Outsourcing to the Philippines and India: Which Country Does It Better?
Outsourcing For Dummies: What You Need To Know To Make Outsourcing Work For Your Business
When discussing the Yempo business model with clients, we are often asked, “Why the Philippines”? Or “Why not India”? There is a perception that India is a much lower cost with a higher skilled workforce.
Having lived in both India and the Philippines while working with an offshore and outsource model (see Small Businesses and Offshoring for a definition) it was an easy decision for us to make at Yempo and we are happy to guide our customers through the advantages and disadvantages.
Many of us remember the early days of outsourcing, when we would call a bank or other service provider and find a heavily accented person on the end of the line, and become frustrated with either their communication generally, or their insistence on following a documented script and just not listening. This has unfortunately tarnished India in the eyes of many businesses, which are reluctant to inflict this scenario on their own customers.
While investment in language and accent training is now massive in India, it is hard to shake the memory of those early experiences, and a call centre employee attempting an Australian/American accent or using inappropriate colloquialisms does nothing to address this.
The Philippines overtook India as the world’s call centre capital in 2011, with large organisations flocking to this island nation. Heavily influenced by its American occupation from 1898 to 1946, Filipinos benefited with improved education, health care, infrastructure and language skills. The local accent has a pleasant American lilt and the naturally warm and friendly nature of the locals shines through even over the phone.
For some countries, such as the UK, Indian capital cities are highly accessible with direct flights from major airlines and a time zone that is relatively compatible. For others, such as Australia, India is a long way from home base. No direct flights service Australian capitals into India, requiring a stopover in Asia, and it is typically a 16-hour journey, arriving and departing at unfriendly hours.
The timezone slippage from Australia is 4-5 hours, depending on daylight savings, which means your Indian personnel either have to start work at 4am to match your 9am start, or if they work Indian daytime hours, you have to wait until 2pm for them to arrive in the office.
The Philippines is serviced by direct flights, but even an Asian stopover makes it only an 8-10 hour journey. One direct overnight flight gets you back into Australia in 8 hours. The timezone is 2-3 hours depending on daylight savings and a 6am start is quite acceptable to the locals.
One of the most underestimated factors in outsourcing to India is the sheer size of the workforce. Many organisations subsequently go into India on such a large scale that it is not unusual for a batch of new starters to be amongst 500 others. Indian employees are therefore accustomed to the benefits this large scale offers; career development, advancement, considerable investment in training. The outsource companies that leverage this typically provide services to large organisations with a minimum of 100 staff. Small organisations, recruiting 10-20 staff, just don’t stand a chance to attract and retain talented workers.
While there are 450,000 graduates per annum in the Philippines compared to 4.4m in India, this is still a substantial workforce but not on such a scale that hinders smaller outsource companies from attracting excellent staff with high levels of commitment and loyalty.
Both India and Philippines were colonised at some point in their history by a Western nation; India by the British, Philippines by Spain and then the United States.
India’s culture, religion, and language were scarcely dented, and the practices within the workforce can be blatantly and subtly different to Western practices. The Philippines conversely, has been significantly impacted by colonisation, adopting Catholicism as its national religion, English as its primary business language and adopting many Western business practices. Visitors to the Philippines are pleasantly surprised at how familiar and comfortable the working environment is.