Philippines Proving to be Strong Competitor in Global Contact Center Industry

As the U.S. economy continues to experience its current turmoil, industry segments in other countries are reaping the benefits. With an increasing focus on reducing costs associated with supporting customers, many companies are renewing their focus to offshore investments.

The Philippines has been a point of interest for some time as it continues to offer significant cost savings, a skilled and educated labor base and progressive infrastructure that continues to support IT investment.

As the global contact center industry continues to be highly fragmented and extremely competitive, outsourced contact center services and solutions priced to attract overseas investors will continue to flourish.

According to the SGV Industry Bulletin-BPO Edition, BPO has been one of the fastest growing sectors in the Philippines in the past seven years. Revenues are projected to reach $12.2 billion by 2012, showing a five-year compounded annual growth rate of 38 percent. The bulk of this amount is expected to be accounted for by contact centers.

Although the country is showing strong performance and strong projections, the Philippine market share of the total global industry was only 3 percent in 2005. The country’s closest competitor is India, which showed a market share of nearly 8 percent in the same year.

The Philippines is considered by some to be on a strong path for gaining as much ground as India already has in this space. While such projections are based largely on recent trends in India of rising wages, high attrition costs and issues relating to the proficiency of language, these factors alone will not take all business away from India.

If looking at UN estimates comparing the two countries, India has 40 million fluent English speakers, which is roughly 4 percent of their population. The Philippines claims 60 million fluent English speakers, which is roughly 75 percent of the population, putting the Philippines in a stronger position if considering English fluency alone.

To better understand the difference, the dominance of English in the Philippines indicates that Filipinos think in English, unlike most of their Indian counterparts. It is this tendency that helps the country to achieve the highest standard of English in Asia.

Given that it is a significant strength and the rising global opportunity, it is unlikely that competing countries will maintain the gap in English proficiency and instead will redirect their efforts with a renewed focus on education.

The global contact center market is still rapidly growing, creating significant dynamics both in the U.S. and abroad. While the current economic situation is certainly driving decisions, it is the reaction of the customer that will have the most impact.