Philippines investing in its call centers

Call-center agents work overnight daily in Manila's Makati financial district to cater to United States clients. The number of Filipinos who work graveyard shifts to answer calls on behalf of big multinational companies such as Citigroup and JPMorgan Chase is now greater than India's 350,000.

MANILA — The Philippines is the world’s call-center capital but will need more graduates and better trained professionals if it’s to be a major force in the broader outsourcing market, where growth is in providing research and analytics for the legal, healthcare and financial industries.


In little more than a decade, the Philippines has overtaken India in running call centers, helped by an affinity for the language, culture and work ethic of the United States.

The number of Filipinos offering a cheery “have a nice day” while working the graveyard shift to answer calls on behalf of multinational clients such as Citigroup and JPMorgan Chase now exceeds India’s 350,000, and the government wants to double the market to $25 billion by 2016, with 1.3 million workers.

But to do that the Southeast Asian nation must convince investors it has more to offer than just a huge pool of talent speaking English with an American accent.

Research firm Everest Group has forecast the global business process outsourcing (BPO) industry could be worth $220-$280 billion this year, with 90 percent of that in nonvoice work – providing complex skills and services in research and analytics for lawyers, doctors and bankers.

In the Philippines, non-voice work last year accounted for just over a fifth of total BPO revenues of $10.9 billion, but employed a third of the BPO workforce, or around 220,000 people.

“The goal is aggressive but achievable as long as we know one thing: that what got us here won’t get us to where we need to be,” said Maulik Parekh, president and CEO of outsourcing services provider SPi Global, part of Philippine Long Distance Telephone Co., the country’s most valuable listed company.

“A lot of the focus of the tripartite relationship between the government, educational institutions and the private sector has been about English language skills. We need to start to focus on how we can have a thriving healthcare, publishing, finance, human resource, procurement, IT-related BPO,” Parekh said.

India should continue to dominate in outsourcing, with its first-mover advantage and skills in software development, but the Philippines has its eye on the non-voice market’s potential.

“While some providers are leveraging the Philippines for non-voice functions, the scale of work is relatively low. However, tremendous market potential exists if service providers can successfully manage talent-related constraints,” Nikhil Rajpal, partner at Everest, wrote in a study.

With China, Latin America and other Asian markets such as Malaysia also making strides in outsourcing, the Philippines must ensure it has a steady supply of professionals and highly-skilled workers to offer the more complex, added-value services to meet clients’ demands.

In Manila, Cebu and beyond, demand for outsourcing is growing at around 20 percent a year, but the number of local university graduates is growing at only 3 percent, and only 5 percent to 8 percent of them are hire-able, based on government data.

The Philippines has a 10-year basic education system, which the government is looking to extend by two years by adding a pre-school kindergarten program to match its Asian rivals.

“The challenge is to be able to supply the human resources to support the industry from the entry level to middle managers and executives,” said Trade Secretary Gregorio Domingo.

The country turns out 470,000 accountants, lawyers, nurses and engineers each year, but that figure is dwarfed by the 4 million college graduates in India and 2 million in China.

The Americas remain the biggest clients for the Philippine outsourcing industry, accounting for nearly three-quarters of the domestic BPO market, but Europe, Australia and Japan are increasingly knocking at the door for business.

Some local BPO operators worry about the possible impact of President Obama’s election-year pledge to close tax breaks for companies that move U.S. jobs overseas and offer incentives to firms bringing those jobs back home.

The growth in the Philippine outsourcing sector has made it indispensable to the economy and to employment, with local officials citing it as one of the reasons the country escaped recession in the wake of the 2008 global financial crisis.

In 2009, when much of the world was reeling from the crisis, the United States invested $1.4 billion in the Philippine BPO sector, up from $986 million a year earlier, central bank data showed.



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