Recent political events have somewhat dampened the explosion of interest in India and the Philippines as locations for call centers. Some US firms now favor nearer locations such as Canada and Mexico. However, for many companies, the cost savings afforded by these locations will outweigh the (often exaggerated) risks.
US firms are worried about the political risks of outsourcing operations to offshore markets.
Recently there has been an explosion of interest in countries such as India and the Philippines for call center outsourcing. The abundance of low-cost labor available in these locations has been a big draw for US and European call centers and outsourcers.
In addition, both the Indian and Filipino governments have actively encouraged foreign investment into call centers in their countries, touting the low labor costs and high availability of an educated English-speaking workforce, as well as offering government incentives to businesses locating there.
But while many pundits touted India and the Philippines as the ‘next big thing’ in call center outsourcing, recent events have made companies wary. India’s military clashes with neighboring Pakistan continue, and Islamic militants continue to kidnap and murder Americans in the Philippines. The possibility of further instability is causing some companies to look for other offshore alternatives.
As a result, the focus has moved more towards locations such as Australia and New Zealand – and to countries closer to the US, such as the Caribbean, Canada, Mexico, and certain Latin American countries. Many of these offer cost savings, proximity to the US, convenient access, ease of travel and fewer security risks.
However, many of these ‘near-shore’ alternatives cannot offer the same cost savings as offshore locations; those that can often do not possess the same amount of educated and English-speaking populations. So although more and more companies are carrying out a hedging strategy – a combination of offshore and near-shore call center investments – the growth in offshore markets does not look likely to stop.
For many companies, India and the Philippines still represent good opportunities for cost savings. In these cases, the enormous cost benefits will outweigh potential risks – which may well be overstated by the media in any case.
Related research: Datamonitor, US Customer Relationship Outsourcing to 2005 (DMTC0753)
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