Is Vietnam a serious threat to Philippines for BPOs

Reading this article one assumes Vietnam can on the basis of cost can replace the Philippines as a BPO supplier. However, it does not take into account the cultural mindset and the fluency of speaking English as the key success  factors for the Philippines achieving no 1 ranking as a BPO supplier in the voice category even beating India.


Vietnam gains traction as ‘lower cost’ alternative for offshore, outsourcing services

Vietnam’s economic growth rate has been among the highest in the Asia Pacific region in recent years, with an annual GDP rate of between seven and eight and a half percent, and strong growth in its contact centre industry establishing the country as a credible low cost alternative destination for offshore and outsourced services.

In its latest report on the Vietnamese market, research firm Frost & Sullivan notes that hiring IT professionals in Vietnam is 30 to 50 percent less expensive compared to other outsourcing countries like India and the Philippines.

According to Frost & Sullivan’s Research Associate, ICT Practice, Dao Thi Minh Thao, studies  have  showed  that  Vietnam  with a strong workforce of more than 15,000 IT engineers of software outsourcing alone, and its low labour cost, is an  “undeniable  advantage  that  drives international companies to this new ideal outsourcing destination.”

And, with customer service becoming a key focus in Asia  Pacific,  Thao says that Vietnam is improving customer relationships for the purpose of greater loyalty, brand recall and profitability, with basic  applications like Automatic Call Distributor (ACD),  Computer Telephony Integration (CTI), Interactive Voice Response (IVR), and Call Monitoring (CM) still leading the trends in the Vietnam contact centre market.

“ACD  is  the  biggest  contributor  that  accounts  for  almost 40% of all applications  and  is  still  growing at a fast rate as majority of contact centres’ primary  purpose  is  to  support  incoming  voice  calls.  It is forecasted that in 2018, ACD will reach the saturated status of 31.7% from 37.3% in 2011 and start to slow down. The same will happen to other current major applications like CTI and IVR.”

Frost & Sullivan reports that BFSI and Telco are the largest contributing verticals and are likely to remain so due to an ever- increasing customer base and an adequate supply of  capital  to invest in new technologies and solutions.

According to Thao, the customer-intensive industries of BFSI and Telco are characterised by large deployments of centres with 200 seats and above, and she says this size band will grow in  prominence as these two industry verticals are likely to dominate revenue contribution.

“Most contact centre projects in Vietnam are deployed by banks, financial institutions and Telco service providers.  These sectors require a high level of customer care. Large seat numbers are needed to always be available to serve customers.”

Thao also says that “currently the less than 50 seats contact centres compromises of  only  more  than  2%,” adding that “over time, the market is expected to see a higher growth  of  less  than  50  seats  and 51-200 seat horizontals based on the increasing  demand from  the  SMB  segment as well as more integrated, cost-effective solutions provided.”

And, Thao observes that although the language barrier is an “obvious drawback, almost 80 percent of the workforce is comprised of young, enthusiastic college graduates with science degrees that are always keen to learn,” and that Vietnam is “propelling their way up in the IT outsourcing industry.”

“For further growth and success, companies should look forward to more efficient contact centre application adoption to align these trends for the future.  Emerging global vendors in providing suitable solutions also need to offer more customised solutions and effective marketing activities at more affordable prices.”

One thought on “Is Vietnam a serious threat to Philippines for BPOs

  1. Most companies can gain a number of benefits by outsourcing or using BPO services. Most bpo companies here in the Philippines are able to carry out the work for considerably less effort and money. It is also possible in some instances to improve quality of service through being able to have more resources and better qualified personnel.

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