Philippines challenges India in race for the outsourced dollar

Philippines challenges India in race for the outsourced dollar
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First Published: Tue, Feb 27 2007. 01 24 AM IST
Updated: Tue, Feb 27 2007. 01 24 AM IST
It’s dusk in the Philippines capital, Manila, and the five-storey office of Advanced Contact Solutions Inc. (ACS) is beginning to fill up.
By 10pm, all 1,600 call-centre agents will be at work, re-booking airline flights in the US and dealing with clients of phone companies and insurance firms. The Philippines, with a large pool of English speakers and a cultural affinity with the US, is developing as a strong second to India in the global outsourcing market.
“We’re actually flooded, we have a deluge of client visits. Every week, we are entertaining somebody,” said Arthur Harow, vice-president for operations at ACS, which is looking to expand into non-voice outsourcing, including documentation, information technology (IT) and financial services.
“In the past, you would sell the concept of ‘Why the Philippines?’ Now you don’t have to sell the Philippines.” ACS has 5,400 seats now in call centres, up from 800 in 2004.
The Philippines earned $3.6 billion (Rs15,856 crore) from outsourcing in 2006, up 50% from last year, and the government estimates revenue could jump to $12.2 billion by 2010.
India, the leader in the global outsourcing market, earned $6.2 billion in the 12 months to March 2006, and this is likely to jump to $8 billion by March 2007. Even outsourcing firms based in India are moving some of their operations to the Philippines.
“India is getting to be an important source of investment in IT and IT services,” said Celeste Ilagan, executive director for ­international promotions at the government’s investment ­agency. “Clients of Indian companies have dictated that apart from operations in India, they should have a back-up offshore and the Philippines is always chosen to complement Indian operations.”
Big outsourcing players from the US such as Sykes Enterprises Inc., Convergys Corp., PeopleSupport Inc., Accenture Ltd and eTelecare Global Solutions Inc. already have branches in the Philippines.
Last year, the world’s largest maker of personal computers, Dell Inc., opened its first call centre in the country and a ­second contact centre is in the works.
Kiran Karnik, president of India’s software and service industry group, Nasscom, said that, for some lines of business, the Philippines was a better bet because it has stronger cultural ties with the US than India does.
“If you want to do a marketing kind of thing, India is not the place. Go to the Philippines because the cultural affinity is very, very high,” Karnik said at a recent conference in Manila.
The stakes are high, with the Philippines tapping less than a fifth of the $80 billion global outsourcing market at the end of 2006. India corners at least 43%.
“I think 2007 is going to be another positive year for the industry,” Ilagan said. “Since 2007 started, there have been more enquiries on information technology outsourcing, software development. It has become more diverse.”
Ayala Corp., the country’s oldest conglomerate and its fourth most valuable firm, joined the outsourcing bandwagon last year when it set up a unit focusing on high-value services such as graphics design and legal process outsourcing.
But while the high value of so-called business process outsourcing is growing, the Philippines will remain mainly a voice-based centre.
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First Published: Tue, Feb 27 2007. 01 24 AM IST
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