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Despite Call Center Outsourcing Boom in Philippines, India Will Remain On Top

There is much talk recently about the Philippines having stolen a march over India and other Third World countries when it comes to the burgeoning call centre outsourcing industry. The call center industry comprises 80% of the outsourcing industry in the Philippines. For some skeptics, it may seem like the beginning of the end for the Indian outsourcing boom. Has the bubble finally burst?

However, nothing could be further from the truth. India’s position as the world leader in outsourcing as a whole remains unshaken and undisputed, despite the Philippines having commandeered a sizeable chunk of the BPO market. India is still hailed as the hub of the outsourcing industry and continues to be the world’s favourite outsourcing destination. There has to be a very strong reason behind this rationale.

Facts about the Philippines and why call centre outsourcing is gaining popularity there:

  1. Filipinos have a natural affinity towards the American culture since the Philippines was an American colony for almost 50 years.
  2. In addition, the Filipinos watch American TV serials and are much more familiar with the nuances of American English than Indians who have been exposed to British English and are perceived to be more UK-oriented.

All these facts are indeed impressive. However, why is it then that India continues to dominate the outsourcing world?

Let’s examine the facts that strongly swing things in India’s favour:

  1. Strong education system: Compared to its immediate neighbour, and also one who has recently entered the outsourcing fray – Pakistan – or any other Asian country, India is head and shoulders above the rest as far as education is concerned. Although India is a Third World country, what distinguishes India from other Third World countries is its strong and robust education system. That is why 350 million Indians speak English when it is not their first language and why so many Indians emigrate via brain drain to the West. Every sector – engineering, law, accounts, I.T, financial services, you name it – is bursting with highly qualified people in every industry.
  2. Dense population: India has a population of over 1 billion (1000 million) whereas the Philippines’ population has just crossed a 100 million, as per the 2011 Census. The logistics are simple. Greater the population, larger the talent pool, and bigger the scope for outsourcing. So, in terms of sheer numbers, India is miles ahead of the Philippines.
  3. Stable government: India has a stable government, offering countries a safe haven for outsourcing. Not surprisingly, all the big US players like Microsoft, Del,, Shell, LG have their offshore offices in India. Even Google has opened its R&D centre in one of the prominent IT-centric cities in India, Bangalore.
  4. Fast-growing Indian economy: The Indian economy is among the ten fastest growing economies of the world, with government policies strongly favouring outsourcing and IT outsourcing in particular.
  5. Excellent satellite and telecommunication links: India boasts an excellent satellite connection, enabling outsourcing companies to enjoy access to high-speed Internet connectivity – the lifeline of successful outsourcing. The Government of India is committed to further development of the IT sector, creating Software Technology parks and offering incentives to the software outsourcing industry.
  6. More to India than just call centre outsourcing: The most crucial part is that call centre outsourcing is just one portion of the outsourcing pie. Indian professionals are adept at handling even the more complex forms of outsourcing like KPO (Knowledge Process Outsourcing), LPO (Legal Process Outsourcing), MPO (Medical Process Outsourcing).

Why call centre outsourcing is catching on in the Philippines

One must remember an essential fact. The call centre outsourcing industry is in its fledgling stage in the Philippines. It is just starting out, so naturally their costs are slightly lower whereas in India, because the call center outsourcing has been in existence for over a decade now, costs have slightly risen. Secondly, due to their affinity to the American culture, the fluency in English of the average Filipino is another point in their favour.

Final analysis

Outsourcing is not a new phenomenon in India. It started in a very basic way some 20 years ago and it has been getting more and more complex ever since. In  other words, the Indian outsourcing industry is evolving constantly. While initially companies outsourced back end work like legal transcription, today core legal research is also being outsourced. So, looked at from this perspective, Indian outsourcing may have lost some of its share to the Philippines, it most certainly does not mean that it is in decline. It simply means that it is just encompassing more complex and new sectors.

It just so happens that outsourcing in India started with call centers and IT outsourcing, but the fact of the matter is that this pattern can be repeated several times over in other fields too – AND IT WILL and it is just starting too. Fields like SEO, medicine, law, engineering are only just beginning to realise the benefits of outsourcing to talented Indian professionals.

What could act as a deterrent to outsourcing to the Philippines, however, is a) its comparatively small population, which obviously means lesser number of people available for work in any field, b) it just does not have the requisite talent in other fields. Sure, it can compete with India where fluency in English and BPO is concerned, but beyond that, it simply lacks the numbers or the expertise to dislodge India from its very firm position at the top of the outsourcing heap. They do not have anywhere near the same number of engineers, doctors, lawyers, accountants or architects. They simply cannot compete in these other industries because they just do not have the numbers and that is why India will always maintain its dominance.

So, in the final analysis, it does appear that India will continue to retain its supremacy on the outsourcing industry. Competition is only to be expected; however, it must be kept in mind that outsourcing has now entered its second phase of sorts. With even core functions now being outsourced to India as opposed to the initial cautious outsourcing of only the non-essential business processes, the Indian outsourcing vendors have proved that they are more than capable of being trusted with complex, long-running projects that need greater and intensive involvement from their side.


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