If you can’t beat them, join them. This is the new strategy the Indian business process outsourcing (BPO) industry is following so that it does not lose business to the Philippines, the new hotspot for outsourcing deals.
While the Indian BPO industry has for long said that the Philippines cannot take over India’s businesses, realisation is beginning to dawn that the winds are shifting in favour of the South-East Asian country.
Reasons galore
The reasons for the shift are many but the most important is that their spoken English and accent are more acceptable to clients in the US and the UK. The Philippines’ time zone is another advantage. In addition, its BPO industry gets a lot of support from the Government. Also, the work force is much larger -- 416,000 put together for both voice and non-voice operations – as compared to around 90,000 in India.
According to the Business Processing Association of the Philippines (BPAP), the BPO industry generated revenue of $11 billion in 2011, up from $2.8 billion the previous year.
The non-voice sector generated $3.6 billion last year. Although India is still ahead in terms of industry revenue at $16 billion, the Philippines is closing the gap at a rapid pace.
Top career choice
“BPO is the number one career choice in the Philippines today for youngsters. Recently, their President also spoke on BPO and said it should be the top career choice. I think that level of commitment should be created in India as well,” Keshav R. Murugesh, Group Chief Executive Officer, WNS Global Services, said. Therefore, to churn out some business from that country, Indian BPOs such as Genpact, Infosys, Wipro, Aegis, HCL Technologies, WNS, Hinduja Global Solutions and others have entered the Philippines market and have been servicing clients globally for the last four-five years.
All have set up their facilities there and have hired locals as employees.
Among the biggest employers is Aegis BPO with six centres and around 12,000 employees. The company also entered earlier than others in 2008.
Others such as WNS, Wipro and HCL Technologies have around 1,500-2,000 employees each with one centre each in the country, all of them employing locals.
“The plan to set up the delivery centre in the Philippines was influenced by country’s growing prominence as a strong BPO services hub,” Rahul Singh, President - Financial Services, HCL Technologies, said.
Much nurturing
Not only the Philippines, some of the BPO industry veterans say India should learn from countries such as China as well, where many youth are trained and nurtured for this sector.
One more factor is the travelling time because of the better infrastructure in countries such as the Philippines and China. Pramod Bhasin, Vice-Chairman, Genpact, said that if long distances could be covered faster there, “Why will people (clients) come and buy from us? So when China catches up, for us, we do not mind. We will all move to China as you can’t be a global company then,” Pramod Bhasin said, citing an example. Therefore, he said India has to build expertise and build science around processes and get better-skilled people for this industry. Also, one needs to cut costs by using new methods such as like Analytics and Big Data.
Analytics uses a common application to analyse business data to describe, predict and improve business performance in lesser time. Big Data industry is characterised by technological advancements, niche start-ups and large number of mergers and acquisition. The Indian Big Data industry is expected to grow from $200 million in 2012 to $1 billion in 2015 with a compound annual growth rate of over 83 per cent.
BPO to BPM
New terms such as business process management (BPM) and SMAC – Social, Mobility, Analytics and Cloud – are also emerging as India is doing away with voice-based services and concentrating more on non-voice services for clients globally. The industry is now calling it BPM and not BPO as it is shaping up in that direction, because India still has the strongest engineering talents and can deliver better.
“The employment base has grown by two times over the last six years, indicating we are the leading net hirer every year. But, at the same time leveraging technology and platforms are going on non-linear basis. We are able to do more (service) with less (people),” Som Mittal, President, Nasscom, said. However, it doesn’t mean that there will be lesser hiring for the industry; rather, more hiring for more processes. He said the BPO industry in India continues to remain strong and vibrant despite the slowdown and has been rapidly transforming itself from BPO to BPM, which is the single most critical factor that has helped the industry and maintained its leadership position across the globe.
“The industry has been able to successfully position itself as a partner to customers and changed the way service is being delivered and create a broader impact on clients,” he added.