Why companies prefer outsourcing to the Philippines over India

Why companies prefer outsourcing to the Philippines over India

September 30, 2013
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For years, there has been an on-going battle between India and the Philippines for outsourcing supremacy. Recently though, the number of companies outsourcing to the Philippines over its other Asian competitor is increasing, as evidenced by recently bagging the title as the world’s call center capital.

Both of these locations have cheap labor markets and offer unique values that draw in foreign companies. Here’s a short comparison between the two.

Outsourcing to India

As of late 2012, outsourcing to India is stated to be 30% less expensive as compared to the Philippines. According to the news portal Invest Vine, this is due to the steadily appreciating peso and depreciating rupee. Clearly, India offers cost advantages that appeal to companies with special budget constraints.

On the other hand, Indians are known for their thick accents, which are deemed undesirable for call center operations. Although considerable proportions speak decent English, it is British English, a legacy of the British colonial rule which differs in vernacular, context, and phraseology from traditional American English.

However, the true problem lies not on the accent or language, but on the disconnection of Indians from the Western culture. The local population is not familiar with Western food, movies, or pop music - aspects that generate significant Western influence. There are also local cultural practices that clash with traditional American cultural understanding.

As a result, customers from Western countries, and even clients themselves, find it difficult to communicate with Indian professionals.

Outsourcing to the Philippines

The Philippines has long been a contender in the global outsourcing arena. Currently, its niche lies in voice-based services, although there are organizational efforts to expand its reach to other specialized areas.

The main strength of this country is its workforce. In contrast to the US, a degree in college is a prerequisite for the natives to find good employment. Thus, it is not surprising that 95% of call center and outsourcing professionals are college graduates. This means that companies can ship not only their customer service functions, but other higher-value operations as well, including IT and other web services.

Additionally, English is the second language in the country. Most Filipinos can speak English fluently and are familiar with common idioms, with a clear neutral accent that makes them ideal for international customers. More importantly, Filipinos are accustomed to the Western culture - a key factor why foreign companies decide on outsourcing to the Philippines over other destinations.

The locals embrace song titles from US hit charts, watch Hollywood films, and consume food with Western origins, among others. They also have lifestyles akin to many Western countries. This strong cultural affinity helps in building rapport and communication to both clients and customers. It also prevents miscommunication and other cultural-related hindrances for other types of business operations.

Given the country’s English-proficient, college educated workforce, and cultural affinity with the West, more companies are choosing this Southeast Asian country over its rival particularly for voice-based services such as customer service and sales.

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