British Companies Looking to Move Call Centres to Manila

• Rapid wage inflation: Typical agent salaries have gone from £130 to £180 per month in 5 years.
• A large number of poor service providers: The difference between Manila’s best centres and worst is now immense. Many local entrepreneurs have been blinded by the bright lights of the call-centre industry. However, they have often applied the same management principles associated with the local textile industry which have proven disastrous. Manila now has some of the worst-run offshore call centres in the world (and also some of the best)
• High attrition: The explosion in call-centres has meant that it is very easy for an experienced agent to constantly job-hop from one centre to another. This has in turn led the less professional centres to cut back on training their staff.
• Management shortages: Where does an industry which didn’t exist in 1999 find 10,000 team-leaders from?
• Shortage of qualified applicants: In the early day of Manila’s offshoring industry, centres were able to cherry-pick from the best universities. As demand has increased rapidly, they have been forced to look at new sources for staff. This has meant that the applicant:employee ratio has dropped dramatically.

Of course, these problems aren’t unique to The Philippines. Indeed, back in the UK, we would love to have the problem of paying agents £180 per month or choosing which university our agents came from. However, these have become increasingly important issues to The Philippines industry and are only compounded by the ever-increasing demand from new centres and existing centres who continue to expand.

So Why The Philippines?
The answer to this question is quite simple; the level of English.

Estimates of the total number of speakers of English in India vary from around 4-20 percent of the population, which given India’s current population of around 1 billion makes it one of the largest English-speaking countries in the world. English is the official language in the Philippines, alongside the national language Filipino. It is estimated that around 65% of the 76 million population know English. (McArthur 1992) The command of English varies from individual to individual, from superficial knowledge to near-native proficiency. Philippine English is very widely used in such domains as government, law, education, newspapers, electronic media, music, entertainment, and Philippine literature.

The second reason is the relatively poor state of The Filipino economy. The Philippines has been overlooked by almost every industry in the 60 years since their Independence from The United States at the end of World War 2. It has gone from being the 2nd richest country in Asia to among the poorest. Let’s not forget the advances made by countries such as Singapore, Malaysia and Taiwan in that time. Even countries like Thailand, Vietnam and China have overtaken The Philippines. The fact is that all of these other countries had some competitive advantage which has enabled them to succeed. For Singapore, it may simply be their location which has enabled them to become a major hub for shipping and air-travel. Malaysia has been helped by its abundance of natural resources. India has developed due to the natural technology ability of its people. However, The Philippines seemed to have nothing. Indeed 8 million Filipinos (10% of the population) have left to seek a new life in places like America or Canada with many more working in low-paying jobs in The Middle East or in Asia’s tiger economies. However, The Philippines natural advantage is its communication skills, especially English language communication skills. Finally, the globalisation of call-centre services has given the Philippines the chance to showcase its natural advantage.

The Fight Back

The more professional Filipino service providers are fighting back with an improved emphasis on quality:

• Different perspective on recruitment: Call-centres can no longer just rely on tier 1 universities to provide their staff. Call-centres are also being very pro-active in taking their job-offerings to market
• Improved training: Some 3rd-party companies are now providing pre-job training session to applicants with the successful people being placed in jobs:
• Career paths: Most American outsourcers were initially bringing their management staff from The United States. Little by little, these jobs are being filled by Filipinos.
• Focussing on brands: Filipinos generally welcome the opportunity to include a well-known international brand on their cv and many employees are exploiting this.
• Moving outside Manila: To cities such as Baguio, Angeles and of course Cebu.

Bad Government?
The Philippines definitely suffers from bad Government or at least the perception of bad government. Whilst it is an accusation continually denied by Philippines officials, it is a story regularly painted by Transparency International, the Paris based organisation which measures global corruption.

Transparency International ranks the Philippines as joint 121st in its corruption perceptions index. To put this into context, it is joint 121st with Russia, Gambia, Honduras and Rwanda! The Philippines scores much worse than most other major offshore call centre locations such as India (70th), Canada (14th), Sri Lanka (84th) and South Africa (51st).

However, this is a “perceptions index” and in part stems back to the days of President Ferdinand Marcos who reportedly stole billions of $’s to fund his wife’s shoe collection! Transparency International ranks Marcos as the 2nd most corrupt leader in the world ever and 20 years after his departure, the country still suffers from the perception of corruption.

In fact, in my humble opinion, it is this perception of corruption which actually keeps the country highly competitive. With very few international companies (outside of the call centre industry) looking to invest in The Philippines, the peso is very weak and unemployment relatively high. If the non-call-centre world ever realised that the country is not as corrupt as they think, the flood of investment may make The Philippines less competitive. With this in mind, I think we should keep it a secret.

I lived in Manila for 5 years running a call centre company and never once had to pay a bribe to corrupt Government officials. And as for the accusation that Philippines Government officials are ineffective, my experience is that this is untrue. Every Senator, Congressmen and DTI officials are all aware of the importance of the call centre industry to the Philippines economy and have gone out of their way to provide their support.

Conclusion
While issues still remain, The Philippines remains a very suitable place for English speaking activity.

If your call centre application isn’t working in India, it’s likely that they won’t work in The Philippines or any other offshore location until the root causes of the problems are fixed. There are concerns over a number of things such as how Filipinos understand Brits & their sales ability.

The Philippines does still remain a competitive and high-quality offshore option. However, In a call-centre market becoming increasingly averse to offshoring, it may be that The Philippines is judged alongside lesser competition.