India vs. Philippines: Who’s winning the call center outsourcing game?

OABPO Blog Team Published on March 14, 2014

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There’s no denying that the Philippines and India are the two top leaders in the global call center outsourcing sector. These two countries have always been juxtaposed in the business process outsourcing (BPO), contact center, and offshoring industries. But the question is: Who really is winning the game?

The Indian quandary

For five years in a row, the entire Indian BPO sector recuperated from the losses incurred from several emerging economies such as China, Brazil, Mexico, Thailand, Poland, Chile, and the Philippines. But this recuperation is far from over, as India is continuously seeing jobs that were once theirs being entrusted to nearby countries, especially to the Philippines, their greatest rival.

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In a Nasscom economic survey last year, India has a 10% overall loss in the global BPO market. Not really a big one, but for a country that has been a world outsourcing leader for more than a decade, such loss is one big hit in the gut.

But what’s hurting India big-time for the past three years or so is its international taxation ruling. The existence of Permanent Establishment (PE) in every BPO activity in India, which basically gives increase to value added tax liability to the investor, is robbing the country tons of outsourcing revenues every year. For a long time, this has shooed a lot of foreign investors away and forced them to look for a greener pasture in nearby shores. And most of them flew to the Philippines.

Below this quandary are the grueling realities that Indian call center outsourcing needs to work on immediately: the worsening attrition rates, the declining economy, and their disintegrating English proficiency, which affects their voice sector immensely. And they have to take good care of the only sector they still dominate today: the IT sector.

The Philippine predicament

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The Philippines has its own share of problems as well. Despite its continuously flourishing state, the Philippine outsourcing industry is still pestered by the increasing employee attrition rate, data overload, and lack of professionals who will fill in the increasing managerial posts due to the left and right springing of new contact center businesses.

However, according to various global research and business groups, the Philippines remains to be one of the top outsourcing destinations in the world despite the aforesaid quandaries, overtaking leaders India and Ireland. It is set to increase 15% in revenue in 2014 and go bigger in the next three years.

In addition, the implementation of the ASEAN Economic Community (or AEC, the Asian version of Eurozone) in 2015 would boost this growth, as this will encourage giant international firms to invest more in the Asian region due to the lowering of trade and employment barriers.

Who wins it?

As of today, the Philippines is leading the overall outsourcing game, but it doesn’t mean it gets a permanent hold of the much-coveted spot. There are many things that await and may change the game for the countryโ€”chiefly the national elections in 2016, as it would welcome a change in economic policies. But for now, the Philippines must continue its effort in aligning the call center outsourcing sector with the improvements of different promising sectors such as agriculture, infrastructure, and tourism.
Hence, the game is far from over.

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