Why Philippines has overtaken India as world's call center capital

By David Dizon, abs-cbnNEWS.com

Posted at Dec 02 2010 01:20 PM | Updated as of Dec 09 2010 12:40 AM

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.