[lg policy] Philippines passes India in call-center jobs; "Philippines excels [with] the most accent-neutral language"

Harold Schiffman haroldfs at GMAIL.COM
Mon Jan 10 20:46:43 UTC 2011

Philippines passes India in call-center jobs

By Michelle Yun and Kathy Chu, USA TODAY

CEBU CITY, Philippines — Help-wanted ads dot I.T. Park, an eclectic
enclave of call centers, restaurants and clubs in this Southeast Asian
city. One from U.S. banking giant JPMorgan Chase encourages job
seekers to "work directly for the first multinational financial
services firm to establish a Global Service Center in Cebu." Nearby,
workers set up a booth to recruit workers for TeleTech, an Englewood,
Colo., firm that operates call centers in the Philippines, Latin
America and elsewhere for U.S. banks, telecom and technology firms.

For the past decade, the Philippines has been an attractive
call-center destination due to its educated, English-speaking
population. But its appeal is at an all-time high as the Philippines
inches past India as the largest call-center operator in the world.
"It's a bit of a coming-out party, because the Philippines has been
undermarketed," says John McCarthy, an outsourcing expert at Forrester
Research in Cambridge, Mass. "Clearly, the Philippines has become the
preferred (call-center) location for companies serving Americans."

The Philippines now leads India in call-center jobs, employing 350,000
compared with India's 330,000, according to the Contact Center
Association of the Philippines, which represents the country's
call-center operators. The association estimates that Philippines call
centers produced $6.3 billion in revenue last year, and that the
figure will grow 15% to 20% a year as multinationals increasingly set
up shop here. By comparison, India's call centers likely generated
$5.6 billion to $5.9 billion in revenue last year, according to
Dallas-based advisory firm Everest Group.

Some American companies such as US Airways are pulling back on call
centers in the Philippines. But many others — including Citi and Chase
— are outsourcing customer calls, back-office work or other operations
to the country. For U.S. consumers, the trend means that they'll be
increasingly routed to an agent in the Philippines when they call
their bank, insurer or computer company. And they probably won't even
know it's happening.

"The thing that the Philippines excels in is that they have the most
accent-neutral language," says Kevin Campbell, group chief executive
for technology, for Accenture, which has more than 20,000 employees in
the Philippines developing software, doing accounting and answering
customer calls, among other things, for clients.

Filipinos' English-language skills — English is one of the country's
official languages — mean that outsourced calls are less obvious.
Customers are also more likely to have their issues resolved the first
time they call because it may be easier to communicate with a Filipino
representative than an Indian one, says Richard Bledsoe, a TeleTech
executive vice president of operations who is based in Pasay City,
outside Manila.

In addition, the Philippines has "an absolutely fantastic service
culture," an important component in keeping cranky customers
satisfied, says Jane Lockwood, an associate professor at the City
University of Hong Kong who provides training for call centers. "They
go out of their way, not just in call centers, but in tourism and
events management, to ensure people are well looked after."

Even Indian firms are seeing the benefits of doing business in the
Philippines. WNS, a global outsourcing provider based in India, opened
its first call center in Manila with more than 200 employees in 2008.
WNS now employs more than 1,300 in the city, answering calls for
consumers looking for help with items such as booking plane tickets.

"Some clients are very conscious about accents, and definitely prefer
the Philippines over locations in India," says Keshav Murugesh, CEO of
WNS, whose U.S. and U.K. clients include T-Mobile and Virgin Atlantic.

For U.S. consumers, what often matters most is not where calls are
directed but whether agents can resolve their problems.

"It was very frustrating," says Kaylene Lewek, of Raleigh, N.C., about
a recent call to her computer company. "I had a number of different
problems with my computer, and it was very obvious they were using a
script. They couldn't answer anything that deviated from it."

Lewek, 26, says she also found the agent's Indian accent hard to understand.

Controversy lingers

Philippines' call centers serve a diverse range of companies — from
banks to airlines and insurers — in English-speaking countries such as
Australia and the United Kingdom. But the Philippines' embrace of
American culture makes it particularly attractive for U.S. firms.

"If you were to visit the Philippines, it's like being in small-town
America. Restaurants might be showing baseball on TV, and the
programming is all in English," says Bledsoe.

It doesn't hurt that Filipino employees are more than willing to work
night shifts to cater to U.S. companies time zones away. Night shifts
are so common that there's a "whole industry around this industry,"
says Lockwood about the bars and restaurants that open at 6 a.m. for
call-center workers finishing their shifts.

In Cebu's I.T. Park one evening, American rock music spills out of the
clubs adjacent to the call centers. Young Filipinos mill about on
sidewalks, some taking a break from their office jobs in nearby
buildings. A female singer tries to draw passersby into a bar with You
Were Meant for Me by American singer-songwriter Jewel.

Young Filipinos are prime candidates for call-center jobs. The
positions pay the equivalent of around $4,300 U.S. per year, according
to the Business Processing Association of the Philippines, which
represents the outsourcing industry, an attractive salary in a country
where the average family income is just a little higher than that. By
comparison, call-center jobs in the U.S. — when they can be found —
may pay $16,000 to $22,000 a year.

The outsourcing of jobs is not a new phenomenon. Yet, it remains
controversial as the U.S. jobless rate is at 9.4%. President Obama has
championed measures to rescind tax breaks for U.S. corporations that
move jobs overseas. Senate Democrats introduced a bill last year to
end such deductions, but Republicans opposed the measure, saying it
would hurt U.S. companies and the sputtering economic recovery.

American companies defend outsourcing as a necessary way to cut costs
and survive in tough economic times. Outsourcing also allows remaining
employees to do things "core to their business," says Benedict
Hernandez, president of the Contact Center Association of the

Steve Dieter, 60, of St. Louis, says he's not extremely concerned
about lower-paying call-center jobs being sent overseas. What does
matter, he says, is that "skilled jobs remain in the U.S. and there be
less incentive for companies to outsource" work such as software

Moving beyond call centers

In the Philippines, the call-center industry is maturing, meaning its
growth could soon hit "a plateau," says Avinash Vashistha, CEO of
Tholons, a New York-based outsourcing advisory firm.

That's why, if the Philippines has its way, call centers will soon be
one of many functions the country routinely handles. It wants to be
the go-to location for all types of outsourcing services, from
processing insurance claims to analyzing retail sales data.

To achieve this, the country needs to improve its education system so
people can expand their skills beyond call-center work, says
Ramakrishnan Chandrasekaran, president of global delivery for
Cognizant, a Teaneck, N.J., provider of outsourcing services to

Giving young people more technology training, for instance, would make
the Philippines attractive to companies looking to outsource software
programming or technology tasks.

The Philippines government is promoting educational and scholarship
programs to improve workers' skills. It's also provided generous tax
breaks to multinationals that create jobs here.

The question is whether those programs and incentives will be enough
to keep the Philippines competitive with other outsourcing locales in
the long term.

Accenture believes so. Campbell says the Philippines is already "as
competitive" as other locations in providing services such as
accounting and software development.

For now though, the vast majority of what multinationals outsource to
the Philippines remains call-center work. Research and analytical
services are a small but "growing niche in the Philippines," says
Donald Felbaum, a Tholons partner who is also part of the American
Chamber of Commerce of the Philippines.

Such services, though, hold huge growth potential as companies try to
drive down operating costs. A report from the Business Processing
Association of the Philippines predicts the amount generated by the
global offshore services will increase 10% to 15% a year; non-voice
services are expected to grow most rapidly.

Philippines President Benigno Aquino, in a December speech at the
opening of IBM's new outsourcing facilities, called the industry's
prospects "highly encouraging."

The government predicts that services outsourced to the Philippines
from around the world will generate up to $100 billion by 2020,
grabbing 20% of global offshoring market share.

In the next few years, U.S. consumers are likely to find their calls
redirected not only to India and the Philippines, but also to Vietnam,
China, Egypt, Morocco and countries in Eastern Europe and South

In emerging outsourcing destinations such as Vietnam and China, "the
voice quality is not where it needs to be," says Bledsoe of TeleTech.
"But millions of people (are) learning English, so they will be ready
at some point."



 Harold F. Schiffman

Professor Emeritus of
 Dravidian Linguistics and Culture
Dept. of South Asia Studies
University of Pennsylvania
Philadelphia, PA 19104-6305

Phone:  (215) 898-7475
Fax:  (215) 573-2138

Email:  haroldfs at gmail.com


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