As the election year campaign in the US gains momentum, a recent ad from the Obama camp to downstage Republican candidate Mitt Romney accusing him of outsourcing jobs to India has led to debates back home. But what is the scenario of the BPO industry in India as it faces competitors from emerging countries?
With India garnering a major portion of global IT market, and unemployment in the recessive western economy rising, the country’s outsourcing might has become a favourite referral point with some politicians in a blame game.
It has now even figured in the Democrat vs Republican campaign strategy in America in the election year as has been recently.
In an ad Democrats accuse Republican candidate Mitt Romney of “outsourcing” to India perhaps insinuating disloyalty to the country’s working population.
True, India has gained by the early jumpstart in this sector but other countries are catching up and according to some reports, India might lose the advantage soon. Take the Philippines, for example. According to recent reports the call centre business in the country has grown at an exponential rate of 46 per cent since 2006.
Once the stronghold of the US after the Second World War, the country is fast becoming the hub of business process outsourcing (BPO). So much so that according to surveys the small island nation has now upstaged India in the booming business of call centres. Now an American consumer seeking information about his insurance claim may no longer speak to Reema in West Bengal, he would rather speak to John in Manila.
According to surveys, about four million Filipinos are spending their nights over phone calls to American consumers. Big companies like Expedia, JP Morgan Chase and AT&T have either set up call centres in Manila or hired office space for BPO. And it is not just the US, but also Europe.
Suvro Das, who works in a call centre in Sector V, Salt Lake, the BPO hub in West Bengal, “It’s only natural that US would extend jobs to a country where they had a strong presence once. Also there’s a large population of youngsters there who speak American English. They think, live, and breathe America.”
As the numbers keep growing one wonders the reasons behind Philippines’ emerging popularity as a call centre hub. First, the outsourcing business has become more mature. Earlier, the industry was simply establishing outfits in countries with a large English-speaking population and where labour cost is low. India just happened to fulfill the criteria.
“However, now they are identifying places that are best suited for specific jobs. Filipinos are being preferred simply because of their fluency in US English,” says G Ghoshal, a past employee of Tech Mahindra.
Many Filipino parents have realised the booming prospects of call centre business and are already grooming their wards in a way that they can join the call centre industry in the country. That, of course, includes learning to speak American English, and watching the show Friends on TV.
Not surprisingly, the popular sit-com that ruled American TV for years is a teaching aid for trainers at call centres. In contrast, the large English-speaking population in India are used to British English. The call centre business had taken off in a big way in India about two decades ago.
However, it does not mean that it is cheaper to outsource to the Philippines, rather it could be more expensive. While a beginner in India is paid around $250 monthly, in the Philippines the figure is a few notches higher at $300. “Still Americans find it worthwhile to outsource to that country whose conversational style is something that is close to their hearts,” says Sayan Chatterjee, who works with a medical insurance BPO in Kolkata.
The economic benefit of outsourcing jobs cannot be in doubt. Small wonder then the BPO industry is growing at a rate of 20 to 25 per cent in the Philippines and has given a boost to the GDP contributing a share of 4.5 per cent. Besides the language skills, the island nation also boasts of a better infrastructure than India. Also Philippines is safe hence employers do not have to cruise employees to and from work.
However, India earns ten times more revenue from outsourcing compared to the Philippines. One reason is that India’s population is much higher - 1.2 billion as compared to 93 million of Philippines.
Despite emerging outsourcing regions like the Philippines, South Arica, East Europe and Latin America, India remains the world’s BPO hub, according to the latest Nasscom data holding 36 per cent of the market share globally. The number of people employed directly in India’s BPO sector has grown by 17 per cent from 2009-’10 to 2011-’12 employing some 876,000.
A reason perhaps for the continued reference to India by politicians promising a better job scenario in the West who aim at the winning post. But it is likely to blow over as the election is over and one shouldn’t take too much notice of it said US-based senior journalist Chidanand Rajghatta at a debate recently in a private Indian TV channel on this issue.
In any case, India has meanwhile gone beyond the voice-based work. As executives in the IT sector point out, outsourcing is not confined to call centre work alone but includes data analytics, accountancy, finance and other domain-specific work. Today, highly skilled professionals like engineers, accountants, even lawyers and scholars, are joining up the BPO sector as top end experts.