Philippines is catching up with India in the outsourcing industry

India, the dominant player in outsourcing touted as the “back office of the world”, would soon have to contend with a third world rival – the Philippines.

A highly qualified English speaking workforce. A reliable telecommunications infrastructure. Low costs for qualified personnel. These are some important reasons to choose India or Philippines for outsourcing support.


A former colony of the British Empire for almost two centuries, India has the second-largest IT talent pool in the world, thanks to its British-influenced education system, which places great emphasis on science and mathematics. With 120,000 trained IT professionals joining India’s workforce annually, India is preparing to become a third world IT giant and is recognized as the top choice of US companies for software outsourcing. According to Nasscomm, a conglomerate of India-based software and services companies, Indian companies provide software solutions to more than half of the Fortune 500 companies.

The launch of India’s first private submarine cable has greatly improved the international bandwidth situation. In addition, considerable scope is available with state-owned Videsh Sanchar Nigam Limited, part-owned by India’s largest business conglomerate. The privatization of the telecom industry has also led to a significant drop in telecom tariffs. Observers predict that the entry of new industry players will lead to a further drop in telecom prices. Over the past decade, telecom costs in India have fallen by 85 percent.

Over the years, India has built a strong brand equity as an attractive destination for software development and support. India is home to established IT companies such as IBM, Intel, Microsoft, Oracle, Cisco, Sun, HP and Alcatel.


But the Philippines — one of the second-largest English-speaking populations in the world — is fast catching up to India.

With a literacy rate of 94%, the Philippines has a large pool of IT professionals and inexpensive telecommunications infrastructure. The country ranked third in knowledge and information-based jobs in the 2002 Global Technology Index survey conducted by META Group. Three million college graduates join the workforce each year, providing a tremendous source of talent.

An American colony for nearly 50 years, the Philippines has a Western-influenced culture, a unique trait that clearly sets the country apart from other offshore destinations. Although Asian-oriented, Filipinos watch American television and are therefore able to communicate effectively in American English.


In recent years, the Philippines has emerged as the offshore destination of choice for outsourcing call centers specializing in customer service. Due to Filipinos’ high level of English proficiency and strong customer focus, many leading multinational companies have used the Philippines as a global hub for customer service. American OnLine, the nation’s largest Internet service provider, employs 600 people at its call center in Clark, Pampanga. Caltex, Procter & Gamble, Barnes and Noble, among others, have established large service centers in the Philippines.

A very promising industry that has sought outsourcing assistance in the Philippines is the medical transcription business. The Philippines has a large talent pool of medical professionals including doctors, nurses and medical technicians. Demand for medical transcription has increased as US hospitals are now required by federal regulations to convert medical records into a data format. There are now 17 medical transcription companies in operation, employing 1,200 Filipinos.


Although the Philippines is not as big an offshore web and software services provider as India, they are showing promise in the customer service industry. Although India charges lower fees than the Philippines – for data encryption work, India charges around $4 versus $10 in the Philippines – more multinational companies are choosing the Philippines for the high quality of the work. In addition, Filipinos make good customer service representatives not only because they are fluent in American English, but also because of their helpful and friendly nature.

More and more companies are choosing the Philippines for offshore support. Services offered in Filipino outsourcing companies include editing and indexing; web design and maintenance; data conversion, data storage, data capture and data input; OCR and scanning services; proofreading; coding and keyboard; imaging and graphic design; call center and customer service; abstraction and document conversion; Sentence; and tagging, among others.