Call centers

By Boo Chanco (The Philippine Star), Mar 31, 2017

Our largely American BPO industry is apparently on a roll. The BPO sector is expected to generate $40 billion in revenues, 7.6 million direct and indirect jobs, 500,000 jobs outside of the National Capital Region, and cover 15 percent of the total global outsourcing market by the end of 2022.

That’s according to the industry road map. But right now, many new investments are on a wait and see mode. Worries about what Presidents Trump and Duterte would do have made investors take a breather until things become clearer.

Apparently, President Duterte really spooked some of the big players when he picked a verbal fight with the former US ambassador and with President Obama as well. The American executives were shocked with the strong anti American rhetoric of President Duterte and became worried with what that means for American investments here.

Then Donald Trump got elected US president. He also had bold and disturbing plans about a border tax that would reduce the economic justification for outsourcing jobs abroad.

Were it not for Duterte and Trump, industry players have been raring to pour in more investments to increase our footprint in the BPO world market.

Apparently, they really like Filipino BPO workers. An expat executive who has set up BPO operations in many foreign countries including China, India and the Philippines only had good words about our people and our country in his blog.

“I spent a lot of time in Manila and I think I can pretty confidently say Filipinos are the friendliest bunch of people you’ll meet anywhere. Their English language skills are also exceptional, courtesy of a long history of American settlement. You have zero problems being understood and conversing openly anywhere in the capital and the same goes for discussions with outsourcing vendors.

“One thing I’ve noticed in Australia over recent years is a really clear shift to the Philippines for call centers where previously you’d have been speaking to someone in India… I suspect it is a combination of their strong English skills, friendly dispositions and emerging tech sector that’s driven the shift…

“Cost wise, the Philippines was consistently lower certainly than China and regularly than India too. The economics of each of those countries mean it will likely stay that way for some time too.”

Last Tuesday, I met Craig Reines, the guy who runs the Sitel operations in the Philippines, at the EDSA Plaza Tuesday Club. I first met him last year and from our conversation, he remains bullish as ever about the Philippines as a call center haven.

Craig isn’t too worried about Trump or Duterte and apparently, neither is his company. Sitel just inaugurated its fourth “customer experience center” in Baguio, its 13th nationwide. And from his enthusiasm, it seems they are just getting started.

Sitel started operating in the Philippines in 2000 and was among the first to venture out of Manila by opening centers in Baguio 13 years ago. Craig, in his speech during the Baguio inauguration, said Sitel Philippines grew rapidly from 2015 and 2016, averaging 30 percent year-on-year.

“In the last 18 months, Sitel has added seat capacity and jobs within Pasig City, Quezon City and Mandaluyong City, but we are most proud of the significant new capacity investments in new provincial centers such as Tarlac and Palawan, along with this beautiful new 4th facility in Baguio.”

I remember Craig being very enthusiastic about Palawan when I last talked with him. He was impressed with graduates of the Palawan State University who were working in a hotel in Coron when he was on a family vacation there. I guess that led to the Sitel center in Palawan.

Craig explains that it makes sense for BPOs to start moving out of crowded Metro Manila and help boost job opportunities in the regions. The presence of schools and universities in key regional cities means there are qualified trainable people they could hire at better rates.

Craig proudly pointed out, “Sitel is the undisputed leader in inclusive, provincial growth for our industry. It all started right here in Baguio City, and the phenomenal performance of our Sitel employees – creating highly reference-able, international client success stories – is what set our company and our industry on the exciting path to develop our nation and bring high quality jobs closer to where people live.”

Craig said the goal of the industry roadmap to create 600,000 IT-BPM jobs nationwide is possible only if they start moving out to the provinces. Sitel Philippines now has 23,000 employees nationwide.

Craig knows how it is to be a pioneer in the industry. He helped establish one of the early call centers in Cape Town, South Africa before his assignment to the Philippines. He knows all about being mindful of cultural differences and how to adjust to local cultural norms.

In his speech during the Baguio inauguration, Craig focused on the economic contributions of his industry. Taking Baguio as an example, Craig said “Sitel’s investment has generated many direct jobs in this community … but also over 30,000 indirect jobs in Baguio City.

“The World Bank says for every peso generated, 16 times that is created in economic activity. The economic impact starting with our first investment 13 years ago in Baguio City has led to additional investments by Sitel and many firms, further increasing disposable incomes, increased tourism, etc. and we estimate this to be an astonishing P75 billion or over $1.5B.”

Well, the industry is one of only two legs of the Philippine economy, the OFWs being the other leg. The BPO industry is expected to overtake the OFW contribution soon. Craig sees the fears generated by Duterte and Trump merely as momentary concerns.

A senior economist of the ING Bank in Manila agrees. In a press briefing last January on the bank’s global economic outlook, Joey Cuyegkeng said “We think both OFW remittances and the outsourcing sector will continue grow. But by 2018, revenues from the outsourcing sector will outstrip revenues from OFW remittances.”

Mr. Cuyegkeng concedes there will be a wait and see stance on BPO investments, but he thinks “they’ll reassess once the US administration comes up with their programs that can affect the sector.”

Both presidents will in time see the value of what the industry is doing for their US and other clients as well as for the economies of the two countries. I share Craig’s view that those who will make bold expansion decisions now will benefit as soon as the political drama of the two presidents wind down.

Boo Chanco’s e-mail address is bchanco@gmail.com. Follow him on Twitter @boochanco