Philippines to overtake India as world's call center capital

Posted at 12/01/2010 11:42 AM | Updated as of 12/01/2010 5:17 PM

MANILA, Philippines (2nd UPDATE) - The Philippines would soon overtake India as the call center capital of the world, a recent study by Everest Research Institute showed.

The Philippines' call center revenues are expected to reach $5.7 billion this year or $200 million higher compared to India's $5.5 billion. BPO revenues, on the other hand, are forecast to hit $9.5 billion, playing catch-up to India's $12.4 billion.

The Business Processing Association of the Philippines (BPAP) said beating India in the call center business was not "far-fetched" as more companies based there start moving their operations in the Philippines.

"[More] clients are going here," said BPAP executive director for external affairs, Martin Crisostomo.

The shift to the Philippines is attributed to several factors: the country's workforce has better English-speaking skills, the Philippines' telecommunications network is superior to that of India, higher incentives for companies setting up business here, and Filipinos' affinity with the American culture.

Younger industry

In terms of scale, India's sheer size far outweighs the Philippines. 

India, too, has began exploring the BPO industry 10 years ahead of the Philippines. 

The Philippines’ workforce is no match to India’s, given their total population of 92 million and 1 billion, respectively, a BPAP executive has stressed in a previous interview. 

Low-margin, entry point

Among the menu of services currently offered by outsourcing and offshoring firms, such as those based in the Philippines, the voice-based or the traditional call center sector has one of the lowest profit margins.

Even Indian BPO firms have long realized that their competitiveness--and fatter profit margins--could be best realized in the non-voice sectors, including financial, legal, medical engineering and editorial services, among others. 

Among several permutations of the BPO business model is to have the low-end call center services in the Philippines, which has cultural affinity with the mostly American clients, while the up-market technical services are based in India. 

A multi-country model also bodes well for BPO firms concerned about managing their business' country risks.

The Indian industry group National Association of Software and Service Companies, or NASSCom, and the BPAP keep ties for partnerships and business exchanges.

Majority of the BPAP member firms still offer call center services but considers this as simply their entry point to get a biggest slice of the clients' more profitable non-voice services.   

Employment boon

Call centers may be low-end and low-margin, but for the Philippines it meant an employment boon. 

Crisostomo noted that the growing local BPO industry should not only translate to higher economic growth, but also more jobs.

In the call center sector alone, some 60,000 jobs will be up for grabs next year.

"We are hiring a lot," noted Bong Uichanco, Asia-Pacific sales director of BPO firm Stream Global Services.

The BPO industry has just released its latest roadmap, wherein its revenues and workforce are targeted to reach $25 billion and 1.3 million, respectively, from $9 billion and 500,000 today. - With a report from Ryan Chua, ABS-CBN News