Move over India, the new offshore darling is the Philippines

It's a smaller world than ever and the list of offshoring options is seemingly endless. Debra Maxwell, director at business process outsourcer arvato, reveals the latest hotspots.

by Debra Maxwell
Last Updated: 29 Oct 2012

For many years India was the default offshoring destination for UK businesses, and while it still retains the number one spot today, the cost savings it offers are no longer as attractive as they once were.

New pins are popping up on the global offshoring map with several emerging locations now offering the right mix of skills and infrastructure to challenge Indian dominance. This competition can only be good for companies looking to offshore and their customers; it’s driving improvements in quality while keeping costs low.

While cost will inevitably remain the primary motivation to offshore, smart companies are scouring the market for the best options in terms of both quality and value for money. They are also taking into account the ease of doing business in the different locations. Infrastructure is a key consideration, specifically sufficient internet bandwidth and a reliable power supply, supported by contextual factors such as the level of governmental support offered to overseas investors within a given territory, political stability, security and air links from the UK.

Any emerging nation capable of combining these elements with a large, university educated and English-speaking workforce should be on the radar of those looking to offshore.

In today’s shrinking world that leaves a long list of options, so to consider what really differentiates the best locations from the rest, businesses need to analyse which destinations provide greater commonalities with their own organisation and customers. Cultural or language barriers, for instance, can be a disaster for effective customer service and engagement.

This is what made India such an attractive location to many English-speaking firms and why nations like the Philippines are now climbing the ranks. US-based companies have long-established offshore links with the islands, particularly due to cultural and social similarities, as well as employees’ neutral accents, and now many British businesses are taking advantage, too. A recent GlobalEnglish study found that of the world’s top 30 countries by size of labour force, the Philippines topped the chart for workers’ fluency in English, above India and, more alarmingly, the UK.

The final consideration should be about the type of service you’re looking to offshore. Not all destinations are equally strong across front and back office services. Some, like China, are perhaps strongest in ITO, whereas the Philippines has always been recognised for providing good voice services but is increasingly delivering growth in BPO.

No one destination has it all but with new locations emerging as credible candidates then the increase in choice this brings is good news for UK firms.

Debra Maxwell is global BPO director at arvato

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