RP may dislodge India as leader in global BPO

The Philippines may soon outpace India as the leader in the multi-billion dollar global business process and IT services outsourcing industry as India faces serious challenges that are threatening its leadership position and opening the door wider for alternative locations such as the Philippines.

The Philippines is now second to India in terms of volume of business process outsourcing (BPO), even as it expects to capture a significant share of the world’s call center jobs.

CB Richard Ellis (CBRE) Philippines managing director Rick Santos told The STAR in a recent interview that even now, every call center that has operations in India also has one in the Philippines to complement the former and as part of a two-country strategy.

Santos, also president of the American Chamber of Commerce in the Philippines, likewise revealed that there is also less resistance in the United States to outsourcing. "The Americans are realizing that they cannot stop their businesses from outsourcing to other countries. Our job is to make sure that the Philippines gets that opportunity," he said.

CBRE, in a recent report, said India’s success in the outsourcing industry that has been phenomenal (it has created around 550,000 jobs in software and 280,000 in back-office work in a $12.5-billion industry growing at 30 percent a year) is also faced with challenges, such as the continual rise in wages, appreciation of the Indian rupee, strained infrastructure, and a finite labor supply.

According to global outsourcing firm Hewitt Associates, an Indian outsourcing firm can expect to lose 15 to 20 percent of its staff every year while in some cases, the attrition rates can be as high as 50 to 75 percent, forcing outsourcing firms to boost salaries and offer more perks.

Hewitt likewise said that general wages in India’s IT outsourcing market have been rising by 15 percent a year while the appreciation of the Indian currency vis-à-vis the dollar is placing pressure on billing rates. India’s computer, telecom, and physical infrastructures are already strained, it added.

Several consulting firms have predicted