Our growth is, like, so awesome
IT'S midnight in Manila, and the capital is just waking up to the
start of another working day. At the Worldwide Corporate Centre office
block, thousands of young Filipinos are crowding into endless open-plan
offices. Once seated, they quickly start answering the questions and
calming the frustrations of vexed American consumers beginning their own
day on the other side of the Pacific Ocean.
These Filipinos are call-centre workers. To outsiders it is hardly a
glamorous profession, yet despite the antisocial hours these men and
women have every reason to be as well-motivated and cheerful as they
seem. They are well paid and know that they work at the heart of their
country's most dynamic industry.
The rise of what is known as business-process outsourcing (BPO) in
the Philippines has been nothing short of phenomenal. The very first
calls were taken in 1997; today the sector employs 638,000 people and
enjoys revenues of $11 billion, about 5% of the country's GDP. Last year
the Philippines even overtook India, long the biggest call-centre
operator in the world, in “voice-related services”. The country now
employs about 400,000 people at call centres, India only 350,000.
The South-East Asian upstart (population 101m) is unlikely ever to
surpass the South Asian behemoth (1.2 billion) across the entire range
of outsourcing offerings, which also include all kinds of
information-technology services. Yet given the extraordinary growth so
far it is hard to gainsay the Philippines' own projection that its BPO
industry could add another 700,000 or so jobs by 2016 and generate
revenues of $25 billion. At that point, the industry would make up
nearly a tenth of GDP and be bigger in value than the remittances from
the 10m Filipinos working overseas.
As in the call-centre business so far, some of these new jobs will
come at the expense of India. Yet India's relationship with the
Philippines in back-office work is more complex than the numbers
suggest.
The main reason for the success of the Philippine call centres is
that workers speak English with a neutral accent and are familiar with
American idioms—which is exactly what their American customers want. Of
these, many have taken to complaining bitterly about Indian accents
(which no amount of “voice neutralisation” coaching seems to have
overcome). As a result, the Indian firms themselves have been helping to
move jobs to the Philippines by setting up call centres in Manila and
other parts of the country. Infosys and Wipro, as well as scores of
other Indian firms, now have substantial operations there. And they
aren't drawn to Manila by cheap labour. Wages in the Philippines are
slightly higher than in India since the Filipino accent commands a
premium.
It also helps that the country has a big pool of well-educated
workers. The million or so Filipinos who graduate every year have few
other options to choose from, besides emigrating. And working in a call
centre is considered a middle-class job (new recruits start at $470 a
month).
The big question is whether the Philippine BPO industry, having
conquered the call-centre market, can now move up the value chain. To
keep growing rapidly—and profitably—it needs to capture some of the more
sophisticated back-office jobs, such as those processing insurance
claims and conducting due diligence. In these businesses, called
knowledge-process outsourcing and legal-process outsourcing, India still
rules supreme.
Integreon offers a glimpse of what the future may hold. The firm
occupies just a few discreet, very secure offices. It employs 300 people
in Manila, 40 of them lawyers who help multinational law firms with
litigation. Familiarity with America helps. “It makes it very easy for
us to do legal research for American firms,” says Benjamin Romualdez,
the firm's country manager.
This sort of operation is new in Manila, but Mr Romualdez expects
that he can find the skilled workers to double his workforce over five
years. Western banks have also discovered the Philippines. JPMorgan
Chase now has over 25,000 workers on its own payroll in the country,
many of whom do much more than answering phones. The Philippines is set
to compete with India across the BPO board.
Refer: www.economist.com/node/21557350
