It is now no longer news to proclaim bright prospects for the Philippine call center industry. Indeed, accolades and high flying predictions have become so common it almost seems ridiculous to have to repeat them. But some habits can be a good thing, and in this case, forecasts about the country's promising "sunshine industry" do bear repeating.

CALL CENTERS-RP'S EMERGING SUNSHINE INDUSTRY

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 in 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 the Department of Industry (DTI).

From 2000 to 2001,the segment reportedly grew by more than 200 percent, and local center revenues are projected to increase from $173 million in 2002 to $ 846 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 centers 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 in a central customer service operation where agents (often called customer care specialists or customer care 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 computer 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.

Other reasons cited are better power and telecommunications infrastructure, competitive labor cost in terms of quality and value of money, and strong government support for ICT-related industries.

Of these, skilled labor is the country's acknowledge ace.  Filipinos are renowned for their English proficiency, high IT literacy, warmth, trainability and customer orientation.

"We're unbeatable when it comes to the way we speak English.  We're also more patient in handling calls and more customer-oriented," says an industry observer.

Major industry movers

Today, there are several 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 Investment records show.

And more foreign firms are expected to set up call centers in the country creating thousands of jobs for locals.

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 telecommunications 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 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 2002.  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 nonexistence.

Tough Rival

And no doubt all these efforts are necessary as other nations initiate moves to grab a share of a lucrative call center market.  At present, India leads the race with 100 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 services is fast becoming the sector to watch out for.  But industry leaders caution that while the Philippines has a good change 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.

Prospects of growth:

One reason behind this sudden influx of money is the presence of industry leaders in the country. According to an online study, many of the top call centers abroad have stationed operations in the Philippines. PeopleSupport, for example, has based its Asia-Pacific operations in Makati City while Convergys has two offices in the Philippines with a third call center already under construction.

The study cited four reasons behind the succes of the call center industry in the Philippines: people, cost, environment and something called international awareness. The study stated that countries with high living costs, such as the US and most of Europe, have been sensitive to the cost benefits of transferring call center operations to countries like the Philippines. They save approximately 55% of their budgets because salaries are lower. And despite the increase in transportation and telecommunication expenses, international firms still save 40%.

Salary levels of call-center agents

To illustrate, the average salary of a Filipino call center agent is pegged at $2,828 a year. Even among the other Asian countries this is comparatively low. According to a benchmark study by Callcenters.net, the average annual salary of a Thai agent hovers around the $4,000 range, at about $3,939. Lower costs, however, tell only one side of the story.

The main advantage of the Philippines over other Asian countries is the quality of its knowledge workers. The employee turnover rate for call centers in te US is around 35%-50%. The Philippine turnover rate is 13%. The Filipinos' literacy rate and English skills have become traditional selling points for moving a contact center operation to local shores. The Philippines' cultural affinity with the US is also seen as an advantage, haviing been an American colony from 1898 to 1946.

Adoption of the American school system has also been cited as a key factor in choosing the Philippines before other Asian counterparts.

The gender distribution in the call center industry is also something worth noting. Approximately 72% are females while 28% are males. And the industry as a whole hires about a thousand workers every week. Bong Borja, president of PeopleSupport (Philippines) Inc. and chair of the Contact Federation of the Philippines (CFP) as well as the Contact Center Association of the Philippines, said the comparatively low real estate prices and the "robust telecom infrastructure" allow locally-based outfits to make cheap international calls. He placed the cost of connecting to the United States at less than $4,000 every month. Borja also cited fiscal incentives offered by the government as a key factor contributing tot he industry's growth. The average lease price of an IT-ready fiber optic-wired office is an unbelievable $0.67 per sqaure foot.

Because of these strengths, the Philippines is projected to have the fastest growth rate next year, at a staggering 100%. India, the country's traditional rival, holds growth rate at 65%. It is impressive yes, but still only second to the Philippines'. While these prospects are certainly thrilling to investors, siginifcant areas for improvement remain.

And to allay investors' fears, the industry as a whole seems to be taking steps to remedy a number of these problems.

Working conditions:

A call center training and consulting firm estimated that an average of only two out of every 100 applicants get hired for call center positions due to the lack of qualified applicants who can speak good English. This is in stark contrast to the traditional battlecry that Filipinos carry a very high English proficiency rate. "There are other countries like China, India, the Caribbean and now East European nations that are now putting a higher focus on English.

The need for very good English

The Philippines has to reinforce programs that will generate more quality English speakers market demand and sustain growth," said Jon Kaplan, presidentof Teledevelopment Services. What Kaplan was probably refering to is the need to improve fluency in English.

While Filipinos may have an intuituve grasp of English, there are a number that may not meet certification levels. To respond to this, call center training schools are already on the rise. The Call Center Academy in Pasig City is one such institution. Through 20- to 40-hour modules, it aims to arm both graduates and undergraduates with competitive globalized customer service skills. Industry officials are also batting for English as the medium of instruction for primary schools to retain the Filipinos' historical edge in language.

In a comparison with India, for example, Americans favor the Philippines because of the Filipinos' familiarity with their culture, whereas India is more familiar with Britain. The long worrisome peace and order situation is also a major concern, more importantly since call centers are moving out of Metro Manila into places such as Cebu. Studies indicate that while expatriates enjoy the amenities in major Philippine cities, investors may still be wary of outsourcing services in countries where the peace and order risk is relatively high.

An online study also recommended a more concentrated effort to market the country better. And while the efforts from the DTI are very much appreciated, the study stated that some websites about the industry are not up-to-date, and information should be made public whenever possible.

The Philippines, it said, would also do well not to ignore the European market. The call center industry remains one of the most viable areas for growth in the country. And other countries are beginnning to see that as well.

For the Philippines to retain its competitiveness in a fast growing market, officials, both in the private and government sectors should take steps to ensure that the country's labor pool and infrastructure are well taken care of, otherwise one of its most promising young industries may suddenly find itself on hold.