For a long time, India has led the worldwide Business Process Outsourcing industry, particularly its great pool of IT graduates and British-influenced British culture. In the last ten years, they quickly formulated the skills set blended with the capacity of creating mass output with the millions of professionals they certified every year. They became the global reference for providing just about every type of ITO and Business Process Outsourcing services in every corner of the world.
With a total market estimated at around US$ 70 billion, the Indian companies are reported to be responsible for approximately U$ 50 billion. That is roughly 70 %. The "TWITCH" companies (the 7 families: Tata, Wipro, Infosys, TCS, Cognizant and HCL), which alone, according to Gartner Research, have 36 % of the US IT services market, and 51 % of the European market, are the real big players, and also according to Gartner are proving to be IBM and EDS´s greatest competitors.
Aside from these giants, India still had some 250 other smaller companies that generate hundreds of millions of dollars each every year, making the Indian companies the most cash rich companies on the globe. This means that, even though they are seeing more competition from other country destinations and companies, they can simply buy the market. Specially in the current times where cash is king. This is the reason why we are seeing the Indian companies move into all markets where there is a justifiable return on investment. Be it by the ways of the local market, such as Brazil or Poland, be it to use it as a nearshore platform to markets like the US and Europe.
Clearly these Indian Companies were the whales in this great ocean of Business Process Outsourcing industry, ready to devour the small fishes which were the Companies from other markets around the globe. They're just like fishes financially, compared to the whales of the cash rich Indian Competitors. So what can these companies do to step up to the challenge?
Beating The Whales
Some groups of companies like those in Brazil have adopted a collaborative approach, which was being called the "whale strategy". In the early 70´s, Walt Disney released an animated flick called Fantasia, considered one of his first masterpieces´s. In one of the scenes, a hungry big whale is after a large group of fish, which find shelter under a big rock, where they stay trapped, since the hungry whale stayed put patiently waiting for its main course.
This is when, one of the smarter fish, comes up with the idea that, if they came out of underneath the big rock in a formation that reproduced a whale, the hungry whale would be made to believe it was another whale too.
In Brazil where the collaborative spirit is strongest, many companies have started several different consortium, building "whales", so they can have greater critical mass, combine different competitive advantages and capabilities, and also have a more financial clout. The challenge is to create a greater common good that the personal interest, in order to keep every ones dedication and toughness. In this case, the greater need to become a relevant international player plays a heavier role for every company, that if were to go alone, probably would not survive the first year.
Here in the Philippines however, a growing number of American companies and other multinational companies were moving their operations from India to a determined Business Process Outsourcing competitors in Southeast Asia: The Philippines. Although India has a growing share of the pie, the Philippines is fast overtaking the Business Process Outsourcing giant because of it's all important advantages: improved infrastructure, customer service-oriented workforce, and deep admiration, understanding and efficient practice of the English language and American culture. The Philippines does not only banking on one option alone but also using India's weaknesses as it's strengths. This is the main reason why it stands out against whale like no other could.
Unlike the other players, the Philippines though only a distant second biggest service provider in the globe after India has became the largest Business Process Outsourcing destination int the Asia Pacific. The Business Process Outsourcing sector actually grew by 25 percent in 2009 while the Philippine economy almost came to a grinding halt, rising at less than 1 percent. The industry yielded US$2 billion in revenues last year, up by 19% year on year. This still pale in comparison to that of Indian numbers though.
India: Dropping Its Momentum in the Business Process Outsourcing Contest?
According to a survey conducted by Kelly Services Inc. Michigan, India is losing its position as the number one choice of US companies for backroom operations. Suffering Quality - For all its advantages, India may be quickly losing its momentum as the leader of the Business Process Outsourcing industry. The Philippines is fast catching up to India in terms of servicing the growing Business Process Outsourcing market. It's telecommunication infrastructure is immensely better and companies are more safely set up and maintained because of the stable environment, maximizing economic incentives and extremely competent human resources. American, European and Australian companies that have already outsourced to the country are currently saving 40% to 60%, which translates to boosted profits and capacity for expansion.
More importantly also, while many Indians do speak English, their accent is still too thick, which may result in difficult conversations with frustrated customers. This could be one of the factors in the decision by Tampa-based Sykes Enterprises to move some of its call center operations from Bangalore to the Philippines, as reported by The Motely Fool, a commercial website about investment and finance, and the Tampa Tribune.
Another very promising industry is outsourced medical transcription, which thrives in the immense medical talent pool of the Philippines. The large number of nurses, medical technologists, doctors and specialized medical transcriptionists in the country has been able to meet the increased demands of US hospitals, which are now required by the law to convert medical records into data format. With all of these positive qualities going for the Philippines, all signs point to the tide of battle shifting soon in its favour.
Numerous large companies have already set up operations in the Philippines, such as MSN-Microsoft, AT&T, IBM, Washington Mutual, Sallie Mae, Expedia, Intuit, Transunion, Alltell and Bellsouth. Reading from all present indications, the future of Business Process Outsourcing or Business Process offshoring is clearly not India, but the Philippines. More and more small and medium-sized American companies have also chosen the Philippines as their Business Process Outsourcing headquarters of choice.