Posted On February 19th, 2013
Back in 2000, I did a consultancy project to set up a call centre outsourcing company in The Philippines. The company was very well funded and used a range of consulting firms such as PWC to determine what the price of those services would be. All the experts said the price was USD15 for American clients and '10 for British clients. The investors in that particular company all fell out and the operation was sold off before the company started to generate any revenue. With 1 of the investors and a friend, we set up a basic call centre and we had the same pricing structure of USD15/GBP10. Nobody ever questioned the pricing and everyone paid the same. Our market research showed that the limited competition that we had at that time was charging pretty much the same amount with some offering bulk-discounts for larger projects. Based on the pricing structure at the time, we were able to command a pretty decent margin. Over the years, the costs of delivering operations in The Philippines has changed. Salaries have gone up slightly (in peso terms) & telecommunications costs have plummeted. The cost of real estate has also changed but this is a more complex story. 10 years ago, outsourced vendors were tending to use Class A real estate predominantly in Makati City but also other prominent locations. The price of that real estate has rocketed as The Philippine economy has boomed. However, most outsourced vendors have switched to much cheaper real estate to keep their prices low. You've also found a much lower propensity of expensive expat management resources. Now, most of the management is either Filipino or in the case of some of the Indian vendors, they are Indian. Overall, the cost of delivering a productive hour of operations is fairly static and for many vendors has actually gone down.
As The Chairman of The British Philippine Outsourcing Council, I'm constantly contacted by Philippines-based vendors and I'm shocked at some of the excessively low prices they are now quoting. However, I do the sums, there is absolutely no way that they can deliver even a mediocre quality of service based on those prices. This mirrors what has happened in India where low-grade vendors have offered rock bottom prices to win business and by doing so have given the country's call centre reputation a destructive blow. In The Philippines, I think it's fairly reasonable to charge in the region of $11-15 per hour and more if specific skills or technologies are required. Companies offering less than $6 (and there are some) are missing something out and/or they are delivering far below cost price and there will be no longevity in your relationship with that operation. Of course, pricing has taken on increasing complexity for all forms of outsourcing over the past decade. Unit pricing (such as cost per minute/call) are more common place as are rewards or penalties for failing to meeting specific KPI's. Much of the 'pay-per-performance' telemarketing work was taken away by the Do Not Call Registry and The Telephone Preference Services and what is left is typically done by low-quality vendors who will take whatever work they are given. There are some good pay-per-performance projects left but these tend to be the exception rather than the rule.
Overall, a buyer of call centre services at ridiculously low costs needs to be careful. You definitely get what you pay for and if you're the lowest paying client of a centre, you should expect to get the lowest quality of service. If you need assistance in the vendor selection process, please contact us at The British Philippine Outsourcing Council on 0121 364 4000 and we will point you in the right direction.