Current Affairs


0 Comments 01 December 2010


A report by the Business Process Association of Philippines (BPAP) and Everest Research Institute, an autonomous research and analysis firm, says that the Philippines is set to overtake India as the call center capital of the world.

The report noted that major companies like HSBC, Cisco, BT Plc and T-Mobile are moving their work from India due to the alarming attrition rate there. Several other large firms are also contemplating setting up another core support center in the Philippines.

Another report, by IBM’s Latest Global Locations Trend Annual Report released recently in New York, said the Philippines is now the world’s leader in business support functions such as shares services and business process outsourcing after effectively overtaking India in these categories last year.

The 20-page report, launched in October but was only made available online in November, said it was the first time that India was not in the leading position for these activities. India now ranks No. 2.

“The Philippines has taken over the lead in the global ranking from India, after having challenged the top position for several years,” the report said.

It said the Philippines offered a similarly attractive business environment for international business support functions as India, but has not had the same labor cost increases as have occurred in various Indian “hot spots” in recent years.

The Contact Center Association of the Philippines (CCAP), meanwhile, says the Philippines is already ahead of India in terms of number of call center employees this year.

In a television interview on ANC’s Headstart last Dec. 2, CCAP president Benedict Hernandez said, “When you think of the contact center environment, we have assumed the number one position. Last year (2009), we were about 300,000. This year, its 350,000 in terms of employed Filipino working in call centers in the Philippines compared to only 330,000 in India. Right now, the best place to put a call center from a quality position is the Philippines.” he said.

Hernandez said the country assumed its lofty status because of the quality of English-speaking employees in the Philippines. “We won this war not because we’re lower cost than India. To some extent, we are a little bit higher priced to operate a call center compared to India. We won this battle by virtue of Filipino quality.  We grew faster than India because it’s the Filipino talent, which is world class caliber,” he said.

According to the report released recently, the major outsourcing services buyers are convinced that the Philippines has a number of advantages over India which would help the country to become the most preferred global destination for voice-based sales and customer services.

For instance, they feel that the Philippines enjoys more cultural affinity with the US and possesses a large talent pool. In addition, the Philippines also offers better tax motivations.

BPAP and Everest said the voice-based jobs contribute as much as 45 per cent of India’s entire BPO services exports, estimated at $5.58 billion in 2010. Compared to this, the total export revenues from just voice-based work for the Philippine BPO firms would be about $5.70 billion in 2010.

According to the partner of Everest Research India, Nikhil Rajpal, the Philippines will overtake India in pure call center business in 2010 and be the new capital of the global voice-based BPO industry.

The report also states that major outsourcing services buyers like BT Plc and Cisco are providing more and more voice-based customer support and sales work to inexpensive destinations like the Philippines. For example, the customer support executives in overseas such as the Philippines are paid just one-fourth of what their counterparts in the US with equivalent talent and experience actually get.

Industry experts believe that at the pace at which the Philippines BPO industry is progressing, it is very much possible that in another five years’ time, the firms in that country would leave behind India, whose BPO industry is worth $12.4 billion. The offshoring and outsourcing (O&O) industry has witnessed tremendous growth during the last two years and is now currently worth $9.5 billion.

Last November, IBM opened three new service delivery facilities inside the UP Ayala Techno Hub in Quezon City that will deliver outsourced process services, including human resources, finance and administration, customer relationship management, application management services and shared services (IBM internal) to existing and future clients of IBM’s BPO unit.

This expansion further strengthens IBM’s existing service delivery capability in the Philippines which serves over a million client employees across 84 countries. A mix of BPO services will be delivered to global companies from sectors such as healthcare/ pharmaceutical, consumer goods, technology, entertainment, telecommunication and distribution through these new facilities.

IBM growth markets general manager Bruno Di LeoHe said the Philippines is attractive to international business due to its well-educated workforce, strong work ethic and good language abilities.

“Filipinos are competitive and flexible and productive. That is why we are confident in investing in the future of the Philippines,” he said.

Di Leo said IBM is committed to growth and to the Philippines. IBM operates in eight world-class locations in the business centers of Metro Manila and Metro Cebu and delivers IT and business solutions to leading public and private sector clients throughout the country.

Di Leo also revealed that in the next five years, IBM intends to more than double its employees in the Philippines because the country is a world leader in providing business support functions.

He added that next year, IBM intends to double its business growth in these global delivery centers by building centers of competence with deep industry expertise in business analytics, applications management and helpdesk operations. “We will hire more industry IT architects as well as graduates from top universities,” he noted.

IBM Philippines country general manager James Velasquez said this expansion demonstrates their continued commitment to the country.

“The Philippines is one of the strategic locations in IBM’s Global Delivery network that integrates capabilities, assets and skills without borders. With abundant resources and globally benchmarked processes and methodologies, IBM will provide solutions to global and domestic clients to help them reach higher operational efficiency in a cost-effective way,” he said.

The Economic Times, a publication in the Times of India group, recently reported on all the Indian call centre and BPO companies that are either moving or setting up subsidiary operations in the Philippines. Indian companies now employ over 20,000 in Metro Manila alone. Another Indian call centre company, Convergys, plans to hire 3,000 people this year and Sitel is looking for 4,000 employees.

These companies join well-known multinational companies like MSN-Microsoft, Intuit, Expedia, HSBC, AT&T and IBM, which have already established their service and sales call centers in Manila, Davao, Angeles and Cebu.

The Philippine government has been actively encouraging the development of BPO industries by substantial investments in communications infrastructure. The country’s telecommunications network is superior to that of India, and Filipino call center agents can deal with 20 to 30 per cent more calls a day than can those in India.

BPO companies in the country enjoy income tax holidays from four to eight years, and a five percent tax rate on gross income after that time period. If situated in IT Parks and eco-zones, these companies also enjoy tax and duty exemption on imported capital equipment.

Industry observers note that one advantage of the Philippines stems from India’s much greater general economic success. Last year for example, the Indian economy grew by nearly eight per cent as it has for several years while the Philippine economy grew by only one per cent. As a result, there are many more opportunities for young, educated people in India and there is a high turnover of staff in Indian call centers and BPO offices, as much as 60 per cent a year. With few options, Filipinos tend to stay put.

Others point to the Philippines’ close affinity to the United States that serves as added attraction for America-based multinationals.

Chris Repholz, senior vice-president with the U.S. outsourcing company Zenta, aptly put in a recent speech: “Culturally, India is less westernized than the Philippines. Filipinos speak idiomatic American English better than Indians and their accent is more neutral.”


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