Offshore outsourcing upstarts bite at India's heels

India may be the best known destination for offshore contact centres but 'nearshore' countries such as Egypt also want to get a piece of the action.

Following India's success, many countries such as Argentina, Egypt, Hungary and Mexico are marketing themselves as destinations for companies looking to cut costs or access particular language skills.

The new competitors are appearing at a tricky time for the Indian market, with a consumer backlash against Indian offshoring combined with increased costs and attrition rates of 75 to 80 per cent in some Indian call centres.

While India is going to remain by far the largest market - with 169,000 offshore call centre staff by 2010, up from 95,000 last year - smaller players will increase their visibility, according to analyst Datamonitor.

Datamonitor senior analyst Peter Ryan said: "If you have complaints about offshoring nine times out of 10 they will revolve around India. This is unjustified but it seems to have become a flashpoint for concerns about offshoring."

By 2010 there will be 10,700 outsourced call centre agents working from Eastern Europe, up from 3,700 now. Growth in North Africa will jump from 7,800 agents last year to 23,000 in four years' time, largely driven by Egypt boosting its market presence.

Speaking at the Offshore Customer Management International Conference in Cairo, Ryan said: "Egypt's government has been very proactive in lowering the corporation tax rates." And with Egypt only a four hour flight from most of Western Europe, Ryan pointed out: "That's a lot more compelling than getting on a plane and flying for 16 hours [to India]. If you are a busy executive you don't have the time for that and there's a cost."

But concerns over regional stability may put some companies off, as well as a perception that corruption is still an issue in some nearshore countries, he said.

There are also other countries trying to get noticed by companies looking to offshore - including Botswana, Ghana, Kenya, Malaysia and Senegal.

Latin America and the Philippines continue to be attractive destinations for US companies looking to offshore contact centres, Ryan said.

Another region gaining some interest is China but Ryan said the contact centre expansion there is likely to cater for the increasing number of Chinese consumers. And he added: "The Chinese business environment hasn't been as solid in terms of cutting through red tape as you might see in India or Egypt."