Manila breaks India top six in outsourcing index

The Philippines is challenging India as a destination for outsourcing business services, as Manila reaches number two in Tholons Top 100 Outsourcing Destinations report, breaking a potential top six for India.

Indian cities made up six of the top seven destinations, with Bangalore in first place, but Manila pushed Mumbai, a city synonymous with outsourcing, to number three. Dehli (4), Chennai (5), Hyderabad (6) and Pune (7) were other Indian cities in the top 10.

Manila and Cebu City (8) in the Philippines retained the strong positions they achieved in last year’s report.

Krakow in Poland (9) and Shanghai in China (10) were the other two locations in the top 10.

Cambridge University Press chose Manila for its first offshore captive about five years ago. It started with 40 staff focused on software development and testing, supporting its online digital product. It now has over 250 people there and expects more than 300 by the end of this year. It has 18 teams doing a wide range of different processes at the centre. 

“It is cost effective, low attrition and the wage inflation is not as bad as people say,” said Cambridge University Press CIO Mark Maddocks. 

But India is also a vital offshore location for the company. It has offshore software development in India, with development centres in Calcutta and Hyderabad. These are with two large Indian IT services providers and have about 50 dedicated staff.

The Calcutta centre supports the organisation’s learning management platform, which has about 500,000 users globally. This English language resource is used by people globally. 

“I put this in Calcutta, rather than Manila, for access to skills. There was a particular technology stack I did not think I could bring in quick enough in Manila,” said Maddocks.

The organisation has also recently launched through a business process outsourcing (BPO) operation in Hyderabad.

But Peter Schumacher, CEO of management consultancy the Value Leadership Group, said the Philippines and India offer very different environments.

He said the Philppines is largely focused on BPO to US companies and most of the operations are not owned by indigenous companies but rather by foreign companies. In contrast, India is mainly indigenous owned.

This makes a difference because there is a vested interest to invest more in Indian locations rather than just access them for services.

Schumacher said Bangalore, which was number one in the Tholon top 100, is growing at a very high rate.

Bangalore has over 100,000,000 sq ft of prime office space leased out, and this will increase to 150,000,000 sq ft in the next five years. Schumacher said that while the Philippines has a focus on value-for-money business processes, cities like Bangalore have very diverse technology and services ecosystems.

India is still the best place for businesses to outsource services and is unrivalled in its scale and availability of skills, according to AT Kearney’s index, which ranked business services locations in 2014.

Asian countries dominate the management consultancy’s index of the top 50 global locations, with six of the top 10 in the region.

India, China and Malaysia respectively make up the top three, while Indonesia (5), Thailand (6) and the Philippines (7) follow close behind, with only Mexico (4) splitting the group. The remaining three in the top 10 are Brazil (8), Bulgaria (9) and Egypt (10).