Why Philippines has overtaken India as world's call center capital
MANILA, Philippines (UPDATED) - The Contact Center Association of the Philippines (CCAP) on Thursday urged the Aquino administration to continually promote the country as the world's premiere hub for call center operations.
Speaking to ANC's Headstart, CCAP President Benedict Hernandez said the Philippines has already overtaken India in terms of number of call center employees this year.
"When you think of the contact center environment, we have assumed the number 1 position. Last year, we were about 300,000. This year, its 350,000 in terms of employed Filipino working in call centers in the Philippines compared to only 330,000 in India. Right now, the best place to put a call center from a quality position is the Philippines," he said.
A separate report by IBM's Global Locations Trend said the Philippines has also overtaken India as the world's number 1 country for shared services and business process outsourcing (BPO).
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.
Hernandez said the country assumed the top spot in terms of call center employees and revenues because of the quality of English-speaking employees in the Philippines.
"We won this war not because we're lower cost than India. To some extent, we are a little bit higher priced to operate a call center compared to India. We won this battle by virtue of Filipino quality. We grew faster than India because it's the Filipino talent, which is world class caliber," he said. He noted that Indian call centers are already migrating some of their operations to the country.
Cultural affinity, neutral accents
Jojo Uligan, CCAP corporate secretary and executive director, said the Philippines played up its strengths in the past 10 years by being a superior value destination for US companies.
He said Filipinos have a better cultural affinity to Americans, and their accents are more neutral.
"When you train a Filipino to speak English, you would never know it is a Filipino. I think Americans like to talk to a person they can understand," he said.
Hernandez said various leaders can take credit for the rapid growth of the business process outsourcing industry. He said President Fidel Ramos helped pave the way by deregulating the telecoms industry and fixing the country's power supply problems.
He added that former President Gloria Macapagal Arroyo and then Trade Secretary Mar Roxas continued the trend through tax exemptions.
Uligan said he hopes the Aquino administration will continue the trend by giving more training to young Filipinos and promoting the Philippines as a BPO destination.
"We're not just focusing on the United States but other English-speaking countries like the UK, which we only service a little. Australia and New Zealand are also good potential for us. But again, if you can market in these areas where we service a smaller percentage of the business, then we will have a better chance of getting more jobs," he said.
Hernandez encouraged fresh graduates to apply for call center jobs. He said the BPO industry is expected to grow to 1.3 million jobs with $25 billion in revenue in the next couple of years.
"This is an industry that has so many opportunities. It needs agents, supervisors and managers. The growth potential is from inside and there is also training involved. You also hone language, communication and problem-solving skills, which are portable skills that you can apply anywhere," he said.
Low profit margins
Call centers are generally positioned at the bottom of the BPO value chain since they provide lower profit margins compared to other BPO offerings.
Non-voice BPO offerings, such as financial, medical, editorial, and engineering services, contribute higher profit margins, thus is preferred by more established BPO players, including those from India.
Local BPO firms have pursued call center services as part of a strategy. Call centers are considered as their entry point for a slice of the non-voice outsourced and/or offshored businesses of clients.
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India is aggresively bringing
India is aggresively bringing up the level of the skill of their college grads and agents.
If you call from the US about a problem with your computer, the first line of call center people to answer are in the Philippines. But when the problem becomes deeper and more technical, you will be forwarded to call centers in India.
What does that mean? India has transformed from low value call centers to high value technical support centers and centers with higher knowledge. They earn more from their clients in the US and Europe and they can pay their agents higher.
The low value call centers are just being passed to the Philippines. We don't have any competetive advantage except English.
I foresee in the near future that Vietnamese will learn English faster and better than us and taking away most of our low value call centers since their salaries are much lower than in the Philippines. Then almost all of our BPO will close and call center agents will be unemployed.
Look at Intel. They closed their very big assembly and test plant in the Philippines. Now they have built a huge one in Vietnam. If our engineers were design engineers rather than assembly and test engineers, we'd have a design center which would not be easy to be taken away.
..which means our schools would have to keep up
by refocusing on critical thinking skills and out-of-the-box thinking instead of rote memorization. How do you challenge students to think for themselves and research the answers themselves instead of being spoonfed and passive? Once you've found the answer, the world will beat a path to your door. Our culture places great emphasis on the wrong things - respect for authority instead of challenging authority, obeying the rules instead of questioning why the rules are there in the first place, get along by going along instead of breaking free from the mold and independent thought. Those few who do break free from the mold have the substance that entrepreneurs are made from.
Yes. Agree.
Yes, challenging and questioning will go a long way. I think that is your point. Think out of the box.
To some who might miss your point though authority and rules:
In general, we must respect authority and obey the rules and at the same time improve by challenging and questioning.
But...
It's unfortunate that some people in authority are trying to suppress imaginative minds and creative people and they make rules that prevent change for improvement usually for self preservation. This is when we must challenge authority and go around rules.
Success is freedom from drugs, prostitution & call centers
The increasing dependence of PH on call centers/BPOs is actually a bad sign. It means the addictions of PH are becoming uncontrollable just like its dependency on OFW remittances.
These create huge abnormalities in Philippines lifestyles, families and society. The government loves being a pimp, but the call girls, call boys and man-whores hate being freaks.