Offering similar services, they challenge the assumption that outsourcing means 'Outsourcing to India.' The country remains the heavyweight, though, with some key advantages that other nations simply cannot replicate
Global Challenge
India remains, by some margin, the world's largest outsourcing destination. However, in recent years, several other outsourcing nations have emerged. Offering similar services, they challenge the assumption that outsourcing means 'Outsourcing to India.' The country remains the heavyweight, though, with some key advantages that other nations simply cannot replicate. One of the first is that India pioneered the modern offshore outsourcing business. It was the first place that industry giants such as Microsoft and GE established large BPO and call centre operations that not only successfully serviced diverse customer bases from around the world but did so cost-effectively, offering significant savings on the bottom line.
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“India also brings something no other country in the free world can: its immense size. The population is over 1.4 billion, meaning a huge potential workforce. The size of the sector also matches this. It contributes close to ten per cent of the nation's GDP, no mean achievement when you consider the country's size,” says Ralf Ellspermann, CEO of PITON-Global, a leading mid-sized call centre and back-office outsourcing provider. It is not just something to boast about; it makes it an important element of the national economy and means that the government is keen to implement supportive policies, so it can continue to benefit from the revenue outsourcing to India generates.
However, these strengths may also hide some of the weaknesses that challengers seek to exploit. Its sheer size may be proving to be a problem. Even in a country of more than a billion people, there is a finite number who have the level of English language fluency some outsourcing services require, and India has often struggled with complaints about communication. Additionally, the nation's infrastructure, especially in more remote areas, may not be well-developed enough to support further expansion. Providers often struggle to find locations with the number and quality of data links they require. And not everyone sees size as an advantage. Businesses are beginning to recognise the dangers of too much concentration of their functions. The COVID-19 pandemic provided an example of the difficulties that could be caused if a country was locked down and there was no alternative provision. Even if they are not looking at locating elsewhere, many businesses are outsourcing to India and spreading their outsourcing requirements now among different geographic locations.
“This has resulted in a global challenge to the Indian outsourcing sector. Nations like the Philippines, Malaysia, and Mexico have emerged as strong competitors. Even European countries like Ireland are getting in on the act, pushing the value of quality over low price,” says Ellspermann. The Philippines has so far been the most successful competitor, leaving a path for others to follow. With government policy designed to encourage and support the sector, BPOs have taken advantage of a nation with incredibly high English fluency levels alongside low labour costs. While outsourcing to India remains a good choice for specific services like IT or KPO, the Philippines has been the world leader for several years for contact centre outsourcing. “It's unlikely that the BPO industry in India will relinquish its crown any time soon, but, as the Philippines has shown, it cannot take it for granted either,” adds Ellspermann.
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