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Outsourcing: Why the Philippines is beating India

ChessWhen engaging in outsourcing, one of the most important issues that should be considered is the location – both the Philippines and India are the most popular outsourcing destinations. So how do you know which one is right for you?

The Philippines is the contact centre capital of the world - there are more contact centre agents in the Philippines than in India. It also runs second only to India in terms of BPO and KPO operations (simply put this refers to back office and technical work). However, the growth rate of back office work is faster in Philippines than India at the moment. 

Let’s look at some hard data.


India Philippines

Time Difference (with Sydney)         

4.5 - 5.5 hours subject to DST                                 2-3 hours behind. DST. Perth time.
2014 nominal GDP USD 2.006 trillion 272 billion
2014 inflation rate 6.4% 4.1%
Population 1.252 billion 98 million
English speaking percentage 12% 78%
No. of graduates per year 6.8 million

550,000

No. of IT/Engineering graduates per year 770,000                      112,000
Ease of doing business ranking (2014 World Bank)   142  95 


Time Zone

From the perspective of Australian small business owners, the Philippines has the easiest time zone to work in. Despite the fact that there is a two to three-hour time difference (subject to day light saving), your Philippine staff are quite willing and prepared to come to the office earlier in the morning and work shifts that begin at 7am Manila time, which is 9am Sydney time. Starting early in Manila allows your staff to get to work without having to deal with the rush hour traffic and believe me traffic in Manila is horrendous.

Choosing an outsourcing location based on the time zone may seem trivial, but the most productive way to work with your remote team is to work with them within the same time zone. This will make it more convenient for everyone – for you to assign your tasks, and for your staff to accomplish them promptly and efficiently.

It’s often claimed you can simply assign tasks and work assignments throughout the day and these can be done overnight (such as in the case when you work with an Indian team and the schedule starts five or so hours later in the day). However, you should consider that this is not the most productive way to work. Why? Simply this: when your virtual staff have questions regarding the tasks you assigned them or when there are related concerns that need to be addressed, these same issues will end up on the backburner and will be resolved the following day (unless you’re happy to work until 10.30pm).

Of course you can have your Indian remote team start earlier in the morning, say, for instance, at 3am. The practical truth, though, is that this is way too early and may limit the attractiveness of the role and subsequent talent pool. In the end, you may need to pay them a premium to attract the right staff and then have tedious tardiness and absenteeism issues to deal with, too.

IMG 7271 800x533

Communication and Attitude

Given the scale of the Indian population, it is true that there are more English speakers. Still, despite this, the Philippines has succeeded in overtaking India in contact centre work because of the fact that the Philippines provides access to talent with better communication and a stronger service orientation. When you’re working directly with your remote team and managing them on a day to day basis, communication is just as important as technical skills. Without solid communications skills in practice and without your constant communication with them, your team will be much less productive.

Equally, finding someone with the technical and communication skills is only half the battle. The other part of the challenge is to find staff who maintain professional habits and keep the right work behavior. Simply put, they should have the correct attitude towards their work.

 Depth of Talent Pool

Clearly, India produces more IT graduates than the Philippines and subsequently has more, for example, developers and they are cheaper. It’s worth noting also that both Microsoft and Google now have Indian CEOs. However for the reasons mentioned above, Australian businesses in particular find working with Philippine technical staff easier. It’s also already been established that -- next to the US -- the second biggest foreign employer in the Philippines is India. Many Indian outsourcing firms have also set up operations in the Philippines to access Philippine talent, too.

 Obviously this doesn’t address other important issues when considering an outsourcing destination, but issues such as the time zone, communication, attitude and the depth of the talent pool are arguably the most important aspects to consider. If you’re an Australian small to medium sized business owner and need to work with your remote team, there is no better choice than the Philippines.

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