India vs. Philippines - Which is a better destination for outsourcing?

Undoubtedly, both India and Philippines are big players in the outsourcing business and there is a lot of competition going around for the projects and over the future. Philippines has emerged as a threat to both India and China. However, this competition has also helped the overall quality of outsourcing industry to grow. Both these countries are working very hard to deliver quality wise and quantity wise. India is a world leader in outsourcing but is the trend changing? Which is a better destination to outsource? Let’s find out.

Workforce Availability
If you compare India and Philippines outsourcing market on the basis of workforce availability then India wins hands down. India is the seventh largest country in the world with over 1 billion population according to 2011 census, whereas, Philippines’s population is just 94 million according to a 2010 estimate. Additionally, in India over 50 percent people are below age of 25 which is a huge advantage. The education system of India produces thousands of graduates and post graduates every year looking for jobs.

English Accent
Although English accent is not essential in all the outsourcing jobs, it still plays an important role. There are several people who speak English but the accent is usually under suspicion. People criticize Indians for having a thick accent which however is improving in the younger generation. On the other hand, the Filipino accent is considered to be of a better quality which has contributed tremendously in its growth.

Labor Rates
The labor rates depend on a lot of variable but on an average the wages in India are much lower than in Philippines. Undeniably, costs are low in both countries but the salary is usually low in India. This is because of the availability of labor, currency rates, competition etc. Obviously, wages depend on the company and type of work.

Technology
Technology is another important factor that is going in India’s favor. The data entry jobs are still there in India, but it has been noticed that the outsourcing projects coming in India are growing in terms of complexities. The Indian technological institutes are world class and help in production good talent with technical expertise. Philippines too is catching up in this filed but it still needs to grow a lot to match the IT infrastructure of India. The ISP, networking and telecom brilliance make India strong in outsourcing business.

Government Support
The governments in India and Philippines are open to foreign investment and facilitate globalization. However, Philippines is relatively new in the outsourcing so it has to be seen how the government acts in future.

Looking at the current scenario, India seems a better option to outsource projects in terms quantity and quality. The infrastructure and technology in India is also better with costs. Moreover, the future of outsourcing also seems strong in India because of the population and the average age which is a huge advantage in its favor. In the coming years, Philippines market will grow but it cannot pose a serious threat to jobs in India.

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Comment by Glenn Gil on November 29, 2011 at 7:17am: Dec. 04, 2010

According to the recently released IBM's Global Locations Trend Annual Report in New York, the Philippines is now the world leader in business support functions like shares services and business processes outsourcing, overtaking India since last year in these categories.

Like India, the Philippines offered a similarly attractive business environment for international support group.

However, labor costs in the Philippines have not increased as much as it did in India.

The country has become the call center capital of the world with its 350,000 call center employees against India's 330,000 workforce, said the Contract Center Association of the Philippines (CCAP).

The expected revenues from the call center industry is expected to reach $5.7 billion in 2010 higher than India's $5.5 billion, said the CCAP.

Call centers provide the so-called "voice" like customer support and sales. They are part of the business processes outsourcing (BPO). They make up 70 percent of the BPO in the country.

The Business Processing Association of the Philippines said there are 600,000 Filipinos in the BPO industry.

Here is the list of leading countries in BPO, according to the IBM Report:

1. The Philippines

2. India

3. United States

4. Poland

5. China

6. Britain

7. Columbia

8. Costa Rica

9. Fiji

10. Ireland

11. South Africa

12. Sri Lanka

13. Hungary

14. Australia

15. Egypt

16. Chile

17. France

18. Canada

19. Singapore

20. The Netherlands

The IBM report cited Sri Lanka as another country that has positioned itself as an alternative to India.

India's Tata Consultancy Services has opened its first BPO center in Southeast Asia at the Bonifacio Global City in Taguig, Philippines on Thursday.

Recognizing the high revenue generated from BPO, Filipino lawmakers would file measures to jump start legislative support for the industry particularly its workers for the booming industry.

A New Capital of Call Centers (New York Times) Nov. 25, 2011

MANILA — Americans calling the customer service lines of their airlines, phone companies and banks are now more likely to speak to Mark in Manila than Bharat in Bangalore.

Over the last several years, a quiet revolution has been reshaping the call center business: the rise of the Philippines, a former United States colony that has a large population of young people who speak lightly accented English and, unlike many Indians, are steeped in American culture.

More Filipinos — about 400,000 — than Indians now spend their nights talking to mostly American consumers, industry officials said, as companies like AT&T, JPMorgan Chase and Expedia have hired call centers here, or built their own. The jobs have come from the United States, Europe and, to some extent, India as outsourcers followed their clients to the Philippines.

India, where offshore call centers first took off in a big way, fields as many as 350,000 call center agents, according to some industry estimates. The Philippines, which has a population one-tenth as big as India’s, overtook India this year, according to Jojo Uligan, executive director of the Contact Center Association of the Philippines.

The growing preference for the Philippines reflects in part the maturation of the outsourcing business and in part a preference for American English. In the early days, the industry focused simply on finding and setting up shop in countries with large English-speaking populations and low labor costs, which mostly led them to India. But executives say they are now increasingly identifying places best suited for specific tasks. India remains the biggest destination by far for software outsourcing, for instance.

Executives say the growth was not motivated by wage considerations. Filipino call center agents typically earn more than their Indian counterparts ($300 a month, rather than $250, at the entry level), but executives say they are worth the extra cost because American cu

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