India scores over the Philippines as an Outsourcing destination

In almost every competency to deliver outsourced business to worldwide clients, India is ahead of the Philippines. Its ability to leverage its sheer strength in numbers heavily favor India as the favorite country to outsource business operations that require low-cost talent.

On parameters such as forecasted revenue, English speaking manpower, and strength of economy, Philippines is up against Indian figures that are bound to intimidate the Business Processing Association of the Philippines (BPAP).

Take revenue, for instance. India is expected to earn revenues amounting to $48 billion in 2009, and end with a share of 44.8 per cent of the total outsourcing pie, according to Canadian-based ICT research and advisory firm XMG Global.

Philippines will close the year with $7.3 billion or 21.7 per cent growth in outsourcing. This is lower than the 24 per cent growth forecast due to the slower growth for IT services, and the delay in expansion plans of several captive players.

India's rising revenue graph can probably be credited to its competent and growing manpower adept in English. Despite being born with various native languages, millions of Indians become proficient in English by the time they graduate.

And it is from this continuously replenishing army of technical and non-technical graduates, that companies interested in outsourcing, draw from.

But in the Philippines levels of proficiency in English have dropped-a factor that it needs to address quickly before growth in its outsourcing sector plateaus.

In economic productivity too, India stands on firmer ground. It recorded 6.7 per cent growth in GDP in 2008-09 versus Philippines's 5.2 per cent growth.

It's not just the GDP that is indicative of the future of outsourcing in both the countries. The consequences of the ongoing economic recession have clearly shown that the structure of their respective economies has and will impact its trade-of which outsourcing forms an important part.

As Philippines' economy is export oriented, its immediate economic scenario is bleak. Foreign direct investment is expected to slide in 2009-10 as investors streamline capital.

For the Philippines outsourcing industry to reach 2006-07 level of earnings it is critical that US and European economies gather steam. This is an eventuality that the Philippines can't really fully depend on.

India is far less export driven as compared with the Philippines, private equity investors, and global fund managers are again channeling back direct and indirect investment into the Indian economy.

Clear evidence of this is that the top Indian share index, as of October 1, 2009, shot up by 10,000 points, or by 74 per cent, since January 2009 - right in the middle of one of the worst financial meltdowns the world has witnessed.

And the factor that no country can discount is India's expanding domestic economy that caters to a burgeoning middle class. It is this class, increasingly well-travelled and informed, that itself expects high standards of service execution and thus is fully aware of the quality it need to produce for companies outsourcing.

The still-developing domestic market is a massive opportunity for Indian and MNCs to set up and evolve their outsourcing operations in the next decade.

On comparing the two countries on various key productivity factors in outsourcing; one finds that India's well-developed expertise in every aspect of office outsourcing offers many advantages over Philippines.

India's scorching growth in outsourcing a challenge for Philippines:
According to key players in outsourcing and National Association of Software and Services Companies (NASSCOM), the Indian outsourcing industry is predicted to grow by nearly 55 per cent by 2012.

This will be largely due to the accelerated growth of Knowledge Process Outsourcing (KPO), and growth of BPO (Business Process Outsourcing).The size of the BPO segment in India increased from $2.6bn in 2002 to $9.7bn in 2007, reflecting a Compounded Annual Growth Rate (CAGR) of 30.2 per cent, and is further predicted to grow to $30.1bn by 2012, at a CAGR of 20.5 per cent. The size of the knowledge outsourcing segment in India increased from $0.3bn in 2002 to $2.8bn in 2007, reflecting a CAGR of 56.1 per cent, and is further predicted to grow to $10.8bn by 2012, at a CAGR of 23.3 per cent.

In Philippines, the vision of the BPAP is that by the end of 2010 the industry will have 10 per cent of the world market, and have revenue of $13bn. In other words, in order to compete with India, the Philippines will have to take away almost 20 billion dollars worth of business in the next three years-a target not easy to achieve and pragmatically unfeasible.

Outsourcing professionals in India outnumber Philippines:
In Philippines, its outsourcing industry still has only about 400,000 employees. A survey carried out in 2005, revealed that only 11,526 applicants or 2.89 per cent of the total 400,000 new graduates are accepted into outsourcing companies.

Presently, India has over 800,000 people working catering to the outsourcing sector - double that of the Philippines. This figure is expected to rise to 2,000,000 by 2012 (Source: Nasscom-Everest India BPO study).

The presence of this large employee pool to choose from for outsourcing companies is an industry advantage that India enjoys. Developed over the last 10 years, it will not be easy for Philippines to replicate.

India's cost advantage in outsourcing over Philippines:
In India labor costs have crept upward over the years but have been offset by falling telecom rates. Typical annual salaries range from $7,000 to $15,000 for technical staff employed in outsourced companies, while back-office salaries range from $4,500 to $9,500.

In the Philippines labor costs are higher than India-a big disadvantage in the highly competitive outsourcing industry. Technical salaries range from $9,000 to $17,000 annually, and back office from $5,000 to $10,000.

Literacy in English, but not proficiency, is affecting Philippines' outsourcing sector:
While it is true that English is the medium of instruction in the Philippines, and the country has poured money into improving English proficiency among teachers, the country is presently equipped with Filipino teachers that have poor English speaking and teaching skills. For instance, more often than not most teachers will revert back to their native dialect when teaching English.

A big obstacle to outsourcing growth in the Philippines is the lack of proficiency in English among the graduates the outsourcing industry seeks to employ. A study in 2007 found that more than 95 per cent of applicants for jobs at outsourced call centers were rejected, largely because their command of English was inadequate.

These days, among ordinary Filipinos, it is increasingly difficult to find anyone under the age of 40 who speaks English with confidence. As of 2007 only seven per cent of secondary school graduates had a mastery of English.

In the Philippines, only 46 million people, half of its population, can speak English. While in India, more than 300 million (out of a total population of 1.17 billion) can speak the language-and inevitably English is a major advantage in outsourcing.

In emerging urban cities in India, English is rapidly becoming the second language in homes and in day to day communication. This will further assist the growth of India's outsourcing sector.

Manpower is India's strength in outsourcing:
India has many prestigious technical and non-technical colleges. Every year, India produces around 2,500,000 university graduates, including 400,000 engineers and 200,000 IT professionals. The Philippines turns out 380,000 graduates annually, and only 15,000 of them have core technology knowledge. Here the elephant and ant analogy comes to mind.

With a look to the future, India has also recently allowed foreign universities to open colleges in the country. This will further improve India's education infrastructure-a core sector for outsourcing competency.

Philippine's standard of education is a concern for outsourcing:
In June 2009 the President of the Federation of Accrediting Agencies of the Philippines (FAAP) cited Philippines' Congressional Commission on Education (EDCOM) lamenting 'a continuing decline in the quality of education in this country'. He said this was due to four main factors: a) mismanagement of the education system b) not investing wisely in education c) lack of management competencies, d) systemic corruption.

Another reason why the Philippines's education system, which comprises of 456 state colleges and universities, is not evolving is because three semesters of each eight semester bachelor degree are required to be completely devoted to government mandated subjects. These mandated subjects include the life and works of Filipino national hero Dr Jose Rizal, three subjects of Filipino language, and Filipino cultural subjects. This is not the case in the Indian education system which is molded almost entirely upon Western models.

In India, the education minister, through consensus and comprehensive research, has recently initiated much needed reforms in the school and college education system-making it more global in structure, and adding accountability as a prerequisite for pay revisions.

This will increase India's appeal as a leading destination for every type of outsourcing, and protect its competitive advantage in emerging fields of outsourcing.

As your outsourcing provider, VirtualEmployee.com is acutely aware of the outsourcing pitfalls, and knows exactly how to overcome them.

Following are the crucial components VirtualEmployee.com implements to make sure outsourcing is a success:

Professionalism
Without doubt the most distinguishing factor of VirtualEmployee.com is our professional approach. Without a professional mindset, short cuts will naturally be made which will lead to a chain reaction of multiple errors. And when you are outsourcing work thousands of miles away, even the slightest glitch can have escalating repercussions. To outsource successfully there can be no short cuts, efficiency at every stage is paramount. Many companies do not understand this mindset or approach, "short cuts" are the norm and this is what results in failure.

Hiring the right employee
The most important factor to successfully outsource is to hire the right employee. If the employee you hire does not have the right qualifications, experience, motivation, ability, or work ethic, inevitably they will be unable to produce the results you require.

VirtualEmployee.com has devised a very stringent and rigorous dual HR screening process to ensure you hire the right employee:

Stage 1: Understanding your requirement:
Step 1: For any position you want to fill we ask you to submit to us a detailed job description. We do not make any presumptions with respect to the type of employee you want to hire.

Step 2: Our HR department analyzes the job description you send to us. If we have any questions or uncertainty, our HR department contacts you to resolve the doubt. Our objective is to completely understand the type of employee you want to hire. Only once we completely understand your requirement, can we then recruit a qualified employee for you. You also include in the job description the job duties of the employee. This way we can use our local expertise to select those candidates when keeping in mind the tasks entailed in the job vacancy.

Stage 2: VirtualEmployee.com screening
Step 3: HR executives commence the screening process by scrutinizing candidates' resumes. The HR executives look for resumes that match the vacant job position in terms of qualifications, experience, and expertise.

Step 4: From the screened resumes, those candidates who match the position based on their resumes undergo a telephonic interview. During the telephonic interview, once again the HR executive screens the candidates' suitability for any said position.

Step 5: Those candidates who pass the telephonic stage of screening are invited to our office for a face to face interview. Most candidates are interviewed by a panel of HR executives and there can be up to three HR executives interviewing one candidate. Many VirtualEmployee.com HR executives are from technical backgrounds (in particular, a software programming background), and so the HR executives will/may ask the candidates technical questions. If the HR executives are not familiar with the technical background of the job vacancy they will research the field so that they are in a position to ask appropriate questions. Furthermore, if the HR executives deem it necessary, another interview round will also be arranged between the candidate and another employee from the same technical background as the candidate. This ensures the candidate will accordingly be asked the appropriate technical questions. In addition to asking technical questions, the HR executives will also judge several other factors-including the candidate's interest levels, background, professionalism, and proficiency in English.

Step 6: If necessary for the position, the HR executive will also assign a test to the candidate, e.g., English test for a content writer.

Stage 3: Client screening:
Step 7: Following the face to face interviews conducted by the VirtualEmployee.com HR department, the best resumes are submitted to you. You then review the resumes.

Step 8: From the resumes submitted to you, you select the candidates you would like to interview and/or test. VirtualEmployee.com advises all clients to interview candidates before they decide to hire an individual.

Step 9: Following the interviews and/or test results, you can then decide if you would like to hire any of the candidates.

VirtualEmployee.com has a very high success rate because of the dual nature of its recruitment process. Both you and VirtualEmployee.com are involved and filter through the best candidates. VirtualEmployee.com does not assign to you an employee that it feels is suitable for the position. Rather, it submits to you resumes of candidates who we feel are suitable for the position and then you select the employee you want to hire.

With VirtualEmployee.com you then have the opportunity to decide if the shortlisted candidates are qualified for the position. We encourage you to review the resumes, provide tests, and interview the candidates. With you asking challenging technical questions, assigning tests, and reviewing the candidate's qualifications and experience, you can deduce if the candidate is suitable for the position.

You are the best judge of the type of employee you require and want to hire. And this is why VirtualEmployee.com involves you in the recruitment process; it significantly increases the success rate. You only hire an employee once you are confident of his/her ability, this helps ensure the right employee is hired. If you are not confident in an employee's ability you have no commitment to hire, and this keeps your risk to a minimum. With this layered recruitment process, VirtualEmployee.com ensures you hire the right employee, a prerequisite for outsourcing to be a success.

Infrastructure and hardware-efficiency is the key
When working with an employee located thousands of miles away, it is imperative that both parties are equipped with the necessary infrastructure and hardware. If the employee does not, then even the slightest hiccup can get magnified several fold and considerably hamper one's progress and efficiency.

India experiences frequent electricity cuts and unstable and slow internet access. Working with an employee is simply not possible if this occurs. Equally, if an employee is not equipped with a powerful PC then heavy collaboration and interaction with an employee is not possible. Unavailability of software and other computer peripherals such as fax, headset, scanner, web cam, printer, and a telephone with local number from your country can also prevent an employee from completing their work or doing so in a productive manner.

The VirtualEmployee.com office is, however, maintained to international standards in every respect. VirtualEmployee.com is dedicated to providing quality; which is why we have lease line internet connections, technical support 24 hours a day, new Dell PCs, air conditioning, spacious office desks, a generator etc. Our office is on par with those you would find in the U.S. or Europe. This allows us to create a Virtual office environment, which enables you and your employee to bridge physical distance and, thus, work directly together. Without this it is simply not possible to directly work with an employee remotely.VirtualEmployee.com places a strong emphasis on hardware, infrastructure, and a first-class office, for it is the only way one can successfully hire an employee from India.

Supervision and management
With VirtualEmployee.com you supervise and manage the employees work. Your employee, however, works from VirtualEmployee.com's office in India where they are physically monitored and supervised by the VirtualEmployee.com HR department and VirtualEmployee.com managers. Our physical presence is crucial to the success of outsourcing for it enables the following:

• Professional office working environment
• Logistical control of your employee
• Real-time implementation of your instructions
• Regulation of your employee

VirtualEmployee.com's physical presence creates an office environment equivalent to yours in your home country, and enables us to implement your instructions. In essence VirtualEmployee.com is your physical presence in India. All aspects of outsourcing and employment that you cannot control remotely are taken care of by VirtualEmployee.com. Without adequate supervision and management of your employee, outsourcing becomes undisciplined and deregulated which leads to inefficiency, unprofessionalism, and, thus, ultimately poor results.

Customer support, dedicated HR department and managers
The VirtualEmployee.com customer support department is open 24 hours a day. You are, thus, able to contact VirtualEmployee.com at any time during the day. If you have any query or any problem you can, thus, instantly get in touch with VirtualEmployee.com. The customer support department will respond to your query or issue and VirtualEmployee.com managers will implement any necessary procedure to resolve it. If you have some problem with your employee, work, or any other outsourcing-related problem, VirtualEmployee.com is present to take care of it immediately.

Equally, the VirtualEmployee.com HR department and VirtualEmployee.com managers are present at all times to resolve any issues or problems your employee may be having. Whether their problem is a technical problem, related to their work, or even personal, VirtualEmployee.com is present at all times to provide your employee with assistance.

In summary, VirtualEmployee.com is monitoring the entire outsourcing and employment process at all times. And we are physically present at all times to immediately implement any corrective measures that are necessary. This is crucial to the success of outsourcing, for both you and your employee have a source of immediate contact and immediate assistance. Without such dedicated support, outsourcing is not pragmatic.