Posted by: Chuck | July 31, 2013

Language constraints and competitive talent

Language constraints and competitive talent in other countries are resulting in India’s business process outsourcing (BPO) industry losing out to the Philippines, Canada and Poland. The $13.3-billion Philippines BPO industry grew 15.6% in 2013, compared with the 8.9% clocked by India’s $20-billion BPO space. According to industry body Nascomm, in the last five years, India has lost about 10% market share to the rest of the world in the BPO space, most of which is in the voice contract segment. However, India is still the global leader when it comes to non-voice services. The Philippines’ voice industry stands at $8.5 billion while India’s is around $7.5 billion.

Countries such as the Philippines, Malaysia and China in Asia, Egypt and Morocco in North Africa, Brazil, Mexico, Chile and Columbia in Latin America, and Poland and Ireland in Europe are emerging as attractive destinations for voice contracts.

India’s challenges lies in the language front as, apart from English, the country doesn’t have much talent to support services in German, French, Spanish, and Portuguese and Nordic languages.

The Philippines, the second-largest destination for outsourcing, is emerging as a serious competitor and is relevant both for voice and non-voice services.

“In fact, the Philippines’ voice industry overtook India’s last year in terms of revenue and full-time equivalent (FTE). Not only does it support English, but the quality of service is better than that of India,” said Salil Dani, practice director, Global Sourcing, Everest Group.

Interestingly, the business process management (BPM) revenue per employee, which is the lowest for India, has risen across countries.

On the other hand, Latin America is emerging as a preferred near shore destination for IT and BPO services for the US due to its physical and cultural proximity to the US and the presence of a large multilingual population.

“No geography competes with India when it comes to cost-efficiency and quality. Though the loss to other geographies is marginal, we have never lost any seat to a competing geography,” added Sanjay Mehta, managing director, India, Teleperformance. The $3.02-billion Paris stock exchange-listed Teleperformance is world’s largest contact centre company, with global operations spreading over 46 countries and employee strength of over 1.38 lakh.

The firm’s voice business in India is almost 90% and it has centers in Costa Rica, the Dominican Republic and Columbia, besides 16,000 people in Brazil doing domestic BPO work. “European countries working in multi-lingual processes find Poland a good option for their medium-term operations involving up to 500 employees. However, not much work has moved away from India to Poland as these countries have a small talent pool. Moreover, India and the Philippines have scale, which no European location can provide,” Dani added.

As for Brazil, the offshore market is small at around $0.65 billion because of the high cost of operations. The domestic BPO market is 10 times the size. Those in the know say that clients have started choosing geographies based on the kind of services they offer. Hence, an investment banking platform may involve analytics being serviced out of Central Europe or India and customer care/voice from India if the off shoring component is high or from Latin America and the Philippines if it is low.

“This is the reason why many BPOs are expanding in different geographies. They want to leverage the opportunities there, besides tapping the required talent pool,” said an industry analyst.



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