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Outsourcers urged to rethink business strategies

Melba-Jean V. Bernad | Feb. 18, 2009
Outsourcers must be quick enough to react to developing conditions and rethink business strategies, says study.

MANILA, 17 FEBRUARY 2009 - The full impact of the economic slowdown will be felt by the outsourcing industry in the coming year or two. And outsourcers must be quick enough to react to developing conditions and rethink business strategies if they are to maintain growth in the face of a slowing global economy. This is the observation of Frost & Sullivan in its "Contact Center Outsourcing Trends in the Asia Pacific Market, 2008 -- 20011" study.

The Asia Pacific contact center outsourcing Market is estimated at US$13.7 Billion in 2008. Majority of these revenues come from the markets of India, Philippines, Malaysia and China, together contributing more than 54% of the total market revenues.

In the report, Frost & Sullivan noted that while outsourcers in countries such as the Philippines, Malaysia and China have gained significant traction for offshoring, given the multi-lingual/multi-dialect workforce they have in employment, the lack of highly technical agents and supervisors has meant that business has been lost to Australia and India, countries renowned for having their superior technical skill set.

One common trend that has been consistent over the years is the preference that American corporations have towards Philippines-based outsourcers. Contributing factors for this include the high volume of agents that speak Americanized English and Spanish, and the fact that most outsourcers based in the country originate from the US. The Frost & Sullivan report said that this relationship with the US will hurt growth in the Filipino market in the short term. However, reliable, well-established destinations like the Philippines and India will attract the most new business as offshoring to these locations represents less of a risk for enterprises when compared to the newer emerging markets like Indonesia or Vietnam.

Among the growth markets, Frost & Sullivan said that India seems to be better poised at moving up the process value chain. The strategy of most Indian outsourcers to shift their focus to offering more data services to foreign clientele is paying off. However, rather than compete, some Indian and Philippine outsourcing communities currently work hand in hand to offer a complete solution to foreign clients. A typical arrangement would involve an outsourcer from the Philippines being responsible for the voice services, while its Indian counterpart oversees data services.

Frost & Sullivan said that larger outsourcers such as Teletech, Sitel, Convergys and IBM Daksh, which have operations in both countries, have successfully segregated the different services accordingly. These large players will prove to have a decisive advantage if there is a movement, especially from Western clients, to consolidate multiple outsourcing partner relationships that overlap functionally.

New customers will also be more aware of spend management issues when sourcing partners for a multi-shoring engagement. Local players in both countries, with the help of the respective call center associations have been working together over the past few years to build a partnership in order to capitalize on the growing demand for a rationalized solution.


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