Philippines: The Next Call Center Capital

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Philippine challenge to Indian call centers



Rob O'Malley, chief consulting officer of Asian Call
Centers, says that anyone who thinks that India has won the battle to be the
call center capital of the world is missing keen competition from a number
of countries, especially The Philippines. In fact, there are many reasons
why The Philippines is a far better place for an English-speaking call
center than India.
Indian issues of concern

The arguments for choosing India to house your call center are strong, but
India has been very slow to overcome several major issues. The
telecommunications and electricity infrastructures are major barriers and
there are concerns with the quality of management in some Indian call
centers.
Whilst there are many good Indian vendors, their
reputation is being spoiled by others who see the industry as a way to get
rich quick. They seem content with winning business exclusively on cost,
with limited attention to quality.
The advantages

Culturally, The Philippines has more in common with the West than India does
and the Filipino accent is far easier to understand for Westerners. Visit
Manila and it seems just like an American city without money. The
Philippines has the best spoken English of anywhere in Asia, basketball is
the national sport and Manila has the look and feel of a run-down American
city.



The key attraction of the Philippines is its highly skilled, motivated,
English-speaking workforce. A recent survey of top executives conducted by
Hong Kong's Political and Economic Risk Consultancy rated the Philippines
better than virtually any country in Asia on the quality, cost, and
availability of skilled labor.
Like everyone else, I do believe that India will house
more call center seats than The Philippines, but it won't be proportional to
its far larger population. I also believe that India will be used for
lower-value calls, whilst The Philippines will become a niche player for
more complex call center activity.
The current situation

There are around 30 call centers operating in the Philippines. These
include:

- large corporate call centers such as America On-Line

- international outsourcers such as Sykes and People Support

- large domestically-owned call centers trying to tap the markets

- numerous smaller players jointly owned by American companies and local
Philippine partners.
Ford forges ahead

Ford already has a call center presence in The Philippines and looks set to
expand this dramatically. Senior executives from Ford have already met
President Gloria Macapagal-Arroyo and promised a new call center in Manila.
There are also very strong rumors that BT Directory Enquiries will soon be
moved to Manila. Teletech have a joint venture with PLDT (the incumbent
telecoms company) which will open soon.
The Ireland of Asia

The Philippines would like to copy Ireland in becoming a regional call
center power. The Filipinos are quick to point to cultural similarities to
Ireland, and The Philippines are evidence of why this should happen.

- Both countries are predominantly Catholic in areas
of the world where Catholicism is not prevalent.

- Both have spent much of their history ruled by others, which led to
English being widely spoken.

- Even their most famous exports are both alcoholic; Ireland has Guinness
whilst The Philippines has San Miguel. In fact, the main difference between
the two countries is that while Ireland is confident enough as a nation to
be proud of Guinness, most people think San Miguel is a Spanish beer.

- Their other exports are their human assets. The brain drain that plagued
Ireland for so many years is mirrored in The Philippines.
Too modest by far

Unfortunately, the Filipinos are too modest to talk about their inherent
talents, and marketing of The Philippines as a base for call center activity
is limited. The Philippines is also considered to be politically unstable,
but in reality is less of a risk than its neighbors.
Services supporting The Philippines industry need to
be improved. Recruitment companies, consultancies and trainers are trying to
jump on the call center bandwagon and American companies are trying to fill
the skills shortage.
Government incentives

There are a number of Government investment incentive packages available to
call center businesses. These include the Board of Investment (BOI),
Philippine Economic Zone Authority, and the Clark and Subic Bay Special
Economic Zones in areas that were previously bases for The United States
Navy and Air Force. The BOI's primary incentive is an income tax holiday of
up to eight years. PEZA, Subic and Clark offer a special five per cent tax
break on adjusted gross income applies and also allow equipment to be
imported duty-free.
Telecommunications

The telecommunications structure in Manila is more stable than in most
Indian cities, but there are still issues. The market is recently
deregulated and there is a serious drive to improve the infrastructure. The
Philippines is also making it very easy for call centers to use all possible
modes of international call routing.
Motivated labor force

The country is fortunate to have a virtually unlimited pool of talented,
well-trained, and motivated workers. They are creative and learn quickly.
According to Hong Kong's Political and Economic Risk Consultancy (PERC), The
Philippines is the only Southeast Asian nation besides Singapore with a
labor force with the potential to move beyond a manufacturing focus to a
higher value-added level.
PERC ranks the Philippines as fourth in Asia on
quality of labor force, behind more expensive locations such as Japan,
Taiwan, and Singapore.
Summing up

The Philippines needs to focus time and effort to ensure that it its viewed
as a destination for quality call centers. Bad news spreads quickly and
Western companies are unwilling to take risks when it comes to their
customer interactions.
If the country continues with its approach to quality,
there is no limit to its opportunities


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