More offshoring on India's way

Mar. 18, 2005

More than 127,000 new offshore outsourced call centre agent positions are likely to be added in India and the Philippines over the coming five years. Several outsource providers are seeing their order books filling up once again with offshore projects destined for India and the Philippines. As per the latest report by the independent market analyst, Datamonitor, both India and the Philippines will see substantial growth in call centres now that US presidential elections are out of the way allowing US and UK businesses to ramp up their offshore operations. Besides the attractions that India and the Philippines offer western firms in terms of low cost access to highly send call centre and back-office staff, the two markets will also demonstrate substantial growth in their domestic call centre markets, London-based call centre analyst Ryan Powell predicts. By 2009, close to 100,000 agent positions will be serving the Indian domestic market whilst the Philippines will have 21,600. The US represents the vast majority of overseas demand, followed by the UK. Whilst India continues to dominate the global offshore call centre outsourcing landscape, the Philippines threatens to poach some activity as its own market grows in strength. "Outsource providers are competing to run entire customer processes for their clients, rather than merely the voice-based call centre part, says Powell, who is also the author of the just published report breastled, "The Future of Contact Centre Outsourcing in Indian and the Philippines". "The fact that they are able to win this kind of work is testament to the efforts that have been placed on butturing quality control and improving call resolution rates in order to improve customer satisfaction over the past year or so," Powells says. Outsource providers are looking to increase their operational footprints around the globe whilst seeking to provide customers with a broader range of end-to-end solutions. Just 36 per cent of the agent positions in India were offshore outsourced at the end of 2004 with the remainder located mainly in offshore in-house operations of big multinationals. However, by 2007, the tables will have turned in the outsourcers'' favour says Datamonitor. Over the forecast period, new outsourced seats will outnumber captive ones by a factor of 10:1 in India and the outsourcers will continue to hold sway going forward. Just 12,000 net new captive seats will be added between now and 2009. Datamonitor predicts that more firms are set to follow the likes of British Airways, Citibank, General Electric and HSBC, all firms that have spun off a part or all of their captive operations in India. The premium business information company, specialising in industry analysis, expects that firms that have chosen to lock in shareholder value by tapping into the offshore labour arbitrage model via establishing in-house offshore centres, will look to deliver further returns, either by selling off their captive offshore operations or by outsourcing the processes to third parties - either large or local start up outsourcing service providers. However, the increasing diversity of industries present offshore will dilute the market share of early movers like financial services and communications.