Philippines VS India – Does the Philippines Beat India in Outsourcing?
When it comes to the Philippines VS India debate in outsourcing, does the PH hold up in 2022? Since the early 2000s, the Philippines has become the “BPO Capital of the world”, however, as time passed do the stats still say the same thing?
Companies and clients across the globe continue to praise Filipinos for their work ethic. In 2020, remittances from Overseas Filipino Workers (OFWs) in the U.S. amounted to $11.94 billion. Additionally, OFWs from Singapore brought in $2.15 billion.
Clients can sometimes anticipate saving 70-90% in wage payouts by hiring a Filipino team, but the low costs aren’t the only selling factor. So, when businesses think of outsourcing to the Philippines, they can expect to hire workers who are:
- Proficient in Conversational English
- Adept to Western Culture
- Fast Learners
- Willing to climb the ladder to advance their careers
Meanwhile, in India, outsourcing clients should expect an advantage in the labor market. Currently, India still has relatively lower labor wages when compared to most countries. For example, an article from Crewbloom says Call Center Agents from India receive $3,091 annually.
As a comparison Call Center Agents in the Philippines can get up to $3,360 on the low end and $4,320 on the mid-end. So, if we look at it from a vacuum where costs are the only factor, then yes, we can say that India definitely beats the Philippines.
Still, if you’re planning to outsource, savings shouldn’t be the only factor you need to look at. Companies should also consider the outsourcing infrastructure of the country, government support, and culture.
Factors to Consider when choosing between India and the Philippines for Outsourcing
Without a doubt, the Philippines and India are two of the best countries to look at when it comes to outsourcing your business. However, we still need to consider key factors that don’t just affect a certain international company, but the entirety of the outsourcing structure of a country.
With that, here are the factors to look out for if you want to outsource:
We can look at this in two ways – the literal infrastructure (buildings) in a country or how the outsourcing industry is set up.
For the past few years, India has built beautiful, modernized buildings in key locations. And, within these structures, one can find business and tech hubs that serve as the backbone of the outsourcing industry.
The offices in the building are state-of-the-art, modern, and pleasing to look at. Thus, workers have an easier time adjusting due to the comfort a BPO building provides.
Meanwhile, the Philippines also has its fair share of modern infrastructures. For the longest time, Manila, Cebu, and Iloilo have become the Philippines’ largest tech hubs. Here you could see gigantic buildings towering over the streets with residents living the metropolitan city lifestyle.
But the Philippines overtakes India when it comes to infrastructure due to the rapid expansion of the BPO industry. The Philippines plans to house more BPO services not just in these tech hubs, but in other parts of the country as well. Primarily, this is the result of strong government support and high revenue from outsourcing.
With that, let’s talk about government support next.
Government Support for the BPO Industry
Costs may be lower in one country compared to the next, but does the government give you other benefits as well? Or do they restrict some key functions and give you necessary hurdles?
These are some of the questions you need to consider when outsourcing. In the Philippines, BPO is known to have extreme support from the government. That’s the reason why it become a world leader in the industry.
The benefits you’d expect to receive come from the Philippine Economic Zone Authority (PEZA). This is an agency that provides fiscal and fiscal incentives to international businesses. Additionally, there’s a separate agency that provides support to the thriving BPO industry such as:
- The IT and Business Process Association of the Philippines (IBAP)
- Contact Center Association of the Philippines (CCAP)
These organizations help shape the BPO infrastructure in the Philippines to benefit both Filipinos and international clients. Based on an article from Outsource Accelerator, a PEZA registered company can receive the following incentives:
Fiscal Incentives of PEZA for outsourcing to the Philippines
- Income Tax Holiday (ITH) of up to six years
- A special tax rate of 5% of gross income after ITH and exemption to pay all national and local taxes
- Tax-free and duty-free importation of machinery, raw materials, and equipment
- VAT zero-rating of local purchases of goods and services
- Exemption from wharfage dues on import shipments of equipment
- Exemption from expanded withholding tax
Non-Fiscal Incentives for Outsourcing to the Philippines
- Simplified import-export procedures
- Employment of non-resident foreign nationals in supervisory, technical, or advisory positions
- Special Non-Immigrant Visa with multiple-entry privileges
- Extended visa assistance to foreign nationals, their spouses, and dependents
On the other hand, India has been notorious for having strict regulations when it comes to BPO. Among these is the compulsory registration of your business to the Other Service Provider (OSP). The OSP is responsible for updating guidelines that led to the removal of BPO units.
Additionally, OSP guidelines mandate that a static IP barrier be placed which hindered India’s growth as a BPO hotspot.
Why is a Country’s Culture Important to Outsourcing?
Each country has its own unique culture and traditions. That’s what gives countries their identity. However, when it comes to outsourcing, hiring from a country that’s more inclined to the Western Culture is definitely an advantage.
The Philippines is one of the few Asian countries that combines Southeast Asian and Western influences well. Because the country was formerly colonized by Spain, the United States, and Japan, this is the case.
As a result, while working with a service provider from the Philippines, this cultural resemblance will help to ensure that outsourcing works right out of the box. Collaboration with an outsourced partner who understands a company’s lifestyle, principles, and culture would be easy.
India on the other hand, although having incorporated aspects of Western Culture, still has predominant practices which stand out. As such, native language, accents, and communication can become a big factor if you want to outsource.
If you’re ready to start your outsourcing journey, Global Strategic can help with your business needs and give you the Strategic Advantage needed to edge out the competition. Learn more about how offshore outsourcing to the Philippines can help your business and future business growth.