Tennessee is a joke.

Call Centers -- RP's Emerging Sunshine Industry

by Romelda C. Ascutia

The call center service has been dubbed the country's latest sunshine industry, expected to generate around 24,000 jobs in the next two years. When a door closes, a window opens. Even as the Philippines feels the fallout from the global IT crunch, it has benefited from the prevailing cost-cutting trend in an unexpected way -- an unprecedented boom in the call center business.

Indeed, the call center service has been dubbed the country's latest sunshine industry, with the sector expected to generate around 24,000 jobs in the next two years, according to Toby Monsod, former assistant secretary of the Department of Trade and Industry (DTI). "It's a very promising industry. Everybody's growing and hiring," Benedict Hernandez, Contact Center Association of the Philippines (CCAP) chair, said in a recent interview.

From 2000 to 2001, the segment reportedly grew by more than 200 percent, and local call center revenues are projected to increase from $173 million in 2002 to $864 million in 2004. Optimism runs high as an international research group forecasts the growth of ICT-enabled services to a $200-billion industry by the year 2010, with the call center segment's share at $42 billion.

Reports say that in the United States alone, there are 1.5 million call center seats that could be outsourced, and so far the Philippines has less than 10,000 seats filled, indicating the domestic industry's huge potential.

What are call centers?

A call center is a central customer service operation where agents (often called customer care specialists or customer service representatives) handle telephone calls on behalf of a client. Clients include mail-order catalog houses, telemarketing companies, computer product help desks, banks, financial service and insurance groups, transportation and freight handling firms, hotels and IT companies.

The size of an operation is described in terms of the number of "seats." A seat consists of a station with two or three people alternating in several shifts to provide 24-hour call center service. The industry's main target markets include the United States, Australia and the United Kingdom.

Many factors contribute to the local industry's sizzling development pace. One is the rising cost of doing business in industrialized countries like the United States, forcing foreign companies to downsize and outsource peripheral e-services to developing countries like the Philippines to cut overheads.

CCAP president Jose Ferreros also cites the better power and telecommunications infrastructure, competitive labor cost in terms of quality and value for money, and strong government support for ICT-related industries. Of these, skilled labor is the country's acknowledged ace. Filipinos are renowned for their English proficiency, high IT literacy, warmth, trainability and customer orientation. Domingo Guanio, assistant vice president of Software Ventures International, which runs SVI Connect, comments that "we're unbeatable when it comes to the way we speak English. We're also more patient in handling calls and more customer-oriented."

Major industry movers

Today, there are 16 key industry players. Among these are Etelecare International Inc., Infonxx, PeopleSupport, C3 Customer Contact Center Inc., Sykes Asia, Inc., Contact World, SVI Connect, Cquadrant and Immequire Philippines, Inc. Most are joint ventures with ICT conglomerates. Even Easycall Communications Philippines Inc. has abandoned the paging business and is investing P1.46 billion over the next five years in a call center facility, Board of Investments records show.

And more foreign firms are expected to set up call centers in the country. According to Bong Borja, chair of Contact Federation Philippines Inc. (CFPI), at least four foreign companies have bared plans to establish offshore operations in the country this year. These are expected to create 400 to 1,000 seats and provide about 2,000 jobs.

Last year, PLDT announced that it has invested over $5.5 million in a 500-seat joint venture, Parlance Systems Inc., set to be operational by March this year. This is in addition to two call center contracts PLDT has inked, with Jardine Salmat Corp. for Contact World and with TeleTech Holdings Inc. for Vocative.

Meanwhile, US telemarketing specialist Reese Brothers revealed plans to plunk down P20 million in a call center project at the Subic Bay Freeport Zone that is expected to generate 2,000 jobs in the first two years of operation. For its part, the government is bent on making the Philippines the call center hub of Asia, realizing the industry's tremendous capacity to provide jobs and earn dollar revenues.

In addition to offering tax incentives and heading trade missions, the DTI has proposed allowing telecommunication providers to build an information highway linking Metro Manila's cyberparks to fast-track the creation of an ICT corridor in the country. The department has also identified call center services as one of five IT outsourcing areas for investment promotion and financing access. A school curriculum conforming to the industry's requirements, with more emphasis on English, Math and Science, is also being pushed.

Competitive strategies

And even as the business thrives, the private sector already is calling for anticipatory measures to ensure it continues to prosper. For one, they point to a need to continually expand and improve the labor pool. At present, only top universities churn out graduates with excellent communication skills, raising fears of a supply shortage.

Responding to this need, call center training schools are on the rise. The first of such specialized institutions, the Call Center Academy in Pasig City, started holding classes in January. Through 20- to 40-hour modules, it equips both graduates and undergraduates with competitive and globalized customer service skills.

Industry officials also are batting for English as a medium of education in primary school to retain the country's language edge. Infrastructure likewise needs beefing up, particularly in the area of more reliable circuitry to cut costs and make down time almost nonexistent. Meanwhile, the CCAP is planning to establish a Contact Center Academy which will produce certified call center operators, and encourages its corporate members to acquire Customer Operations Performance Certification, the leading global industry certification.

Tough rivals

And no doubt all these efforts are necessary as other nations initiate moves to grab a share of the lucrative call center market. At present, India leads the race with 100 call centers and 300,000 agents against the Philippines' more than 20 call centers and less than 10,000 agents.

But China is poised to be a major threat as it has begun teaching high school students to speak in English. Already, China has started to undercut competition in data encoding services, and five years from now, it will be a force to reckon with, warn observers. Malaysia and Indonesia have also thrown their hats into the call center ring.

Indeed, the call center service is fast becoming the sector to watch out for. But industry leaders caution that while the Philippines has a good chance of grabbing a big slice of the global call center pie, it will only attract investors if it continues to make the requisite improvements in infrastructure and labor quality.