Outsourcing To India vs. To The Philippines: Which is Better?

The Philippines and India have been outsourcing pioneers since the 1980s. While the latter remains the top outsourcing destination, the former proves to be a strong challenger. Their respective unique approaches in outsourcing and offshoring talents make them a cut above the rest. 

One of the challenges that Western companies face is talent shortage. A study shows that the global talent shortage has reached a 17-year-high, as 77% of employers report difficulty hiring candidates locally. 

But there is a solution. Outsourcing offers sustainable and long-term solutions to talent shortages by giving businesses access to a wider talent pool across the globe. Operational and management costs are significantly cut, allowing companies to save money.

But in the case of the Philippines vs. India as the better outsourcing hub, which of the two tops has the better talent pool?

Philippines vs. India – Which is Better in Outsourcing? 

The Philippines and India have been battling for the top spot in the outsourcing industry for decades. India has an impressive talent pool in IT, while the Philippines is a talent hotspot for customer support representatives, accountants, and HR professionals. 

While outsourcing to either of these countries remains beneficial to foreign enterprises, this article analyzes their strengths and challenges to show which between India and the Philippines is the better remote talent provider. Likewise, we will help you decide which is the right outsourcing hub for you.   

1. High English Proficiency 

As a former British colony, Indians are natural English speakers. Most of them believe that the English language is superior to Hindi. But did you know that the Philippines ranks better than India in English proficiency? 

In the recent 2023 English First survey, the Philippines scored 578 in English proficiency, while India got 504. 

Here are their respective rankings out of 113 participating countries: 

While India is far ahead of its neighboring countries in speaking English, only 30% of its population is fluent. In the Philippines, 47% or almost half of its population speaks the language competitively. 

While moderate proficiency in English might suffice for non-complex roles, a deeper understanding of the language is necessary to fulfill crucial tasks. Foreign companies prefer to hire talents with a high level of English proficiency like the Filipinos. 

At least 1.3 million Filipino talents are employed in voice and non-voice roles in at least 1,000 BPO companies that service clients in Australia, the United Kingdom, the United States, and even nearby countries like Japan. 

Ultimately, their excellent communication skills in English have made it easier for their foreign principals to collaborate with them. 

2. Cultural Compatibility 

India emphasizes aligning its talents with Western cultural norms and work practices. Companies integrate Western business models to enhance the adaptability of Indian talents. 

The Philippines, though an Asian country, is heavily influenced by Spain and the United States, being colonized by both for more than 300 years. This is evident in their choice of music, sports, and even slang and idioms. 

While respecting differences is important in working in a diverse company, cultural harmony is vital in ensuring that workflows are not disrupted by conflicts. When clients and their remote teams share the same values and culture, they collaborate more efficiently. Outsourced Filipino employees embody traits that make the sharing of ideas, communication, and accomplishing complex tasks seamless for their employers. 

In an Internations’ Expat Insider 2023 report, the Philippines ranked 8th in the best places for expats to live. This is an indication that most foreign clients recognize the compatibility of the Filipinos with their culture. Ultimately, this vote of confidence is more and more Western companies choosing Filipino remote talents to fill crucial roles in their organizations. 

3. Top-Tier Talent Pool 

The National Economic Development Authority reports that 51 million Filipino skilled talents are ready to work today.

With the  Philippines’ median age at 26, its labor force is comprised of millennials and Generation Z. This attracts foreign employers since they prefer remote workers who are willing to be trained in new technologies. 

Filipinos put a premium on education. For them, a college degree is their ticket to a better future. Hence, the influx of highly skilled talents that universities produce annually. This has also resulted in an all-time high literacy rate of 99.27% in 2021.

Meanwhile, India’s Labor Force Participation Rate has decreased from 46% to 40% (414 million to 360 million) from 2017 to 2022. Out of 414 million, 21 million are women who left their jobs to change lifestyles. 

Likewise, this number also signifies that only four out of 10 Indian talents are willing to work. One notable reason for the decline is Indian talent’s inability to cope with new technological advancements. 

The Philippine government is actively boosting the employability of its citizens through upskilling and reskilling. The Senate has approved a $157 million budget to be used to boost the skills of Filipino talents. 

The government’s program aims to equip Filipinos for remote job opportunities in tech, communications, and finance and to provide foreign enterprises talents with specialized skills when they outsource to the Philippines. 

The demand for outsourced talents in these specific industries on a global scale has become more imminent over the past two years. 

4. Competitive Digital Infrastructure 

The Ookla Speedtest Global Index reports that India’s median speed is at 25 Mbps only, even after the new 5G technology’s implementation. Likewise, India’s global ranking for total median fixed broadband speeds has slightly decreased from 49.11 in November 2022 to 49.14 in December of the same year.

On the other hand, the Philippines has been aggressively boosting its internet infrastructure over the past years. A report by the Ookla Speedtest Global Index in November 2022 showed an increase in the country’s broadband median speed from 81 Mbps to 87 Mbps.

The Philippine government continues to boost the country’s digital infrastructure by streamlining its processes. Today, eight major internet providers offer fiber-optic and satellite technologies in the main cities for faster connectivity, making it easier for remote workers to work efficiently.   

In February 2023, Elon Musk’s ISP company, Starlink, started its operations in the Philippines. It now provides an internet connection speed of not less than 100 Mbps. This opens many opportunities for Filipino talents to take on complex roles that require faster connectivity. 

India’s continuous digital infrastructure development has propelled Indian talents to work remotely even more. Its tech services have widened with the help of digitalization.

Conversely, the Philippines is hailed as one of the fastest-growing digital economies registering a 93% expansion from 2020 to 2021. Such growth is a result of foreign businesses opting to outsource talents to the Philippines to ensure the continuity of their operations during the pandemic 

Likewise, accelerated digital infrastructure in the Philippines contributed to the growth of the IT-BPM industry, employing more IT professionals remotely. 

5. Labor Costs 

India and the Philippines can offer cost-effective outsourcing solutions due to their low living costs that reflect competitive salaries. According to the International Cost of Living Calculator, India ranks 191st out of 197 countries while the Philippines is 152nd in the cost of living survey. 

Meanwhile, the Philippines’ average monthly salary is 45% lower than India as shown in this table: 

You may compare more roles and salaries using this transparent and free salary calculator. 

India’s cost of living is a major factor in why they can offer affordable outsourcing solutions. However, the Philippines’ very low average monthly salary makes it all the more cost-efficient to build your remote team there.

Companies spend at least 45% less on the salaries of their Filipino talents compared to India. Cost savings is one of the major reasons why companies outsource talents. This makes outsourcing to the Philippines more cost-efficient than in India. 

Final Thoughts 

The Philippines may have established its outsourcing industry a decade later than India, but it has proven to be a top destination for global companies who wish to scale their teams remotely. 

Here are some of the key reasons why the Philippines tops India in outsourcing: 

• The country is home to at least 51 million highly skilled talents who are ready to take on complex roles and accelerate your company’s growth. 

• High-speed connection of up to 100Mbps is made available in key cities and even remote areas for seamless communication and efficient working units. 

• The high level of English proficiency of Filipino talents and their neutral accent make communication and collaboration easier. 

• The monthly average of Filipino workers is only $363, compared to India at $660. 

Ultimately, the Philippines has proven to be the more viable option when it comes to outsourcing and offshoring talents due to these key reasons. Filipino talents let their efficiency prove that they are indeed, a cut above the rest.  

If you’re looking to scale your company and reach your size goal efficiently, tap a trusted Filipino offshoring partner to accelerate your remote team’s growth in less than 30 days.