Indian BPO Losing 70% Of Voice Business To Low Cost Rivals

India’s BPO industry is currently losing 70% of all incremental voice and contact centre business to competitors like the Philippines and countries in Eastern Europe, according to a new report.

The Associated Chambers of Commerce and Industry of India (Assocham) study said that several Indian firms have set up substantial operations in Philippines, which has a large pool of well-educated, English-speaking, talented and employable graduates. Almost 30% of graduates in Philippines are employable unlike 10% in India where the training consumes considerable amount of time, according to the report.

“It is estimated that in the ongoing decade India might lose US$30 billion in terms of foreign exchange earnings to Philippines, which has become the top destination for Indian investors,” Assocham Secretary General D S Rawat said.

“Thus, there is a need to reduce costs and make operations leaner across the BPO industry.” The report found that BPO companies could reduce their total operating costs by 20%-30% by moving to a low-cost city within India, with a cost differential of around 10%-15% for non-voice processes and upwards of 20% for voice processes.

“Lower attrition rate in smaller towns is a big positive owing to lower recruiting and training costs, while there is comparatively high attrition rate of 30-35% in Tier 1 cities. Transportation costs for BPO employees and real estate prices are also lower in smaller cities,” Rawat said.