India worries PH will be world’s No. 1 BPO center in five years

MANILA, Philippines—The Philippines toppling India as the world’s top destination for offshore business process outsourcing (BPO)?

Sen. Miriam Defensor-Santiago thinks so, drawing from a recent visit to India where the industry was supposedly abuzz about the Philippines surging past the South Asian nation in five years.

Santiago on Saturday said the prediction was that India would lose its lead owing to the steady growth of the local BPO sector, which was “expected to post $5.7-billion revenues in voice-based customer support and sales for 2010.” In contrast, she said, India was poised to hit only $5.58 billion by yearend.

The senator said in a statement that Indian newspapers such as The Economic Times had expressed “concern that the Indian call center industry is losing US-based clients in favor of the Philippine industry.”

The Philippines is the second largest BPO industry in the world, next to India. Industry figures place revenues generated from the BPO sector in 2008 at $6.8 billion for the Philippines, and $11 billion for India.

Filipino advantages

In a paper titled “The Great Call Center Debate: India vs the Philippines,” an official of a top US-based BPO company noted the advantages enjoyed by Filipinos over Indians in the industry.

“[Filipinos] speak idiomatic American English better than Indians, and their accent is more neutral. The Philippines is an outstanding destination for a wide variety of offshore services. They have gained great traction especially in voice work,” wrote Chris Repholz, senior vice president of Zenta company.

Santiago also cited “better affinity with the American culture, lack of competing industries for skilled workforce, and higher tax incentives” among the leading reasons behind “the unprecedented rise of the [Philippines’] BPO industry.”

The goal to overtake India is part of the five-year (2011-2016) road map for the country’s information technology and BPO sector. The objective is to expand it to a $25-billion industry employing 1.3 million people.

Santiago said she would file a measure next week seeking to “jump-start legislative support for the BPO industry, especially its workers.”

“Curiously, the Senate in the 15th Congress has yet to file any bill for the promotion of the call center industry and the protection of its workforce,” she said, and went on to urge her fellow lawmakers “to formulate laws supporting this booming sunshine industry.”

Labor violations

Santiago called for better safeguards for industry workers amid concerns such as “contractualization and union-busting.”

She said her office had been getting complaints of “rampant and stark labor violations in the call center industry,” including “unreasonable metric evaluations, compelled overtime and holiday work, long working hours … [and] the high attrition rate.”

“Legislators should study how our laws can adapt to this relatively new industry,” Santiago said.

She added: “Amendments in the Labor Code or an entirely different and separate law should be considered so as to protect the rights of call center agents because of their unique work environment.

“We must balance the legitimate business interests of BPO companies with the labor rights of employees. I have heard that most call center agents do not stay too long in one company either because the work becomes more and more unreasonable every year, or there is no professional growth in the company.”

Workplace study

But the working conditions in the Philippine BPO industry are of “reasonably good quality” compared with those in developing countries.

That’s according to the International Labor Organization (ILO) in its first in-depth study of the workplace in the four top BPO destinations in the world—India, the Philippines, Argentina and Brazil.

The study, titled “Offshoring and Working Conditions in Remote Work” and released in Geneva in July, examined remote work, its impact on the labor market in general and the workforce in particular, and the possible implications for working and employment conditions in countries where the BPO industry is growing.

The BPO industry may be broadly divided into “voice” services such as call/contact centers, and “back office” services, like finance and accounting, data processing and management, and human resource development. Call centers make up 70 percent of the local BPO industry.

‘Brave new world’

Very little is known about the working conditions in this rapidly growing industry worth about $90 billion, according to Jon Messenger, senior researcher of the ILO’s Conditions of Work and Employment Programme and co-editor of the study (with Naj Ghosheh).

“The BPO industry has at times been heralded as the wave of future knowledge work in a service and information economy, and alternatively, demonized as a ‘brave new world’ of electronic sweatshops. The reality, as one might imagine, is far more complex,” Messenger said.

“The bottom line is that this is an industry with the potential to offer a model for a future of good-quality service sector jobs and high-performing companies in the global economy,” he said.

Higher pay

The ILO study said Filipino BPO employees were earning 53 percent more than workers of the same age in other industries.

The average monthly salary is P16,928, with benefits such as meal and transport allowances. Men earn 13 percent more than women.

In general, the BPO workforce is young, well-educated and predominantly female.

Hours of work in the BPO industry are also quite reasonable by local standards, in stark contrast to the often excessively long hours of many workers in the developing world, the study said.

The average hours of work of local BPO employees are 44.7 hours per week. Overtime work averages 1.12 hours per week.

Night work, which is often associated with occupational safety and health issues, is common in the Philippines, with 42.6 percent of BPO employees (51.7 percent of employees in call center positions) working the night shift to serve customers in distant time zones (primarily the United States in “real time”).

On the flip side, the ILO study said local BPO employees reported sleep disorders or insomnia, fatigue, eye strain and body pains.

BPO employees also have heavy workloads backed by performance targets combined with tight rules and procedures, all enforced via electronic monitoring and leading to high levels of stress, the study said.

“Back office” positions tend to be of higher quality than call center positions in terms of wages and working conditions, according to the study.

It said workers serving outside markets appeared to have better-quality jobs than those focused on domestic markets, mainly as a result of the higher skills required in international positions.

Continuing expansion

Analyzing the impact of the global economic crisis on the BPO industry, the ILO study said some companies, particularly in the banking and insurance sectors, had suffered a considerable blow, but only in the short term.

It said some of the factors driving the industry’s expansion—such as the continuous search for cost savings and increasingly sophisticated and inexpensive technologies—were unlikely to diminish and could even accelerate in the medium to long term.

The study offered suggestions to improve the quality of jobs in the BPO industry and increase productivity. These include:

* Stronger measures to protect the health and safety of night workers in line with the ILO Night Work Convention.

* A redesign of work processes, especially in call centers, to allow employees more freedom to make use of their qualifications, as well as greater latitude concerning rest and toilet breaks.

* Policies and practices aimed at improving workers’ collective voice and promoting social dialogue. –Christian V. Esguerra, Cynthia Balana, Philippine Daily Inquirer