Given the position of the Indian Business Process outsourcing (BPO) industry today, it’s easy to imagine that its status as the world’s outsourcing destination is inevitable. Of course, those that know business know that it’s dangerous to take anything for granted, but India did have significant advantages that helped propel it to its dominant position. “The nation’s close links with Britain from its days as a colony meant that English was widely spoken, and low labour costs made it a good base when multinationals started offshoring their business processes at scale in the early 1980s. Ever since, outsourcing to India has been a viable option for many businesses, massively increasing the market size and creating an explosion in demand,” says Ralf Ellspermann, CEO of PITON-Global, a leading call centre in the Philippines.
India’s dominance has continued to this day, although challengers have started emerging. The competition, however, has largely been for new customers rather than a fight over existing contracts. The market first created by Indian BPO providers has continued to grow. It’s currently estimated to be worth around $250 billion a year. Most industry insiders expect it to continue growing for some time, driven by an ever-expanding service sector and increasingly demanding customers. “Growth has also come from new areas. While traditional IT, call centre and back-office services still form the bulk of outsourcing to India, businesses are keen to explore other functions, and providers have filled the gap,” says Ellspermann.
And there are few countries that are better placed to meet the growth in demand than India. It is one of the world’s most populous nations, with well over a billion citizens. And, even when the education system does not cover large parts of the population, that incredible population size means there are few difficulties in finding staff for their centres. For companies that are looking to establish or scale large offshore operations, outsourcing to India is one of the few options that can meet the demands. Indeed, the scale of the Indian outsourcing industry is such that it contributes close to a tenth of the national GDP, making it an important part of the economy and ensuring a sympathetic government that is keen to see the sector continue to thrive and contribute.
The growing market, combined with challenger nations that are keen to get their share, does mean that not everything is going India’s way. While it remains the world’s largest outsourcing destination, and that status is not under immediate threat, other nations are starting to make in-roads. “Its key challenger is the Philippines. The country’s competitive advantage is the high level of English proficiency; Filipinos frequently have no accent and follow Western culture closely. The attraction is such that the country has surpassed India as the world’s largest and leading call centre outsourcing destination,” explains Ellspermann.
Indeed, most major Indian BPOs have now set up large operations in the Philippines, employing over 100,000 Filipinos in the country. ITO and BPO to India may remain the world’s first choice, but it is no longer the only choice for many.
