Southeast Asia

Call it a boom: Philippine call centers
By Marco Garrido

MANILA - A New Yorker calls directory assistance for the address of the nearest Pizza Hut. He is serviced by an operator whose English may sound even more "American" than his. Except, of course, the operator is neither American nor even in the United States. The caller is being led to the Pizza Hut down the block by a Filipina in Manila. She handles his call with a sparkle of perfectly intoned English phrases - "How can I help you?", "What seems to be the problem, sir?", "The information you requested is coming right up" - then, without missing a beat, turns to her Filipino seatmate and gossips in Tagalog.

Tuan Nguyen, a Vietnamese-American, manages the Manila office of I-TouchPoint, an Indian call-center firm. Nguyen's office fields a share of directory-assistance calls coming from New York. One consideration in the selection of his operators is their ability to speak a neutral-sounding American English. Indeed, for I-TouchPoint and other call-center firms, a key consideration in the choice of the Philippines as a base of operations is the ability of Filipinos to project "Americanness".

The friendly American
While India remains, by far, Asia's preeminent call-center hub, the Philippines is gaining proportionally. Both locations, of course, allow US companies such as American Express, AOL Time Warner, and Dell Computer the opportunity to reduce their overhead substantially by minimizing labor costs. Mark Leigh, president of Avaya Asia Pacific, notes that companies can save 30-40 percent on each call-center agent his firm hires in the Philippines compared with agents hired in the US. This can amount to a saving of US$1.5 million a year for an operation with 100 agents.

The United States alone has 1.5 million call-center "seats" to outsource. (A seat is a station usually manned by two or three persons alternating in shifts to provide 24-hour call service. The number of seats is used to describe the size of an operation.) As it is, India has about 300,000 seats, while the Philippines has only about 10,000.

The Philippines, however, has an edge in terms of the quality of its customer service. A 1999 regional study conducted by Australia-based Call Center Research rated the Philippines second only to Australia in customer-service quality. India ranked four notches below. A large part of this edge would seem to consist in the combination of an American accent and Filipino amiability, as if the Philippine advantage is its ability to project the illusion of an American agent but friendlier.

"We're unbeatable when it comes to the way we speak English," says Domingo Guanio, assistant vice president of Software Ventures International. "We're also more patient in handling calls and more customer-oriented." Bong Borja, president of People Support, agrees: "We're one of the most hospitable people in this region and we do that naturally ... [Also, a] majority of our calls come from the United States, and, yes, the Philippines has a very, very strong affinity to American culture and current events."

Michael Henderson, managing director for Asia and the Pacific Rim for Sykes, believes that too much is being made of Filipino "Americanness". There are other reasons for call centers to invest in the Philippines; in particular, for its pool of qualified information-technology (IT) graduates and for its telecom infrastructure, which is considered even better than India's. Nevertheless, Henderson admits that the Filipino accent may be more appropriate to the North American market than would an Indian's British accent.

America 101
Much is being made of accents because much is at stake. According to the Philippine Department of Trade and Industry (DTI), revenue from the 22 call-center companies in the Philippines - whose clients include the likes of America Online, Verizon, and American Express - is expected to increase from $173 million in 2002 to $864 million in 2004. This boom is expected to generate about 24,000 jobs in the next two years. That is, if there remain enough candidates qualified to fill the growing number of positions.

As it is, the industry seems far from its saturation point. The demand for qualified operators continues to outpace the available supply. However, government and private enterprise are collaborating to address the issue. The Contact Federation of the Philippines (CFP), an organization of local call-center firms, is working with the Technical Education and Skills Development Authority (TEDSA) for the accreditation of schools solely devoted to training call-center agents. According to CFP chairman Bong Borja, these schools are designed to address the core competencies needed to develop world-class agents. The cultivation of such competencies apparently requires lessons in US geography and culture, as well as courses in accent reduction.

Call-center schools aim to impart or, more accurately, refine a fluency in Americana because such fluency improves business. The "American Culture and Geography" module offered by the Call Center Academy of Pasig aims to help students "project themselves as educated, knowledgeable individuals capable of attending to customers' needs and requirements". To this end, the course promises to familiarize students with North America's "immense land area, which involves time zones, geographical regions, their regional characteristics, [and] nuances of the varying lifestyle [sic] thereat".

These schools train their students to provide service that is not only pleasant and efficient but, to Americans at least, familiar. Since the clients of local call centers are mainly American, being able to project and maintain the illusion of America has become one hallmark of good customer service. This illusion is so carefully maintained that, according to one operator, if asked their whereabouts, call-center agents for American Express are instructed to say that they are based in St Louis, Missouri, or Salt Lake City, Utah.

Still another country
The Philippines, however, is not America. While, on the one hand, this is precisely the reason the call-center business has come to the Philippines - because costs are markedly lower - it may also be the reason that the business stays away.

Investors continue to view the country as unsafe. Entrenched conflict with Muslim and Maoist rebels and sporadic terrorist attacks, most recently the bombing of the Davao airport and seaport, confirm perceptions of instability. Although conflict remains largely confined to Mindanao, the whole country is stigmatized nevertheless. "What can you do," asks Nguyen, "when the US Embassy issues travel advisories warning against coming to the Philippines? There is no question that perceptions of instability deter industry growth."

Inconvenient investment regulations can be another obstacle to investment. To be sure, the Department of Trade and Industry is doubling over itself to entice foreign investment in the domestic call-center industry. As an investor "you have their ears", says Nguyen. "They will level the playing field for you." However, unlike India, the Philippines allows duty exemptions for foreign companies by area and not by business. For one, this means that foreign-owned call centers cannot be selectively exempted from paying duties, however much the DTI may wish to encourage the industry's growth. For another, this limits the choice of real estate for these companies to designated cyberparks and other special duty-free economic zones.

Prosperity without progress?
Nevertheless, the prospects for the call-center industry in the Philippines remain bright. Outsourcing customer service to cheaper locations has become a business imperative for US companies. While the Philippines may never rival India in terms of the sheer number of call-center seats it can attract, Rob O'Malley, chief consulting officer of Asian Call Centers, believes that the country is well positioned to become "a niche player for more complex call-center activity".

For Filipinos, call-center positions are coveted jobs. With a starting salary between P10,000 and P15,000 (about $200-300) per month, operators are paid comparatively well for fresh college graduates. Their pride shows in their service. According to Bong Borja, Filipino operators display a higher level of dedication to their job than do their American counterparts: "While in the US, the turnover rate for call centers is almost 100 percent annually; here it is considered a career."

However, the question is, what kind of career is it? The fact that the current boom in the call-center industry owes a lot to the global fallout in the IT industry - particularly in terms of outsourced jobs - should serve as a caveat about the vagaries of transnational business in an age of globalization. While no one may be arguing against the prosperity the industry is generating, concerns over its sustainability are indeed warranted.

Moreover, if operators are largely hired for their ability to impersonate Americans, how do these jobs prepare them for productive careers as Filipinos? Tuan Nguyen believes that these jobs can serve as "stepping stones" to positions in sales, human services, and even management.

Technology forecaster Paul Saffo is not as optimistic. Speaking of India (though equally applicable to the Philippines), he warns that "care has to be taken to ensure that there is a career path beyond call centers - otherwise what began as the well-intentioned creation of jobs could end up being exploitative of India's most important resource, its youth".

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