BPO Industry: Philippines vs India for Offshore Staff Outsourcing

Outsourcing has become a popular way for businesses to cut costs and increase efficiency. Two countries that have emerged as popular outsourcing destinations are India and the Philippines. While both countries offer a range of benefits, there are some key differences between outsourcing to India and the Philippines that businesses should consider before making a decision.

Costs 

One of the primary reasons businesses outsource is to reduce costs, and both India and the Philippines offer cost savings of around 70% compared to Western countries. The cost of outsourcing to India and the Philippines can vary depending on factors such as the type of work being outsourced, the level of expertise required, and the location of the service provider.

Keeping that in mind, see below some general costs for some popular roles in both countries according to Payscale and Glassdoor in 2023:

Software Engineer:

India: Average salary Glassdoor US$9,178, Payscale $7,126
Philippines: Average salary Glassdoor US$9,883, Payscale $5,301

Accountant:

India:  Average salary Glassdoor US$3,424, Payscale $5,603
Philippines:  Average salary Glassdoor US$7,602, Payscale $6,217

Customer Service Representative:

India:  Average salary Glassdoor US$6,118, Payscale $3,399
Philippines: Average salary Glassdoor US$4,344, Payscale $3,326

Language and Communication

Another important factor to consider when outsourcing is language and communication. India has a large English-speaking population, and many Indian workers have been educated in English. This means that communication is generally good when outsourcing to India. However, there are many different accents and dialects in India, which can sometimes make communication challenging.

In contrast, English is an official language in the Philippines, and most Filipinos are fluent in English. This makes communication easier when outsourcing to the Philippines, and also reduces the risk of misunderstandings due to language barriers.

According to the EF English Proficiency Index 2023, the Philippines ranks 22nd with a “high” English proficiency, while India ranks 52nd with a “moderate” proficiency.

Flatplanet reports that the Philippines has an impressive 92.5% English proficiency rate,  with their English coming with an accent neutrality that many companies find highly attractive for their customer support departments. The Philippines is also highly influenced by the American / Western world culture which naturally adds common slangs and English idiom into their vocabulary. In addition, the Philippines media includes American channels as opposed to India.

Communication and business relationship wise, the Philippines offers the least cultural barriers for you and your customers.

Cultural Compatibility

Cultural compatibility is also an important consideration when outsourcing. India and the Philippines have different cultures, and businesses should be aware of these differences before outsourcing to either country.

Filipino culture is known for being more similar to Western culture in terms of individualism, while Indian culture is often described as more collectivist. This can make the Filipino culture more appealing to Western businesses, as it may be easier to relate to and work with Filipinos who have similar values and communication styles.

Western societies are generally more diverse in terms of religion, with Christianity being the predominant religion in the USA and UK, and a mix of religions represented in Australia. The Philippines is predominantly Christian, with over 80% of the population identifying as Roman Catholic, while the majority of the population in India follows Hinduism (but there are also significant populations of Muslims, Christians, Sikhs, Buddhists, and Jains).

Based on the Hofstede Insights Country Comparison of Australia, the UK and the US comparing cultural similarities, the Philippines scored higher compared to India.

Time Zone

The time zone difference between the outsourcing location and the company’s headquarters can also be a factor to consider.

For Manila, Philippines there is 3 hours with London, 8 hours with Sydney and 1 hour with LA.

For New Delhi, India there is 4.5 hours with London, 4.5 hours with Sydney and no hours with LA.

Manila is only 2 hours ahead of Australia, or 4 hours from New Zealand compared to India’s 4.5 hours difference. This makes it much easier to manage your offshore team as the minimal time difference will mean little disruption of workflow and for the most part are both in office at the same time. If anything it increases productivity – it gives you enough time to settle into your office and prepare your day and workload for your team before they start theirs instead of them wasting the day waiting to be briefed.

Both the Philippines and India have a large number of outsourcing companies that offer 24/7 services, which means they have staff working during night hours, so they can both service all countries in the world during their business hours.

Note though that professional service staff (e.g. web developers and accountants) are less likely to desire night-shift work, while it is more common for customer service / call center roles to be willing to work night-shift.

Talent and Skills

Both India and the Philippines have large pools of skilled and talented workers. However, there are differences in the types of skills and expertise that are available in each country. India has a strong reputation for IT and software development, while the Philippines is known for its customer service, back-office support, and creative services. Businesses should consider their specific outsourcing needs and choose a country that aligns with their requirements. India has 1.4 billion people compared to the Philippines 111.8 million.

Phillippines vs. India for Offshore Outsourcing: Who Wins?

India and the Philippines are both great countries for outsourcing. Which country you select should be based on several factors such as cost saving, language, cultural similarities, time zone and talent.

India: former BPO Industry King

It wasn’t long ago that it was just India that had the outsourcing for the BPO industry market cornered. Ever since it was colonised by the British empire, it had a prolonged name for being the informational technology outsourcing country – and for a good reason. Information Technology has been the most prominent source of revenue and employment, making it a popular career choice for the population to be educated in. According to IBEF, as of 2016, India is the fourth largest base for new business in the world and home to over 3,100 tech start ups which is only set to increase to 11,500 by 2020. Home to IT giants IBM, Cisco and Oracle, it has maintained its status for a successful outsourcing country.

Philippines takes the lead

Despite the accomplishing figures, India has now lost significant outsourcing ground to the Philippines over the last few years. The Associated Chambers of Commerce and Industry in India reported a 70% loss in outsourcing market share with call centre and related services, with the LA times reporting Philippines BPO Industry revenue at a staggered $25 billion, equal to 10% of the country’s economy. The Philippines is now quickly gaining popularity within the BPO industry, known for passing along not only affordable services but unique capabilities that breakdown the stigma that comes with outsourcing. It’s garnered global attention, and major cities Manila, Cebu and Davao is now packed with satellite offices of global businesses and firms to accommodate for their outsourced workers. 

The cost differences between India and the Philippines is minimal with India salaries for accounts being slightly less, while Philippines salaries are slightly less for software engineers and customer service representatives. There is 1.5 more business hours cross-over for India with London, though 3.5 less for Sydney and no hours with LA, making the Philippines the better global timezone location.

The Philippines is the winner for English communication and western cultural similarities.

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Outsourced Quality Assured, Inc. is a leading IT outsourcing company that continues to dominate the IT BPO Philippines market. We offer high quality outsourced it services and provide a highly professional offshore staff for businesses worldwide. As one of the leading IT BPO Solutions expert today, our goal is to find and place exceptional remote staff who are sure to exceed your expectations.