Why outsource to the Philippines rather than India

Angela McDonald • 05/07/2016

India is the traditional home of outsourcing, but recently the Philippines has been making huge gains in the area. Manila is now considered to be the call centre capital of the world, and Tholons Top 100 Outsourcing Destinations ranks the city at number two, ahead of Mumbai – a city synonymous with outsourcing.

There are a number of reasons to look at outsourcing to the Philippines rather than India.

Lower ongoing costs

India has had a long-standing problem with high inflation, which hovers around the 5% mark. This pushes wages up similarly, as they need to meet with the cost of living. The projected average wage increase in 2016 is 10% across all Indian industry.
In comparison, the rate of inflation in the Philippines is predicted to remain low, at under 2%. Thus wages will remain steady and you can maintain the cost benefits of outsourcing.

Lower staff turnover

According to a survey conducted by Kelly Services, call centres in the Philippines have staff turnover rates which are 42% lower than those in India. As a consequence, staff tenure in India is staggeringly low at only 11 months.

Government support

The Philippines Government is highly supportive of the BPO industry, and as a result there has been significant investment in internet and telecommunications services, particularly to the business districts of Manila. In order to make the country more appealing to overseas businesses, the Data Protection Act requires that all businesses in the Philippines meet international data privacy regulations, making the country as safe as anywhere in managing sensitive data.

Higher quality customer service

In Indian BPOs there is a significant amount of specialisation and “tiering”. This results in poor customer service as multiple people are required to deal with one customer. On the other hand, in Philippine BPOs there is an expectation that staff who work directly with customers will be “universal agents” – able to address all the customer’s needs.

Neutral accents

While it may be noted that Filipinos have somewhat of an American twang, the accent when speaking English is a lot less marked than in many Indian regions. This makes communication easier between local staff and offshore staff.

More favourable demographics

The average age of a person in the Philippines is 23, which is the youngest in Asia. With a bulk of young, often university-educated, workers competing for jobs, that gives you more qualified candidates at lower wages. The literacy rate in the Philippines is 93%, as opposed to India’s 61%.