Outsourcing: The Philippines vs. India

The cost of running a global business is becoming prohibiting as technology, best practices, and resources fluctuate. One thing that remains steady is talent. With the high demand for exceptional talent, many countries have made people, processes, and knowledge their primary selling point. They offer talent to companies outsourcing business solutions to save on operation costs.

The Philippines and India have been neck and neck for the past few years, competing for the top spot as the leading business process outsource provider in the world. India held this position for years because they have a large population of IT professionals. Towards the end of 2010, however, IBM’s latest Global Locations Trend Annual Report showed that in 2009, the Philippines has taken over India for the leading BPO resource. They now rank first on the list of business support function providers, with India following as a close second.

Why Businesses Choose the Philippines

According to IBM’s report, the Philippines offers an equally desirable environment for international business support. Several things make the country stand out: the Filipinos’ greater awareness of Western culture, their superior command of the English language, and lower costs of operation.

Bar graph showing top ranking destination countries by estimated jobs in business support services in 2009

The Philippines has one of the highest literacy rates in Asia, with a functional literacy rate over 80%. This means they have a large, fresh talent pool to source skills from. Schools all over the country use English as their medium for teaching students, making Filipino professionals the largest English-speaking nation in Asia. The country has maintained very close ties with Americans over the years. Their laws, educational system, and culture are heavily influenced by Western practices and beliefs. International companies can negotiate and communicate their demands better as a result.

Finally, the cost of running a BPO company in the Philippines remains very low. India, on the other hand, has suffered from economic inflation following the outsourcing boom. This is why outsourcing providers in the Philippines offer the same quality services for more competitive prices.

BPO’s Geographical Shift

Businesses outsourcing to India began shifting to new providers in 2009 for various reasons. According to BusinessWeek, while the demand for IT services remains strong in Southern India, global companies either chose local talent or outsourced non-IT processes from other countries. Rising service costs and lack of infrastructure development played a huge role in their decision to switch providers. The quality of service also came into question. Other regions in India like Gurgaon do not have the same talent pool the south has – in fact, they have a huge shortage of skilled workers.

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