant ( You know the name of that company I bet.)

    – I had this call just recently, and the conversation goes like this:

    > Client: ” What state are you Located? are you in California?”

    > Tech. Agent (Me) : “No, ma’am Im actually Located in the Philippines…Southeast Asia”

    > Client: ” Oh, really? you sounded like your just from the neighborhood. You speak ENGLISH
    excellently…Unlike those Hard-to-deal Indians.”

    > Tech. Agent (Me) : “I accept that as a Compliment ma’am.”

    > Client: “It’s Not just a compliment, It’s a FACT.” I’d rather have someone like you from the Philippines than someone from India”

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