The Philippines is the new outsourcing capital of the world, playing head to head with its biggest rival, India. Though India presently claims to be the outsourcing capital of the world, the BPO hot-spots in the Philippines are gradually overshadowing its reputation. Bangalore, the known no. 1 outsourcing city in the world, faces tough competition from other emerging outsourcing cities, particularly Cebu City, which tops the emerging list. Indeed, more and more companies have begun to transfer their India-based outsourcing operations to the Philippines. Companies that have shifted their outsourcing directions include giant firms like Hong Kong-Shanghai Bank of Commerce (HSBC), Cisco, BT Plc and T-Mobile. With such changes in the two countries’ fortunes, one might ask: what do Philippine call centers have that Indians do not?
First, the Filipinos are ahead of Indians when it comes to understanding the Western culture. Having been an American colony for over forty years, the American way of life has had such a deep impact on the lives of Filipinos. This is evident in their education system and the use of English as the primary mode of communication in schools and public institutions. Indeed, the historical ties between the Philippines and the United States have forged such an intimate relationship between former colony and former colonizer that a third party like India could not disrupt. In this respect, Philippine call centers can empathize better with the cultural quirks of and idioms used by American and European customers.
Secondly, still as a consequence of colonization, there are more proficient English speakers in the Philippines than other Asian countries. Firms that plan to outsource their operations are more likely to trust a country that uses English as its secondary language, than a country that does not. Whether professional or blue-collar, Filipinos practically live and breathe English. Between Indian and Philippine call center agents, the latter have the ability to speak like Native English speakers or use a neutral accent.
Third, the Philippines has an impressive literacy rate, which outshines India’s rating by a 30 percent margin. Per survey of the United Nations Development Program, about 93.4% of Filipinos are able to read and write while only 61% of Indians are able to do this. Mandatory primary education is responsible for this high literacy rate, which is advantageous because it infuses more credibility, influence and knowledge into the Philippine call center industry. In the Philippines, the first six years of primary education is compulsory; the first four of these six years compose the primary cycle, followed by a two-year intermediate cycle.
Finally, Indian call centers are becoming too expensive for many foreign firms. Employee costs in certain industries in India have roughly increased to 60% of US comparable costs. Probably due to having an older BPO industry than the Philippines, the Indians are charging higher fees for operations and employee compensation. With all the setbacks of cultural understanding, lower literacy, English proficiency, and expensive labor and operations, India may well begin to face a call center crisis, despite their expertise in tech support. At the end of 2010, Philippine call centers will earn around $5.7 billion, overtaking the $5.5 billion total revenue of Indian call centers.
