outside in? Asia is nearshoring to itself?

Economic rebalancing is certainly moving in favour of Asia Pacific. While Asia has always been a dynamic region witnessing rapid economic growth in the last decade, it’s seen as a back-office of the world when it comes to offshoring /outsourcing. However, the tide is turning today as the growing consumer base within India, China and ASEAN demands dedicated customer service, in their native languages. As an example, India alone has a variety of call center language requirements and needs native speakers in at least 12 languages (Marathi, Tamil, Telugu, Kannada, Gujarati, Punjabi to name a few). These requirements are being met obviously by native speakers within the country.

The reality is – Asia is becoming self-sufficient. Be it their economy, or the new Asian nearshoring trend. This has certainly reduced dependency on Europe and the Americas and helped interaction between Asian markets. Sharing the outsourcing pie between multinationals and Asia’s own fast-growing domestic companies, the region has positioned itself as a leader in innovative outsourcing. As a result, call centres across the region are mushrooming and developing unique capabilities.

nearshoring in Asia

There are several interesting examples across Asia that support nearshoring models being followed by multinationals and domestic enterprises. Let’s look at a few:

In Australia, the legacy carriers of British Airways, United Airlines and American Airlines all closed their local Australian reservations/call centre operations and transferred this function to India (Call Centre News, 2007). A lot of call centre operations are also moving to New Zealand from Australia due to cultural familiarity, lower costs and convenient time zone.

China is also looking at new models to leapfrog India’s success in outsourcing and the domestic market is certainly a sweet spot. According to a KPMG report, China’s Shared Services and Outsourcing (SSO) industry stood at USD46.5 billion at the end of 2012; this is expected to double to USD85 billion in 2015. China also intends to invest USD25.2 billion in cloud infrastructure over the next five years, which will stimulate the growth of China’s SSO industry.

A break-up of international service outsourcing for mainland China shows contracts of $5.4 billion from Hong Kong, and $5.18 billion from Japan. In fact China has recently opened up its contact center business to Indian IT service providers

Let’s take the example of Malaysia, which is now ranked 18 among top 100 global outsourcing destinations. Certain population segments in the country are fluent not just in English but even in Chinese dialects, Hindi (Indian language) as well as Malay (Malaysian native). This makes Malaysia an attractive option for both Indian and Chinese companies looking to outsource their operations. It is ranked the world’s sixth best country overall for ease of doing business by the World Bank, compared with China (96), the Philippines (108) and India (134).

cultural connect in call centers

The call center is first and most importantly about customer engagement, hence cultural factors are also driving the industry both within, and to, Asian countries. Language skills remain core to Asia’s offering, and thanks to high levels of spoken English, the Philippines retains two destinations in the world’s top ten outsourcing destinations, Manila being ranked in the second place after Bangalore.

Malaysia’s ability to offer more languages – it can cover Arabic which not many other destinations can - sets it apart from other outsourcing centers. Many companies, both mutlinationals and Asian transnationals, are outsourcing to Malaysia due to their low attrition rate relative to India and Philippines and the variety in languages. IT helpdesk offerings are on the rise in Malaysia, too.

balance in Asia Pacific

This flexible approach to outsourcing is helping Asia balance its portfolio in outsourcing. The dependency on Americas or Europe is today becoming well balanced by domestic demand and this trend is likely to continue as the Asian economy paces ahead. The call center business in particular is likely to see significant growth as domestic demand appreciates and users realize the value of cultural semblance.


image © sato - Fotolia.com

Haytham Sawalhy

Haytham is an industry enthusiast specializing in technologies that are capable of  transforming customer experience and enhancing operational efficiency. With over 15 years of experience in ICT industry across different continents, he appreciates the diversity in consumer behavior and the impact technologies like IoT, applications, analytics and contact centers are making in shaping businesses globally.