Philippines to turn call centre capital of world

[Monseratto]

Just hope di mapasukan ng mga walang kuwentang leftist militant unions...

http://economictimes.indiatimes.com/...how/6868468.cm

NEW DELHI: The Philippines is set to overtake India as the world’s back office for voice-based customer support and sales this year, as firms such as Cisco, HSBC, T-Mobile and BT Plc shift work to the nation to avoid India’s high staff turnover, and build an alternate support hub.

Better affinity with the American culture, lack of competing industries for skilled workforce, higher tax incentives and an overall strategy to derisk from a pure India-based call centre model are among top reasons for this shift.

Of India’s total BPO exports, nearly 45% comes from voice-based work, which is expected to be around $5.58 billion this year. However, the Philippines BPO industry will post almost $5.70 billion of pure voice-based revenues in 2010, higher than its bigger outsourcing rival, research firm Everest and the Business Process Association of Philippines (BPAP) say.

“In standalone voice business, the Philippines will undoubtedly beat India this year to become the call centre capital of the world,” says Nikhil Rajpal, partner, Everest Research India .

Companies such as Cisco and BT are increasingly outsourcing handling of customer queries and support to cheaper locations, including the Philippines. Every time a user of, say, Cisco’s router dials a toll-free customer support number, his call gets diverted to a customer support executive sitting in Manila who is paid less than a quarter of what it would cost to hire somebody with similar profile in the US.

Experts point out that at this pace, the Philippines can even overtake India’s $12.4-billion BPO industry in five years. The $9.5-billion Philippines O&O (offshoring & outsourcing) industry grew at a compounded 27.6% in the last two years.

Philippines ties to US a big draw

On the other hand, India’s BPO industry has showed a CAGR of 11.92% in the last two years. Going by exactly the same rate of growth over the next few years, India will lose to the Philippines before 2015. “We will grow at least by 20% annually in BPO exports over the next five years,” says Oscar Sanez, the man spearheading the BPO association of Philippines. “But we don’t take India as a competitor, as there is business in the market for everybody,” Mr Sanez adds.

The Philippines’ stronger cultural ties and understanding of American consumers is one of the top reasons. The US, which controls 65% of the world outsourcing market, had colonised the Philippines post the Treaty of Paris in 1898. The Philippines was ceded to the US from Spain for $20 million. Even after the archipelago gained independence in 1946, the US continued to have a military base there and the Philippines became a strong ally. “Most speak English and most Filipino women want to marry Americans and many families have a large base in Philippines,” says Mr Vashishtha.

Spain, which ruled the Philippines earlier, also gives the nation a Spanish language capability. “The other factor is choice of an alternate cheap location, as costs are similar in both nations. Call centre is a critical work and no company wants to put its eggs in one basket. But the Philippines may not win from India in UK-bound work, where India has much more cultural affinity,” adds Sid Pai, partner, TPI.

However, UK customers have also started drifting to the Philippines now, primarily because of better call quality. British telecom operator T-Mobile outsources to WNS Philippines , which has hired 1,200 people in Cubao and Eastwood City . “The Philippines has been recognised as the third-largest English-speaking nation in the world with a high literacy rate of 94%. We believe that 10% of WNS’ workforce (of 19,000) would be based in the Philippines over the next few years,” says WNS CEO Keshav Murugesh. Nasscom, however, is hoping that India will regain the lost ground.

“The country enjoys cultural proximity to the US. But ultimately the revenues will come back to Indian firms, as it is largely the Indian BPOs which have adopted a long-term strategy to offshore voice work to the Philippines. The high-end, transaction-oriented work is being retained in India,” a Nasscom spokesperson added.

Almost all Indian BPO majors have opened large centres in BPO hotspots like Metro Manila, Cebu City, Davo and Angeles. EXL has a centre in Pasay with over 800 employees. But the challenge remains ramp-up. “We have started talent training programmes. The government is giving its full support,” says Mr Sanez. And companies are hiring in thousands. IBM and Accenture are estimated to have over 20,000 people in the nation. Convergys this year announced plans to hire about 3,000 people around Manila, while Sitel plans to hire 4,000. Aegis also acquired a Philippines BPO PeopleSupport for $250 million in 2008.

“The growth in BPO (industry) is also partly because India’s GDP is growing at a faster rate, and people have other options like the services sector (banks, telecom, insurance) which are attracting the youth, in contrast to the Philippines which has none of these major attractions,” explains Mr Sanez. In 2009, Filipino GDP grew at 1% compared to India’s 7.4%. “Many centres in Metro Manila and Cebu City are experiencing growth of over 40% in sales and headcount. HSBC, JP Morgan, Accenture and IBM, all large firms, are witnessing tremendous growth,” adds Mr Rajpal of Everest.

“US-based clients ask for the Philippines as a destination. However, the processes that get outsourced to the Philippines are now not just limited to voice but other high-end processes spread across domain-specific back office, medical, legal and financial accounting work,” says Rohit Kapoor, president and CEO, EXL Service.

[uls]

this one from bloomberg:

Manila's Banter Beats Bangalore in $21 Billion Call-Center Race
http://www.bloomberg.com/news/2010-1...-industry.html

For the past decade, Americans dialing customer service stood a strong chance of being connected to someone in India. Now they’re more likely to end up phoning the Philippines.

Strong government support, a supply of English-speaking college graduates and an effort by call-center operators to reduce their dependence on India have helped the Philippines overtake India in call-center revenue, Bloomberg Businessweek reports in its Dec. 6 edition.

“It’s not that we are trying to take business away from India,” said Oscar Sañez, chief executive officer of the Business Processing Association of the Philippines, an industry group. “We’re just looking for our own place in the sun.”

The Philippines will earn $5.7 billion for call-center work this year from the U.S., Europe and Australia, compared with the $5.5 billion generated by India, according to the Everest Group, a Dallas-based outsourcing advisory firm working with the Philippines industry. The two hubs account for about half of the $21 billion global industry, according to Everest data.

Call-center operators said they like the Philippines because English is taught in schools and Filipinos have a cultural affinity for the U.S., which ruled the country from 1898 to 1946.

6 Percent of GDP

“Clearly, these guys had a much later start, but they have caught up,” Everest Group partner Nikhil Rajpal said.

India continues to lead in overall outsourcing revenue with $70 billion, compared with $9 billion for the Philippines, according to BPAP and India’s National Association of Software and Services Companies, a New Delhi-based lobbying group. The outsourcing industry now employs 530,000 people in the Philippines, according to Everest, and makes up about 6 percent of gross domestic product, according to data compiled by Bloomberg.

A decade ago, millions of young Filipinos, especially English-speaking nurses and law students, emigrated to the U.S., Hong Kong and elsewhere. The billions of dollars they sent back to their families every year represented the country’s second- largest foreign-exchange earner after computer chips from Texas Instruments and other technology companies, according to World Bank data.

Tax Breaks

Frustrated government officials looked to India for inspiration, said Celeste Ilagan, who spent the past decade working in government programs to encourage outsourcing and now heads communications for SPi Global, a call-center operator owned by Philippine Long Distance Telephone Co., the nation’s largest company by market value.

“India had become very famous for call centers, and we decided to learn from their example,” she said.

To better understand India’s success, Filipino officials visited industry representatives there. The Filipino government streamlined the approval process for companies setting up call centers and changed its rules to allow individual buildings to be designated special economic zones, according to the Philippines Economic Zone Authority.

Such zones offer tax breaks, quick clearances for building permits and an exemption from import duties on computers and telecommunications equipment. About 40,000 students have benefited from government-sponsored training to improve their English and communication skills, Sañez said.

Bantering in English

Call centers are changing the rhythms of Filipino life. Malls, bars, cinemas and cafés have popped up near buildings where young, nocturnal workers earn as much as 300,000 pesos ($6,850) a year in a country where the annual per capita GDP in 2009 was about 83,000 pesos, according to data compiled by Bloomberg.

Weaned on radio stations that play U.S. Top 40 pop and hip- hop, teens seeking jobs in call centers can banter in English as naturally as their native Tagalog. Most shifts start at 8 p.m., just as the U.S. East Coast wakes up.

“There used to be some doubts about letting young people work so late at night, but now this has become an industry that young people aspire to,” said Thea Lu, 30, a team leader with 24/7 Customer, based in Campbell, California.

Several companies now operating in the Philippines participated in India’s outsourcing revolution and then expanded abroad. A tax break for Indian outsourcing shops is set to expire in 2011, though the industry is lobbying hard against it.

Wipro, Tata Consultancy

In Bangalore and Gurgaon, India’s biggest outsourcing hubs, companies rely on diesel generators to ensure electricity, run fleets of buses to ferry employees to and from work, and struggle with attrition that can reach 50 percent a year. Those challenges, as well as a desire to diversify geographically, have spurred both Indians and Americans that operate call centers in India to shift work to the Philippines.

Wipro Ltd., based in Bangalore, India, set up in the Philippine city of Cebu in 2007 and now has 2,000 workers in the country. By 2014, it expects to have 8,000.

24/7 Customer, which started operations in India in 2000, opened a Philippines office in 2005. It now has 4,000 employees in the country, compared with 3,000 in India.

Tata Consultancy Services Ltd., India’s largest software services firm, said Dec. 2 it would open a business processing outsourcing center in the Philippines.

Doubling Revenue

“It’s very sad that India could not keep up with its neighbors,” 24/7 co-founder Shanmugam Nagarajan said.

The Philippines outsourcing industry has set a goal of at least doubling revenue by 2015, Sañez said. The biggest challenge is the dearth of managerial talent, Rajpal said. In an industry so young, few people have been around long enough to handle management or strategy jobs.

“Where are we going to find the right kind of managers who can make our operations stand out?” said Steve Barker, who heads Asian operations for Sitel Worldwide Corp., a Nashville, Tennessee-based company that has 10,000 workers and seven facilities in the Philippines.

The Philippines also produces only about 10 percent as many engineers as India, according to graduation data from both countries. India’s ready supply of engineers has helped its outsourcing firms go from answering phone calls to account management, technical support and consulting jobs that include helping banks manage financial derivatives and improving retailers’ supply chains.

“Ten years down the line, the Philippines may be a hotter destination,” said Sanjeev Bhatia, who oversees international operations for Wipro BPO. “But in IT and software, India really doesn’t have any competition.”

huwag lang lumakas sobra ang peso

[robot.sonic]

Ayos! Buti na lang di nanalo si Jamby. Nanggagalaiti yun sa call center e.

Oo nga. Panira kasi yang mga leftist na union. Hayyy.... Ibagsak! Ibagsak!

robot.sonic

[tidus1203]

We will definitely win the voice outsourcing race against India, their English sucks! Pero sa mga non-voice like IT and programming we can never beat India. They churn out way more engineers than we do...

[uls]

bigger picture, pang services talaga ang Pinas

di pang manufacturing

[badsekktor]

We will definitely win the voice outsourcing race against India, their English sucks! Pero sa mga non-voice like IT and programming we can never beat India. They churn out way more engineers than we do...

I agree, Americans are having a hard time understanding their english.

bigger picture, pang services talaga ang Pinas

di pang manufacturing

i guess we could also include tech support as a service industry.

[uls]

yes, tech support, back office, transcription, data entry, research etc

[tidus1203]

Manufacturing is dead here... High cost of electricity and a very strong labor union, diba Intel already left the country!

[mazingerZ]

The pay for call center agents is much better (for our youth) versus the other options that they may have (maski banks - starting their careers)

[niky]

bigger picture, pang services talaga ang Pinas

di pang manufacturing

Oh well... that means that we can generate more jobs and work for less capital investment...

But that also means that those jobs can leave easily, since the physical infrastructure investment is not as big, either.

Damn.