The average cost of a full-time business process outsourcing employee in the Philippines is about $19,300 a year, compared with $72,300 in the U.K. and $91,100 in the U.S., according to consulting firm Everest Group. The cost calculation includes salaries and expenses related to benefits, administration, facilities, technology and others. Read more at Bloomberg.
“For voice work, the Philippines has a better voice/accent environment even though it is at a cost disadvantage to India. For some kinds of work, close proximity and time zones advantage near shore locations is preferred over India,” said Peter Bendor Samuel, CEO of Everest Group, a Dallas-headquartered management consulting and research services firm.
Citing concentration risk as another reason, Samuel said some firms feel that they are overly concentrated in India creating increased risk in the event of natural disasters or large currency swings for these firms a more geographically dispersed location strategy makes sense.
“Although these alternate locations have taken some share from India such as Mexico, Costa Rica and for Europe, Poland, we believe that these share gains will level off as these alternative locations are priced higher than the low cost high skilled Indian labour pool,” Samuel said.
US-based DeepDive/Everest Group It Services Forecaster has forecast a 6.3% growth in constant currency for the top five Indian companies for the 2017 calendar year, a 2.4 percentage points drop from the 8.7% growth in 2016.
For the sector as a whole – including large, medium and small IT firms but excluding MNC captive centres – the growth in 2017 is expected to be a mere 5.3%. That’s a steep drop from the 8-10% that the industry is expected to do, as per IT industry body Nasscom, in the 2017-2017 fiscal year (Nasscom estimates include the contribution of MNC captive operations).
Peter Bendor-Samuel, a global technology researcher, said Trump is “holding out a small olive branch to immigrants” and will stick to his American first protectionist stance. “Trumps statements pertaining to a merit-based system for immigration provided hope to Indians seeking to emigrate to the US with advanced degrees. However, it is unlikely that it signals less hostility toward the current H1-B system.”
Trump has been “very clear that he is seeking to eliminate the ability of services firms to utilize H1-B and L1 visas as a bridge to taking US jobs off-shore”, said Bendor-Samuel, adding “this position is gaining considerable support from both political parties”.
Employers are also developing their own internal bootcamps as well as apprenticeship programs, Anurag Srivastava, vice president with management consultancy Everest Group, notes. The industry is trying to apply lessons it has learned from high turn-over rates among the hot talent it has cultivated thus far, and so it is beginning to invest more in retention. Read more at CIO Dive.
Research indicates IT compensation rose for most certified and noncertified skills in 2016. The market for IoT services is expected to double to $18 billion by 2020. Read more at TechTarget.
Peter Bendor Samuel, CEO of Everest Group, a research firm, says the fight is about two competing visions of Infosys’s future. “Arbitrage-first or digital-first. Under the arbitrage-first vision of the founders, Infosys will consolidate its role as the leading labour arbitrage player.” The digital first vision of Sikka’s will ensure that Infosys will transform itself into a digital company in much the same way Accenture is driving its transformation. “Infosys will accelerate its investments in automation, analytics, cloud and cognitive technologies to build a new source of value for its customers,” says Samuel. Read more at Business Today
Peter Bendor-Samuel, CEO of Everest Group, said, “I wonder if the industry deceleration we have been forecasting is catching them by surprise and they are getting feedback from the market that their original forecast is badly off. They may also be looking for a way to tell a better story given these challenging times. Another contributing factor to the uncertainty could be the pause in globalisation that is occurring as signalled by the new administration in the US and Brexit and they need more time to watch how this plays out.”
H. Karthik, a partner at management consulting company Everest Group and leader of its global sourcing practice, said Duterte’s comments about a separation from the United States altered risk perceptions.
“No companies have publicly stated any significant changes in their Philippines strategy, but many of them are adopting a wait-and-watch approach,” he said.
Karthik compared that wariness about the Philippines to developments in other outsourcing locations, such as the political unrest in the Ukraine, Egypt, and Tunisia, and recent widespread public protests in Romania.
Under the arbitrage model, “Infosys will build on its reputation for premium services to protect its industry-leading margins and offset impact on share price by returning cash to shareholders,” said Peter Bendor-Samuel, CEO, Everest Group.
©2023 Everest Global, Inc. Privacy Notice Terms of Use Do Not Sell My Information
"*" indicates required fields