Philippines passes India in call-center jobs

Help-wanted ads dot I.T. Park, an eclectic enclave of call centers, restaurants and clubs in this Southeast Asian city. One from U.S. banking giant JPMorgan Chase encourages job seekers to "work directly for the first multinational financial services firm to establish a Global Service Center in Cebu."
Nearby, workers set up a booth to recruit workers for TeleTech, an Englewood, Colo., firm that operates call centers in the Philippines, Latin America and elsewhere for U.S. banks, telecom and technology firms.
For the past decade, the Philippines has been an attractive call-center destination due to its educated, English-speaking population. But its appeal is at an all-time high as the Philippines inches past India as the largest call-center operator in the world.
"It's a bit of a coming-out party, because the Philippines has been undermarketed," says John McCarthy, an outsourcing expert at Forrester Research in Cambridge, Mass. "Clearly, the Philippines has become the preferred (call-center) location for companies serving Americans."
The Philippines now leads India in call-center jobs, employing 350,000 compared with India's 330,000, according to the Contact Center Association of the Philippines, which represents the country's call-center operators. The association estimates that Philippines call centers produced $6.3 billion in revenue last year, and that the figure will grow 15% to 20% a year as multinationals increasingly set up shop here. By comparison, India's call centers likely generated $5.6 billion to $5.9 billion in revenue last year, according to Dallas-based advisory firm Everest Group.
Some American companies such as US Airways are pulling back on call centers in the Philippines. But many others — including Citi and Chase — are outsourcing customer calls, back-office work or other operations to the country.

For U.S. consumers, the trend means that they'll be increasingly routed to an agent in the Philippines when they call their bank, insurer or computer company. And they probably won't even know it's happening.

"The thing that the Philippines excels in is that they have the most accent-neutral language," says Kevin Campbell, group chief executive for technology, for Accenture, which has more than 20,000 employees in the Philippines developing software, doing accounting and answering customer calls, among other things, for clients.
Filipinos' English-language skills — English is one of the country's official languages — mean that outsourced calls are less obvious. Customers are also more likely to have their issues resolved the first time they call because it may be easier to communicate with a Filipino representative than an Indian one, says Richard Bledsoe, a TeleTech executive vice president of operations who is based in Pasay City, outside Manila.
In addition, the Philippines has "an absolutely fantastic service culture," an important component in keeping cranky customers satisfied, says Jane Lockwood, an associate professor at the City University of Hong Kong who provides training for call centers. "They go out of their way, not just in call centers, but in tourism and events management, to ensure people are well looked after."

Even Indian firms are seeing the benefits of doing business in the Philippines. WNS, a global outsourcing provider based in India, opened its first call center in Manila with more than 200 employees in 2008. WNS now employs more than 1,300 in the city, answering calls for consumers looking for help with items such as booking plane tickets.

"Some clients are very conscious about accents, and definitely prefer the Philippines over locations in India," says Keshav Murugesh, CEO of WNS, whose U.S. and U.K. clients include T-Mobile and Virgin Atlantic.
For U.S. consumers, what often matters most is not where calls are directed but whether agents can resolve their problems.
"It was very frustrating," says Kaylene Lewek, of Raleigh, N.C., about a recent call to her computer company. "I had a number of different problems with my computer, and it was very obvious they were using a script. They couldn't answer anything that deviated from it."
Lewek, 26, says she also found the agent's Indian accent hard to understand.
Controversy lingers
Philippines' call centers serve a diverse range of companies — from banks to airlines and insurers — in English-speaking countries such as Australia and the United Kingdom. But the Philippines' embrace of American culture makes it particularly attractive for U.S. firms.

"If you were to visit the Philippines, it's like being in small-town America. Restaurants might be showing baseball on TV, and the programming is all in English," says Bledsoe.

It doesn't hurt that Filipino employees are more than willing to work night shifts to cater to U.S. companies time zones away. Night shifts are so common that there's a "whole industry around this industry," says Lockwood about the bars and restaurants that open at 6 a.m. for call-center workers finishing their shifts.
In Cebu's I.T. Park one evening, American rock music spills out of the clubs adjacent to the call centers. Young Filipinos mill about on sidewalks, some taking a break from their office jobs in nearby buildings. A female singer tries to draw passersby into a bar with You Were Meant for Me by American singer-songwriter Jewel.
Young Filipinos are prime candidates for call-center jobs. The positions pay the equivalent of around $4,300 U.S. per year, according to the Business Processing Association of the Philippines, which represents the outsourcing industry, an attractive salary in a country where the average family income is just a little higher than that. By comparison, call-center jobs in the U.S. — when they can be found — may pay $16,000 to $22,000 a year.
The outsourcing of jobs is not a new phenomenon. Yet, it remains controversial as the U.S. jobless rate is at 9.4%. President Obama has championed measures to rescind tax breaks for U.S. corporations that move jobs overseas. Senate Democrats introduced a bill last year to end such deductions, but Republicans opposed the measure, saying it would hurt U.S. companies and the sputtering economic recovery.
American companies defend outsourcing as a necessary way to cut costs and survive in tough economic times. Outsourcing also allows remaining employees to do things "core to their business," says Benedict Hernandez, president of the Contact Center Association of the Philippines.
Steve Dieter, 60, of St. Louis, says he's not extremely concerned about lower-paying call-center jobs being sent overseas. What does matter, he says, is that "skilled jobs remain in the U.S. and there be less incentive for companies to outsource" work such as software programming.
Moving beyond call centers
In the Philippines, the call-center industry is maturing, meaning its growth could soon hit "a plateau," says Avinash Vashistha, CEO of Tholons, a New York-based outsourcing advisory firm.
That's why, if the Philippines has its way, call centers will soon be one of many functions the country routinely handles. It wants to be the go-to location for all types of outsourcing services, from processing insurance claims to analyzing retail sales data.
To achieve this, the country needs to improve its education system so people can expand their skills beyond call-center work, says Ramakrishnan Chandrasekaran, president of global delivery for Cognizant, a Teaneck, N.J., provider of outsourcing services to multinationals.
Giving young people more technology training, for instance, would make the Philippines attractive to companies looking to outsource software programming or technology tasks.
The Philippines government is promoting educational and scholarship programs to improve workers' skills. It's also provided generous tax breaks to multinationals that create jobs here.
The question is whether those programs and incentives will be enough to keep the Philippines competitive with other outsourcing locales in the long term.
Accenture believes so. Campbell says the Philippines is already "as competitive" as other locations in providing services such as accounting and software development.
For now though, the vast majority of what multinationals outsource to the Philippines remains call-center work. Research and analytical services are a small but "growing niche in the Philippines," says Donald Felbaum, a Tholons partner who is also part of the American Chamber of Commerce of the Philippines.
Such services, though, hold huge growth potential as companies try to drive down operating costs. A report from the Business Processing Association of the Philippines predicts the amount generated by the global offshore services will increase 10% to 15% a year; non-voice services are expected to grow most rapidly.

Philippines President Benigno Aquino, in a December speech at the opening of IBM's new outsourcing facilities, called the industry's prospects "highly encouraging."

The government predicts that services outsourced to the Philippines from around the world will generate up to $100 billion by 2020, grabbing 20% of global offshoring market share.
In the next few years, U.S. consumers are likely to find their calls redirected not only to India and the Philippines, but also to Vietnam, China, Egypt, Morocco and countries in Eastern Europe and South America.
In emerging outsourcing destinations such as Vietnam and China, "the voice quality is not where it needs to be," says Bledsoe of TeleTech. "But millions of people (are) learning English, so they will be ready at some point."

(C) USATODAY