January 22, 2013
BANGALORE: The Philippines, led by its capital Manila and followed by secondary cities such as Cebu, Mandaluyong and Taguig, has emerged as a key IT/ITeS destination, posing a challenge to India's outsourcing story.
January 22, 2013
BANGALORE: The Philippines, led by its capital Manila and followed by secondary cities such as Cebu, Mandaluyong and Taguig, has emerged as a key IT/ITeS destination, posing a challenge to India's outsourcing story.
The latest annual ranking of the top 100 global outsourcing destinations by Tholons, an advisory firm for global outsourcing and research, places Manila at No. 3, up from No. 4 in last year's survey. It has pushed Delhi down to No. 4.
The latest annual ranking of the top 100 global outsourcing destinations by Tholons, an advisory firm for global outsourcing and research, places Manila at No. 3, up from No. 4 in last year's survey. It has pushed Delhi down to No. 4. Cebu City too went up one rank in the top 10, pushing Dublin (Ireland) down. Indian dominance continues though, with six Indian cities in the top 10 and Bangalore still the No. 1.
The critical factors that are adding momentum to Philippines are its cultural and accent similarities with the US, cost competitiveness, and a strong positive perception of BPO careers (they are not stop-gap careers like in India). The Philippines government is also keeping its focus firm on the development of the industry through grants and infrastructure developments.
Salil Dani, practice director at outsourcing advisory and research firm Everest Group, said the Philippines is cheaper by up to 70% for US companies. "The country is the leader in voice (call centres). But its non-voice story is still untold. A lot of Indian and global BPOs in the financial, analytical, HR and people-based services are expanding in the country. The Philippines' current IT/ITeS market is $14 billion, of which IT is only $2 billion. But remember, a few years ago the total market was barely $7 billion. Look at the way it's catching up," said Dani. Ankita Vashistha, managing director, Tholons, said costs are rising in India. "Infrastructure and quality of life are also under pressure in Indian cities and these could impact growth in the future," she said.
Convergys, a US-based customer management solutions company, has 18 call centres in the Philippines. UnitedHealth, a US-based healthcare provider, has back-office operations in Taguig City. EXL is opening its third centre in Cebu City. IBM is planning to grow its BPO services in the country, focusing on higher value analytics and high-value customer support services. Wells Fargo & Co is setting up a business support centre in Taguig City to provide customer service and back office services. JP Morgan Chase has recently expanded in Manila by establishing a 1,000-employee facility.
Sanjay Dhawan, executive director at PricewaterhouseCoopers, said local government had created a lot of momentum. "More and more corporations are keen to expand to the country as no one wants to put all their eggs in the same (India) basket."
Pradeep Udhas, executive director at KPMG, said the Philippines had learned lessons from India in terms of best practices, talent management and handling taxation challenges. Som Mittal, president of Indian IT/ITeS industry body Nasscom, dismissed concerns that India had reasons to worry: "Our own companies are expanding to the region. Outsourcing is a global play. So it's less about competition and more about partnership."
Malaysian cities have also moved up in Tholons listing, as have Latin American cities. Montevideo, capital of Uruguay, has moved up six places to No. 37, Bogota, capital of Colombia, has moved up six places to No. 49, and Medellin, Colombia's second largest city, has moved up seven places to No. 53. This indicates a sense of urgency in Latin American countries to explore new industries like outsourcing, said the Tholons report.
Courtesy: TOI
