India VS Philippines: Which is the Better Outsourcing Destination?

In the 2014 list of Tholon’s Top 100 Outsourcing Destinations, India and the Philippines ranked first and second place, respectively. The competition between these two countries is getting tougher as India strives to maintain leadership amidst the aggressive strategies of the Philippines’ continuously growing BPO industry.

For companies looking to outsource their business functions, it is important to note the similarities and differences between the BPO industries of these two countries. To find out which one is the better outsourcing destination, let us compare the two according to the following factors:

Manpower

One of the reasons why companies prefer the Philippines over India is due to its treasure trove of highly-educated manpower. In fact, according to the United Nations Development Programme, the Filipino workforce has an impressive literacy rate of 93.4%, whereas the Indians only achieved a rate of 61%.

Language

Providing good customer service to consumers worldwide requires customer service representatives to have excellent communication skills specifically in English. Poor English speaking skills result in difficult conversations, frustrated customers and loss of business for the company. In this case, the Philippines fare better than India because the latter’s British English accent can be thick and difficult to understand.  With English as their second language, Filipinos speak in a neutral accent preferred by most Western countries.

Culture

Filipinos are naturally hospitable, service-oriented and responsive, which are all traits necessary to have in any customer service environment. Compared to India, the Philippines has had closer ties with the Western world for a longer period of time, particularly with Americans. This is already deeply entrenched in their way of life, which is evident in the clothes they wear, the food they eat and even the movies and TV shows they watch. Because of this, Filipinos are able to relate and communicate better with Westerners.

Service Quality

India and the Philippines both offer a variety of offshore services to clients. According to an article on the Oxford Business Group though, pure voice services account for 62% of total BPO revenues in the Philippines in 2013. Initiatives are currently being made to expand service offerings in order to maintain their competitive edge. India is said to be more successful in sales and upselling services. This is said to be the reason for Aegis’ decision to transfer 600 call center positions from the Philippines to India.

However, it all boils down to the quality of service. A press release issued by the Assocham stated that India has been losing 70% of its call center business to the Philippines and Europe. This can be attributed to their problems with staff turnover of 31% among other reasons.

Industry Growth

The Philippines’ BPO sector continues to thrive each year, growing at an average annual rate of 20%. Employment has currently reached 1 million milestones and is expected to increase some more in the years to come. Estimates from the IT and Business Process Association of the Philippines (IBPAP) reveal that the industry generated US$15 billion in total revenues in 2013 and is expecting it to reach US $18 billion in 2014 and US$25 billion by 2016.

On the other hand, NASSCOM reported that India generated US$17.8 billion in 2013, which is a 10.2% increase from 2012 figures, despite losing a significant amount of their business to the Philippines.

Based on these facts and figures, we can see the reasons why India remains at the top of the list of BPO destinations. However, the Philippines is clearly gaining ground and has the potential to reach the top spot in the future.

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India VS Philippines: Which is the Better Outsourcing Destination?

In the 2014 list of Tholon’s Top 100 Outsourcing Destinations, India and the Philippines ranked first and second place, respectively. The competition between these two countries is getting tougher as India strives to maintain leadership amidst the aggressive strategies of the Philippines’ continuously growing BPO industry.

For companies looking to outsource their business functions, it is important to note the similarities and differences between the BPO industries of these two countries. To find out which one is the better outsourcing destination, let us compare the two according to the following factors:

Manpower

One of the reasons why companies prefer the Philippines over India is due to its treasure trove of highly-educated manpower. In fact, according to the United Nations Development Programme, the Filipino workforce has an impressive literacy rate of 93.4%, whereas the Indians only achieved a rate of 61%.

Language

Providing good customer service to consumers worldwide requires customer service representatives to have excellent communication skills specifically in English. Poor English speaking skills result in difficult conversations, frustrated customers and loss of business for the company. In this case, the Philippines fare better than India because the latter’s British English accent can be thick and difficult to understand.  With English as their second language, Filipinos speak in a neutral accent preferred by most Western countries.

Culture

Filipinos are naturally hospitable, service-oriented and responsive, which are all traits necessary to have in any customer service environment. Compared to India, the Philippines has had closer ties with the Western world for a longer period of time, particularly with Americans. This is already deeply entrenched in their way of life, which is evident in the clothes they wear, the food they eat and even the movies and TV shows they watch. Because of this, Filipinos are able to relate and communicate better with Westerners.

Service Quality

India and the Philippines both offer a variety of offshore services to clients. According to an article on the Oxford Business Group though, pure voice services account for 62% of total BPO revenues in the Philippines in 2013. Initiatives are currently being made to expand service offerings in order to maintain their competitive edge. India is said to be more successful in sales and upselling services. This is said to be the reason for Aegis’ decision to transfer 600 call center positions from the Philippines to India.

However, it all boils down to the quality of service. A press release issued by the Assocham stated that India has been losing 70% of its call center business to the Philippines and Europe. This can be attributed to their problems with staff turnover of 31% among other reasons.

Industry Growth

The Philippines’ BPO sector continues to thrive each year, growing at an average annual rate of 20%. Employment has currently reached 1 million milestones and is expected to increase some more in the years to come. Estimates from the IT and Business Process Association of the Philippines (IBPAP) reveal that the industry generated US$15 billion in total revenues in 2013 and is expecting it to reach US $18 billion in 2014 and US$25 billion by 2016.

On the other hand, NASSCOM reported that India generated US$17.8 billion in 2013, which is a 10.2% increase from 2012 figures, despite losing a significant amount of their business to the Philippines.

Based on these facts and figures, we can see the reasons why India remains at the top of the list of BPO destinations. However, the Philippines is clearly gaining ground and has the potential to reach the top spot in the future.

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