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Conference sketch: War of the Worlds

16 Jul 2008 12:00 AM | Anonymous
Attending this week's NOA Global Sourcing event, sponsored by legal firm Lovells, one of the highlights (alongside lots of in-depth practical advice) was the 'War of the Worlds' debate.

This pitched China, the Philippines and India against each other in a good-natured battle for customer hearts and minds, given voice by Todd Russock, Rob O'Malley and Roop Singh – each of whom has estimable experience of building success in their chosen regions.

First up was Russock, who advises UK organisations about doing business in, and with, China.

The Chinese saw 2007 GDP growth of 11.4%, said Russock, who had many other sobering statistics to hand: for example, four million new Internet users there every month, and a PC or laptop sold every second.

Russock went onto describe a massive drift of the rural populace towards the cities and their suburbs – akin to how the UK's own industrial revolution created a sprawling urban middle class.

In 2035, 70% of China's billion-strong population will be urban, he said. By contrast, roughly 60% of the population today is rural.

In other words, in twenty-five years' time, China's metropolitan population will have increased by 300 million people – quite a government-backed opportunity for outsourcing in the future, he suggested (perhaps neglecting the downside of 300 million fewer people to farm the land and grow food).

Nevertheless, Beijing now sees outsourcing as being the next big opportunity for China, after being the world's manufacturing powerhouse, he suggested.

The downsides, however, remain the levels of English spoken, and the prevailing political and human rights climate, said Russock – although no-one seems to bring up Guantanamo Bay or extraordinary rendition when choosing a US outsourcing partner.

Next up was Rob O'Malley, whose successful track record in the English-speaking Philippines call centre market is not to be (even very politely) sneezed at.

O'Malley has set up a useful website called www.callcentreuk.com, which (rather confusingly) is all about working with call centres in the Philippines.

This, though, is a big deal: during his five minutes onstage, O'Malley portrayed a Philippines economy that seems almost completely reliant on supplying English-speaking call centres to survive. If you are a graduate, he said (and just over half the population speaks English), you either go to work in a BPO or call centre company, or you work overseas. Even the Philippines president is not above attending the opening of a 500-seat contact centre, said O'Malley, such is his country's investment in the sector.

Again, outsourcing seems central to a country's future prosperity: BPO has transformed the Philippines economy more than any economy in the world, said O'Malley, and voice has been the key (88% of BPO revenue comes from the voice market). Eight-five percent of overall BPO work is US based, he said.

Downsides for the Philippines remain weak data security laws, rising numbers of poor-quality or unaccredited vendors (unsurprisingly, given the limited opportunities to do anything else, it seems), and the lack of direct flights from the UK.

Again, the trend is that of an educated population drifting towards increasing numbers of urban centres on the back of outsourcing's influence on the economy, if O'Malley's viewpoint is correct.

It seems to me, though, that O'Malley may have missed something obvious: the potential for legal process outsourcing in the Philippines: an area where higher education and good English would be a boon – and a good way to raise the profile of its legal processes to boot.

Finally, batting for India was Wipro's Roop Singh, who made the only good joke of the day (something about homegrown software programmers and their companies' CEOs flying on aeroplanes, but I won't repeat it here).

Singh spoke with the confidence of the representative of a country that has got it right so far. That said, he acknowledged, domestic labour costs have been rising 12% per annum for the past three years, so the attractions of labour arbitrage seem to be fast disappearing.

Nevertheless, few offshore locations have India's potential to scale, said Singh, and China lacks India's English-speaking advantage in the market outside its own shores and territories.

That said, as India's traditional IT workforce rises to 2.3 million in the near future, again the picture emerged of a country looking further afield for educated staff, in this case from smaller metropolitan centres. Outsourcing is redrawing the map of all major offshore locations.

All in all an entertaining session, and one that highlighted the importance to various countries of making a national investment in offshore and inshore services work for the good of their local economies.

All of which brings me to my next point: the potential for the 53 countries of Africa to make names for themselves in the offshoring markets.

With Ghana, Morocco, Egypt and Senegal surely becoming fixtures in analysts' 'ones to watch' tables over the next decade, that continent surely has so much to offer: many highly educated populations, speaking English, French, and dozens of other languages, and the potential to build a world-class communications infrastructure, essentially from scratch in many parts of the continent.

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