Philippines races India on call centers

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 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 United States, 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 say they like the Philippines because English is taught in schools and Filipinos have a cultural affinity with the US, which ruled the country from 1898 to 1946.

“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 the 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 US, 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.

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..

“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 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 Philippine 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 says. Bloomberg