Philippines…Outsourcing Mecca
Americans calling the customer service lines of their airlines, phone companies and banks are now more likely to speak to agents named Mark in Manila than people named Bharat in Bangalore. Over the past several years, a quiet revolution has been reshaping the call center business: the rise of the Philippines, a former US colony that has a large population of young people who speak lightly accented English and, unlike many Indians, are steeped in US culture. More Filipinos – about 400,000 – than Indians now spend their nights talking to mostly US consumers, according to industry officials, as companies like AT&T, JPMorgan Chase and Expedia have hired Call Centers there, or even built their own. The jobs have come from the US, Europe, and, to some extent, India as outsourcers followed their clients to the Philippines. India, where offshore call centers launched the revolution more than a decade ago, fields as many as 350,000 call center agents, according to some industry estimates. The Philippines, which has a population one-tenth as big as India’s, overtook India this year, according to Jojo Uligan, executive director of the Contact Center Association of the Philippines. The growing preference for the Philippines reflects in part the maturation of the Outsourcing business and in part a preference for U.S. English. In the early days, the industry focused simply on finding and setting up shop in countries with large English-speaking populations and low labor costs, which mostly led them to India. But executives say they are now increasingly identifying places best suited for specific tasks. For example, India remains the biggest destination by far for software outsourcing and technical support. Executives say the growth was not motivated by wage considerations. Filipino Call Centers Agents typically earn more than their Indian counterparts ($300 a month, rather than $250, at the entry level), but executives say they are worth the extra cost because US customers find them easier to understand than they do Indian agents, who speak British-style English and use unfamiliar idioms. Indians, for example, might say, “I will revert on the same,” rather than, “I will follow up on that.” It helps that Filipinos learn US English in the first grade, eat hamburgers, follow the NBA and watch the TV show “Friends” long before they enter a call center. In India, by contrast, public schools introduce British English in the third grade, only the urban elite eat US fast food, cricket is the national pastime and “Friends” is a teaching aid for Indian call center trainers. English is an official language in both countries. The financial benefits of outsourcing remain strong enough that the call center business is growing at 25 to 30 percent a year here in the Philippines, compared to 10 to 15 per cent in India, according to Salil Dani, research director at the Everest Group, a firm that tracks the market. In addition to language skills, the Philippines has better utility infrastructure than India – there are few blackouts, so companies spend little on generators and diesel fuel. Also, cities here are relatively safer and have better public transportation, so employers do not have to bus their employees to and from the office as they do in India. Last year, revenue from outsourcing, which also includes things like health insurance processing, animation development and software programming, totaled $9 billion, or 4.5 per cent of the Philippine gross domestic product, up from virtually nothing in 2000. The government has tried to support the industry with tax breaks and subsidies for training programs. Executives expect the Philippines to continue growing at a fast pace and move up to higher-value services like accounting or the processing of insurance claims. But, like India, companies are grappling with higher costs and losing their best workers because of high domestic inflation and a shortage of skilled professionals. In the past two years, the Philippine peso climbed nearly 10 per cent against the dollar, to 42.14, before weakening in recent weeks. If the peso appreciates to 35 to the dollar, many of the Philippines Call Centers will not survive, said Narasimha Murthy, president of HGS USA, the US arm of an Indian outsourcing company that employs 4,000 people here. But things look upbeat for now, and Murthy was recently in Manila with a prospective US client. Five years ago, he said, many clients would ask him if customer calls could be handled in the Philippines. ”From that,” he said, “it has gone to ‘How well will you do it?”‘
