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NEW DELHI -- The Philippines is set to overtake India as the world's back office for voice-based customer support and sales this year, as firms such as Cisco, HSBC, T-Mobile and BT Plc shift work to the nation to avoid India 's high staff turnover, and build an alternate support hub.

Better affinity with the American culture, lack of competing industries for skilled workforce, higher tax incentives and an overall strategy to derisk from a pure India-based call centre model are among top reasons for this shift. Of India 's total BPO exports, nearly 45% comes from voice-based work, which is expected to be around $5.58 billion this year. However, the Philippines BPO industry will post almost $5.70 billion of pure voice-based revenues in 2010, higher than its bigger outsourcing rival, research firm Everest and the Business Process Association of Philippines (BPAP) say.

"In standalone voice business, the Philippines will undoubtedly beat India this year to become the call centre capital of the world," says Nikhil Rajpal, partner, Everest Research India .

Companies such as Cisco and BT are increasingly outsourcing handling of customer queries and support to cheaper locations, including the Philippines . Every time a user of, say, Cisco's router dials a toll-free customer support number, his call gets diverted to a customer support executive sitting in Manila who is paid less than a quarter of what it would cost to hire somebody with similar profile in the US.

Experts point out that at this pace, the Philippines can even overtake India 's $12.4-billion BPO industry in five years. The $9.5-billion Philippines OandO (offshoring and outsourcing) industry grew at a compounded 27.6% in the last two years.

On the other hand, India 's BPO industry has showed a CAGR of 11.92% in the last two years. Going by exactly the same rate of growth over the next few years, India will lose to the Philippines before 2015. "We will grow at least by 20% annually in BPO exports over the next five years," says Oscar Sanez, the man spearheading the BPO association of Philippines . "But we don't take India as a competitor, as there is business in the market for everybody," Mr Sanez adds.

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Publication:Pakistan & Gulf Economist
Geographic Code:9PHIL
Date:Nov 14, 2010
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