Indian jobs off shored to Philippines?

Thu, 5 Jul Pre-Open

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Eleanor Roosevelt, a famous US diplomat and reformer once said "Learn from the mistakes of others. You can't live long enough to make them all yourself." This is what seems to be followed in its true spirit by Philippines. The country was a late entrant in the voice-based BPO (Business Process Outsourcing) services business. It started the business in 1997. And in just 15 years, it became the biggest exporter of this service. Well ahead of India, which has been regarded as the most envied destination for the BPO business.

Interestingly, Philippines gives credits for its success to none other than India. Mr Bong Borja, a veteran in the BPO business, played a pivotal role in setting up the Business Processing Association of Philippines (BPAP), equivalent to India's National Association of Software and Services Companies (NASSCOM). According to him, Philippines learnt a lot from India.

No doubt, like India, Philippines has a similar advantage of labour arbitrage. As a matter of fact, the country has a lead when it comes to English speaking as their accent is similar to that of American populace. Hence, winning business from American clients was not an issue for them. Moreover they were quick to lean from India's success and mistakes.

India started the BPO business well before Philippines. Hence, all the homework in terms of convincing clients or setting up business models was there for Philippines to copy from India. India actually already made outsourcing a comfortable and viable proposition to the western world. Hence, Philippines never needed to work hard on all this. But the advantage does not stop here. They also followed Indian government policies to incentivize the growth of the business and attract more foreign investment. They replicated the models such as tax holiday of the Software Technology Parks of India (STPI) scheme and Special Economic Zone (SEZ) benefits in some form or other.

But the most interesting part is that they refrained from committing the mistakes that Indians made. They saw Indian companies facing problems of wage hikes and gradually losing the advantage of cheap labour to some extent. Hence, they as an industry kept a close tab on this front and did not go into the same trap. Then, the industry there lobbied hard to get better SEZ facility which was not limited only to repressed areas or empty places. India did not do these things. And it affected the industry growth here. But Philippines understood the importance of doing all this as they were watching India closely.

Meanwhile, the Indian government curtailed the benefits of STPI. It also tweaked the SEZ policy which narrowed the earlier envisaged advantages. And all this would have some negative effects on the Indian BPO business investment.

Now, companies in Philippines are trying for moving up in the value chain of the BPO business. Perhaps it is time for India to watch their moves closely if it does not want to lose more jobs to Philippines.