Report: India losing 70% voice, call centre business to Philippines

Struggling to diversify the delivery footprint to take advantage of low-cost centres, India’s BPO industry is currently losing 70 per cent of all incremental voice and call centre business to competitors like the Philippines and countries in Eastern Europe, says a report.

“It is estimated that in the ongoing decade India might lose $30 billion in terms of foreign exchange earnings to the Philippines, which has become the top destination for Indian investors,” Assocham Secretary-General D S Rawat said.

“Thus there is a need to reduce costs and make operations leaner across the BPO industry,” he added.

BPO companies could reduce their total operating costs by 20-30 per cent by moving to a low-cost city within India, with a cost differential of around 10-15 per cent for non-voice processes and upwards of 20 per cent for voice processes, the report pointed out.

Several Indian firms have set up substantial operations in the Philippines, which has a large pool of well-educated, English-speaking, talented and employable graduates. Almost 30 per cent of the graduates in the Philippines are employable unlike 10 per cent in India, where training consumes a considerable amount of time, according to the report.

“Cultural proximity to the US together with availability of talented manpower are key reasons why BPO companies prefer expanding their operations in the Philippines,” Rawat said.

Expansion of non-English BPOs in Tier-2 and Tier-3 cities to provide low-cost services to the telecom and aviation sectors, are set to play a significant role in the growth of the domestic outsourcing industry, the report found.

“Lower attrition rate in smaller towns is a big positive owing to lower recruiting and training costs, while there is a comparatively high attrition rate of 30-35 per cent in tier-I cities. Transportation costs for BPO employees and real estate prices are also lower in smaller cities,” Rawat said.

Cities such as Ahmedabad, Chandigarh, Coimbatore, Dehradun, Jaipur, Kozhikode, Nagpur, Nashik and Palakkad can help meet 50-60 per cent of the projected talent requirement of the BPO industry over the next five years, the report said.

Government projects such as the National e-governance Plan (NeGP) and the Unique Identification Authority of India (UIDAI), among others, are likely to provide a fillip to the domestic BPO sector in smaller cities, it added.

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