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Philippine challenge to Indian call centers

Rob O'Malley, chief consulting officer of Asian Call Centers, says that anyone who thinks that India has won the battle to be the call center capital of the world is missing keen competition from a number of countries, especially The Philippines. In fact, there are many reasons why The Philippines is a far better place for an English-speaking call center than India.

Indian issues of concern
The arguments for choosing India to house your call center are strong, but India has been very slow to overcome several major issues. The telecommunications and electricity infrastructures are major barriers and there are concerns with the quality of management in some Indian call centers.

Whilst there are many good Indian vendors, their reputation is being spoiled by others who see the industry as a way to get rich quick. They seem content with winning business exclusively on cost, with limited attention to quality.

The advantages
Culturally, The Philippines has more in common with the West than India does and the Filipino accent is far easier to understand for Westerners. Visit Manila and it seems just like an American city without money. The Philippines has the best spoken English of anywhere in Asia, basketball is the national sport and Manila has the look and feel of a run-down American city.

The key attraction of the Philippines is its highly skilled, motivated, English-speaking workforce. A recent survey of top executives conducted by Hong Kong's Political and Economic Risk Consultancy rated the Philippines better than virtually any country in Asia on the quality, cost, and availability of skilled labor.

Like everyone else, I do believe that India will house more call center seats than The Philippines, but it won't be proportional to its far larger population. I also believe that India will be used for lower-value calls, whilst The Philippines will become a niche player for more complex call center activity.

The current situation
There are around 30 call centers operating in the Philippines. These include:
- large corporate call centers such as America On-Line
- international outsourcers such as Sykes and People Support
- large domestically-owned call centers trying to tap the markets
- numerous smaller players jointly owned by American companies and local Philippine partners.

Ford forges ahead
Ford already has a call center presence in The Philippines and looks set to expand this dramatically. Senior executives from Ford have already met President Gloria Macapagal-Arroyo and promised a new call center in Manila. There are also very strong rumors that BT Directory Enquiries will soon be moved to Manila. Teletech have a joint venture with PLDT (the incumbent telecoms company) which will open soon.

The Ireland of Asia
The Philippines would like to copy Ireland in becoming a regional call center power. The Filipinos are quick to point to cultural similarities to Ireland, and The Philippines are evidence of why this should happen.

- Both countries are predominantly Catholic in areas of the world where Catholicism is not prevalent.
- Both have spent much of their history ruled by others, which led to English being widely spoken.
- Even their most famous exports are both alcoholic; Ireland has Guinness whilst The Philippines has San Miguel. In fact, the main difference between the two countries is that while Ireland is confident enough as a nation to be proud of Guinness, most people think San Miguel is a Spanish beer.
- Their other exports are their human assets. The brain drain that plagued Ireland for so many years is mirrored in The Philippines.

Too modest by far
Unfortunately, the Filipinos are too modest to talk about their inherent talents, and marketing of The Philippines as a base for call center activity is limited. The Philippines is also considered to be politically unstable, but in reality is less of a risk than its neighbors.

Services supporting The Philippines industry need to be improved. Recruitment companies, consultancies and trainers are trying to jump on the call center bandwagon and American companies are trying to fill the skills shortage.

Government incentives
There are a number of Government investment incentive packages available to call center businesses. These include the Board of Investment (BOI), Philippine Economic Zone Authority, and the Clark and Subic Bay Special Economic Zones in areas that were previously bases for The United States Navy and Air Force. The BOI's primary incentive is an income tax holiday of up to eight years. PEZA, Subic and Clark offer a special five per cent tax break on adjusted gross income applies and also allow equipment to be imported duty-free.

Telecommunications
The telecommunications structure in Manila is more stable than in most Indian cities, but there are still issues. The market is recently deregulated and there is a serious drive to improve the infrastructure. The Philippines is also making it very easy for call centers to use all possible modes of international call routing.

Motivated labor force
The country is fortunate to have a virtually unlimited pool of talented, well-trained, and motivated workers. They are creative and learn quickly. According to Hong Kong's Political and Economic Risk Consultancy (PERC), The Philippines is the only Southeast Asian nation besides Singapore with a labor force with the potential to move beyond a manufacturing focus to a higher value-added level.

PERC ranks the Philippines as fourth in Asia on quality of labor force, behind more expensive locations such as Japan, Taiwan, and Singapore.

Summing up
The Philippines needs to focus time and effort to ensure that it its viewed as a destination for quality call centers. Bad news spreads quickly and Western companies are unwilling to take risks when it comes to their customer interactions.

If the country continues with its approach to quality, there is no limit to its opportunities