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The call center service has been dubbed the country's latest sunshine industry, expected to generate around 24,000 jobs in the next two years. When a door closes, a window opens. Even as the Philippines feels the fallout from the global IT crunch, it has benefited from the prevailing cost-cutting trend in an unexpected way -- an unprecedented boom in the call center business.
Indeed, the call center service has been dubbed the country's latest sunshine industry, with the sector expected to generate around 24,000 jobs in the next two years, according to Toby Monsod, former assistant secretary of the Department of Trade and Industry (DTI). "It's a very promising industry. Everybody's growing and hiring," Benedict Hernandez, Contact Center Association of the Philippines (CCAP) chair, said in a recent interview.
From 2000 to 2001, the segment reportedly grew by more than 200 percent, and local call center revenues are projected to increase from $173 million in 2002 to $864 million in 2004. Optimism runs high as an international research group forecasts the growth of ICT-enabled services to a $200-billion industry by the year 2010, with the call center segment's share at $42 billion.
Reports say that in the United States alone, there are 1.5 million call center seats that could be outsourced, and so far the Philippines has less than 10,000 seats filled, indicating the domestic industry's huge potential.
What are call centers?
A call center is a central customer service operation where agents (often called customer care specialists or customer service representatives) handle telephone calls on behalf of a client. Clients include mail-order catalog houses, telemarketing companies, computer product help desks, banks, financial service and insurance groups, transportation and freight handling firms, hotels and IT companies.
The size of an operation is described in terms of the number of "seats." A seat consists of a station with two or three people alternating in several shifts to provide 24-hour call center service. The industry's main target markets include the United States, Australia and the United Kingdom.
Many factors contribute to the local industry's sizzling development pace. One is the rising cost of doing business in industrialized countries like the United States, forcing foreign companies to downsize and outsource peripheral e-services to developing countries like the Philippines to cut overheads.
CCAP president Jose Ferreros also cites the better power and telecommunications infrastructure, competitive labor cost in terms of quality and value for money, and strong government support for ICT-related industries.
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Major industry movers
Today, there are 16 key industry players. Among these are Etelecare International Inc., Infonxx, PeopleSupport, C3 Customer Contact Center Inc., Sykes Asia, Inc., Contact World, SVI Connect, Cquadrant and Immequire Philippines, Inc. Most are joint ventures with ICT conglomerates. Even Easycall Communications Philippines Inc. has abandoned the paging business and is investing P1.46 billion over the next five years in a call center facility, Board of Investments records show.
And more foreign firms are expected to set up call centers in the country. According to Bong Borja, chair of Contact Federation Philippines Inc. (CFPI), at least four foreign companies have bared plans to establish offshore operations in the country this year. These are expected to create 400 to 1,000 seats and provide about 2,000 jobs.
Last year, PLDT announced that it has invested over $5.5 million in a 500-seat joint venture, Parlance Systems Inc., set to be operational by March this year. This is in addition to two call center contracts PLDT has inked, with Jardine Salmat Corp. for Contact World and with TeleTech Holdings Inc. for Vocative.
Meanwhile, US telemarketing specialist Reese Brothers revealed plans to plunk down P20 million in a call center project at the Subic Bay Freeport Zone that is expected to generate 2,000 jobs in the first two years of operation. For its part, the government is bent on making the Philippines the call center hub of Asia, realizing the industry's tremendous capacity to provide jobs and earn dollar revenues.
In addition to offering tax incentives and heading trade missions, the DTI has proposed allowing telecommunication providers to build an information highway linking Metro Manila's cyberparks to fast-track the creation of an ICT corridor in the country. The department has also identified call center services as one of five IT outsourcing areas for investment promotion and financing access. A school curriculum conforming to the industry's requirements, with more emphasis on English, Math and Science, is also being pushed.
And even as the business thrives, the private sector already is calling for anticipatory measures to ensure it continues to prosper. For one, they point to a need to continually expand and improve the labor pool. At present, only top universities churn out graduates with excellent communication skills, raising fears of a supply shortage.
Responding to this need, call center training schools are on the rise. The first of such specialized institutions, the Call Center Academy in Pasig City, started holding classes in January. Through 20- to 40-hour modules, it equips both graduates and undergraduates with competitive and globalized customer service skills.
Industry officials also are batting for English as a medium of education in primary school to retain the country's language edge. Infrastructure likewise needs beefing up, particularly in the area of more reliable circuitry to cut costs and make down time almost nonexistent. Meanwhile, the CCAP is planning to establish a Contact Center Academy which will produce certified call center operators, and encourages its corporate members to acquire Customer Operations Performance Certification, the leading global industry certification.
And no doubt all these efforts are necessary as other nations initiate moves to grab a share of the lucrative call center market. At present, India leads the race with 100 call centers and 300,000 agents against the Philippines' more than 20 call centers and less than 10,000 agents.
But China is poised to be a major threat as it has begun teaching high school students to speak in English. Already, China has started to undercut competition in data encoding services, and five years from now, it will be a force to reckon with, warn observers. Malaysia and Indonesia have also thrown their hats into the call center ring.
Indeed, the call center service is fast becoming the sector to watch out for. But industry leaders caution that while the Philippines has a good chance of grabbing a big slice of the global call center pie, it will only attract investors if it continues to make the requisite improvements in infrastructure and labor quality.
According to the Philippine Call Center Industry Benchmark Study 2003 (PCCIBS), the local call/contact centers are expected to double its size to 40,000 seats this year from 2003's 20,000 seats. The 100% growth is considerably higher than other Asian countries such as India with 65%, China with 41%, Thailand and Malaysia with 15%. However, it terms of size, the Philippines lagged behind India with a projected number of 158,000 seats and China with 54,000 seats respectively. The small size of contact centers in the Philippines can be attributed to underdeveloped drivers of growth said Mr. Bong Borja, Chairperson of the Contact Federation of the Philippines. He also mentioned that scarcity of qualified call center agents contributes to the limited expansion of the aforementioned e-services sector.
On the other hand, Secretary Cesar V. Purisima of the Department of Trade and Industry remained very keen and positive about the future expansion and growth of the contact center industry in the Philippines. Secretary Purisima predicted that the 40,000-seat operation will double its size next year thus making the Philippines one of the major contact center destinations in Asia in the future years.
The Philippines is aiming to serve 50% of global call demand in the next 4 to 5 years. Call centers in the Philippines is strategically located in Metro Manila, Clark and Cebu. Davao is also pinpointed to be one of feasible location for contact centers.
Currently, there are 63 outsourced call/contact centers in the country that comprises about 25,000 seats in the Philippines.
Call Center Jobs Drifting Overseas
MANILA, Philippines, Dec. 9, 2003
(AP) It's 9 p.m. as Tim Lavin walks into his office, but his staff greets him with "Good morning, sir."
At Ambergris Solutions, most of the work starts long after rush hour, as lights wink out in other high-rises in Manila's Ortigas business district. On the other side of the world, the company's American clients are just beginning their day.
Behind Lavin, senior vice president for operations for one of the top Philippine call center companies, a steady stream of 20-something recent college grads scurry to work stations on six floors of the 42-story Discovery Suites hotel and office complex.
The company is among 45 Filipino and foreign players in the Philippines' booming call center business, which has generated 30,000 jobs in just five years here - new local employment at the expense of American workers.
The United States has lost 250,000 call center jobs to India and the Philippines since 2001, according to Technology Marketing Corp., a Norwalk, Conn.-based company specializing in call centers and telemarketing.
That's part of a much larger trend. Forrester Research estimated last year that 3.3 million service industry jobs, including call centers, and $136 billion in wages, will move to countries like India, Russia, China and the Philippines.
For Filipinos, the relatively good pay makes call center work attractive, despite the hours.
Trade Secretary Manuel Roxas II touted it as a growth industry in October when the world's leading billing-and-customer-service operator, Cincinnati-based Convergys Corp., opened its first two call centers in the Philippines.
From "almost unexplored territory" five years ago, Roxas projects the industry will employ 100,000 Filipinos by 2005, providing a variety of customer and employee care services to Americans: handling call-in queries and technical support; e-mail, online chat, travel and consumer services; and medical and legal transcriptions.
With so much interest, the trade and industry department is encouraging new call centers to set up shop outside Manila to disperse jobs around the country.
"I have never seen the explosiveness or dynamic growth in an industry such as the Philippine call center business, and we are just getting started," said Dave Crawford, Ambergris' vice president for information technology.
His colleague Lavin, 33, from Austin, Texas, said Ambergris' 1,400 "agents" field queries and assist customers for U.S. clients. The company is obligated not to identify its clients, but Lavin said they are Texas-based Fortune 500 companies involved in computers, utilities and telecommunications.
The Philippines' chief competitor in attracting call center business is India, but the government and industry leaders say the Philippines has some advantages: a cultural affinity with the United States, its former colonial master, and its relatively cheap labor and modern telecommunications infrastructure.
Another difference is that Filipinos speak Americanized English as a second language, "while the Indians may speak the Queen's English," Crawford said.
Just last month, Dell Inc. said that in response to complaints it would no longer route tech support calls from some U.S. corporate computing customers to India, and instead handle them in the United States. Dell would not discuss the complaints, though callers are known to have been dissatisfied with agents' inability - or lack of authority - to solve their problems.
As a hedge against such troubles, the Philippines has a Call Center Academy that focuses on teaching English proficiency, as well as American culture, call center technology and sales, telemarketing and customer service skills.
With rising unemployment - 12.7 percent in July, up from 11.2 percent the previous year - the Philippines' call centers can be picky with new hires.
Jack Tuason, a founder and director of Ambergris, said the company has been hiring about 150 to 200 people per month - only about 5 percent to 10 percent of the applicant pool in a country that produces about 385,000 college graduates a year.
While working the midnight shift isn't for everyone - a coffee maker is always ready to supply a caffeine fix - Tuason says the company does what it can to make conditions attractive.
"We are not running a sweatshop here," Tuason said.
Idle agents engage in light chatter across their workstation dividers. The company provides a room with bunk beds for those who come in early and want to take a nap before work.
Marissa Serrano, a 21-year-old agent at Ambergris who once considered becoming a lawyer, says her friends want to work for a call center.
"They ask me, `What do you do?' I just sit around, talk to the customer with my headset. That's it," she said. "They ask me, `How much do they pay?' Secret."
Is it glamorous?
"Well it is, because of the pay," she said with a laugh. "If you are not working for a call center, you're not `in.' "
The trade and industry department says a Philippine agent, with starting pay of about $218 to $273 monthly, gets only a fifth of an American counterpart but more than what a new bank teller would get here.
The department also says that Filipino call center workers stay an average of 2.5 years on the job, compared to about 8 to 9 months for Americans.
Andre Pierre Hollander, a Filipino-American and one of the top Convergys agents, taking about 100 calls a day, said he has overcome the hardest part of the job - the schedule. He leaves home around dinner and sometimes doesn't get back until breakfast. Everyone else, including his girlfriend, is on a normal schedule.
"It's hard to not be able to see your parents," he said, "but they are very supportive of me and they are very proud and happy that I'm doing well in my job."
Paula Angela Villadolid, training director for Convergys, said the company doesn't look specifically for an American accent, just one understandable to an American customer.
"It's been termed as a neutral accent," she said.
More important, she said, is understanding American culture to get a perspective on costumers' needs and the types of responses they require.
At Ambergris, workers are given USA Today and the most recent Texas travel guide to read between calls. They watch the previous day's TV news from a Texas network during breaks in case conversation with a customer veers to current events.
Operations manager Katherine Ann Fernando said it can help knowing the weather, the top stories - even how the Dallas Cowboys or Texas Rangers are doing.
"We can't afford to sound like we don't know anything about Texas," she said.