Thursday, 24 September 2009

Outsourcing urgency

John Mangun
Outside the Box
Business Mirror

If current trends in the call-center business are any indication, 2010 is going to see the second wave of outsourcing expansion. The first wave took place in 2005 to 2007.

Earlier this week, the administration released a statement predicting that by 2010 this industry would be employing some 1 million Filipinos in the business from around 400,000 now. While the projection for 2010 might be on the high side, there is no doubt that this sector is entering another booming period.

The newspapers are constantly highlighting international companies that are setting up or expanding operations in the country. From “The world’s largest provider of outsourced customer care, Convergys, believes the Philippines could overtake global leader, India, in call-center operations in the next few years. Convergys has 12 contact centers in the Philippines, compared to eight operating sites in India.” And from The Manila Times-McClatchy-Tribune Information Services: ” India’s biggest contact center will be opening its second facility in the country in Eton Properties Philippines Inc.’s mixed-use development in Quezon City, a company official said Wednesday.”

But that is only the surface of what is happening throughout the business. Although the major companies get the headlines, the underlying strength of this business is much, much greater. This is the kind of press that the Philippines is getting in the United States. From, a website devoted to news in the mid-western region of the United States: “A General Motors supplier in the Great Lakes Technology Center has put the state on alert that it is moving from its Flint location and will lay off 100 workers. Morley Companies Inc. said IBM—which is a GM supplier—subcontracts with Morley to operate its call center. One employee, who asked her name not be used, said she and other employees a few weeks ago were training people from the Philippines. “Basically we’re training them to go back and train people to do our jobs,” said the Flint resident, who described the process as uncomfortable.”

Yeah, I bet it is uncomfortable.

However, as I say, the newspapers only capture a small portion of the business that is literally flying to the Philippines. Companies that are now looking for locations include the largest anti-virus software company, the largest US high-definition television company, the largest US cell-phone provider, and the largest US broadband provider now all moving to or expanding operations in the Philippines.

The conventional wisdom says that during a time of great economic turmoil in the United States, these companies would not be spending money to move operations 12,000 away from home. That is why conventional wisdom is very often wrong.

All these firms know they must continue, if not upgrade, their level of customer service in order to keep their share of an ever-shrinking market. What we do not understand in the Philippines is that Americans rely on call- center customer service nearly on a daily basis. Can’t figure out why the sound is not working on your TV? Pick up the telephone. Not able to send a text message? Call someone. Wonder why your computer has a virus? Someone on the phone will tell you exactly what buttons to push. And more often than not, it is a Filipino that supplies the answer.

However, the Filipino workforce does not account for the urgency that these companies are showing to set up shop quickly in the country. They do not have to be told that there is a great likelihood that the peso will appreciate strongly against a falling dollar over the next six months. The million dollars that they bring to the country for operations will buy significantly less in 2010 than it does today due to dollar devaluation.

I do find it somewhat dishonest when that government official or this administration spokesperson attempts to take credit for the boom in the call-center business. The only real accomplishment, aside from fiscal incentives, that the government provided to this industry was to allow individual buildings to be designated at Philippine Economic Zone Authority sites. Although the government claims credit for allotting P350 million for a training program called PGMA-Training for Work Scholarship Program through the Technical Education and Skills Development Authority (Tesda), I have yet to see any numbers validating that anyone got a job at a call center because of this training. While call centers require a minimum of two years of college, the Tesda program requires only a high-school diploma. Seems like a mismatch to me. However, I suppose some government support is better than none.

Nonetheless, business is booming and it is not going to stop soon.

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  1. Call centers are one of the more influential and fastest growing industries in Asia and the world... The advantage of call centers in Asia is that they are a lot cheaper than their counter parts abroad...

  2. Cost benefit is the biggest advantage regarding call center outsourcing. Previously, most of the companies used to have in-house call center services. They provided one-on-one customer services, which brought excellent results.