Snatching the BPO business from India:

THE scandal involving India’s business process outsourcing (BPO) industry should be a boon for the Philippines, provided it plays its cards right. Last month, Satyam Computer Services shocked the world when its chairman admitted that the company had been cooking its books, inflating profits for years. The admission came in the wake of intense scrutiny into India’s fourth-biggest outsourcing company after its chairman tried to buy two construction firms he and other Satyam founders owned.

Soon after, the World Bank, a major client, announced another shocker, disclosing it had banned the Indian firm from future projects after discovering the company’s employees were hacking into the lender’s database. Satyam was not alone, as the World Bank also banned Wipro Technologies from future projects, after India’s third-largest outsourcing firm was found to have improperly offered company stock to the lender’s officials ostensibly in exchange for bagging a project with the multilateral financial institution.

A third Indian firm, Megasoft Consultants joined the list of Indian IT contractors that the World Bank banned from future projects. Satyam was barred for eight years, Wipro for four, and Megasoft for four. Immediately, multinational giants IBM and HP were seen to be poised to take advantage of the Indian IT industry’s glitch.

We believe Philippine BPO firms stand a better chance of snatching business away from their Indian counterparts. The big-name multinationals in the IT industry are saddled with high operating costs, with a growing number of them already announcing job cuts this year in light of the global financial crisis. Like their Indian counterparts, Philippine BPO firms enjoy numerous cost advantages over the IT behemoths. But unlike their Indian counterparts, Philippine companies are not tainted poor corporate governance practices, which are at the heart of the Indian IT industry’s current debacle.