A call from the center of the heart

Prospects for the business process outsourcing (BPO) industry seem positive in the next few years, judging from the comprehensive report contained in the Business Processing Association of the Philippines’ “Roadmap 2010.”  When the outsourcing industry was introduced sometime in 2000, it only had 1,500 people with revenues amounting to $24 million. By 2006, the BPO workforce had increased to 230,000 with revenues reaching up to $3 billion, representing a small five-percent share of the global market. According to industry experts, the current addressable market worldwide is worth $450 billion, and the Philippines has the potential to reach $13 billion in revenues by 2010 with a sizeable increase in the size of the workforce, estimated to reach 900,000.

A significant factor in the industry’s boom can be attributed to the demand for offshore call centers, which has grown from being mere providers of email responses to almost all types of customer relations ranging from travel, technical support, telemarketing, financial services, education, customer care and support as well as online businesses. In fact, the call center sector has been dubbed as a “sunshine industry,” contributing to 12 percent of the country’s gross national product.

At the onset, an obvious advantage for the Philippines has been the huge number of English-speaking professionals in the country, plus the fact that operational and labor costs are less expensive here than in other countries. But one growing concern is the deteriorating quality of graduates and their ability to speak English. According to data from the Commission on Higher Education, some 450,000 students graduate from college every year, but close to 75 percent of these graduates have been found to have “substandard English skills.”  As a result, only five to 10 percent of applicants interviewed for jobs in call center companies get hired, mainly because most of these applicants lack the required proficiency in the English language.

With most call centers located in the National Capital Region and in Cebu, there’s also the possibility of reaching saturation point as these areas start to become “non-competitive,” which is why other cities are being developed as alternative destinations, like Davao, Bacolod, Iloilo, Dumaguete and Tacloban.

The other day, I had the opportunity to meet Freddie Pacho, a Leyteno who is planning to put up a call center in Tacloban, the place where he was born and raised. An engineering graduate of the Mapua, Freddie has a semiconductor plant in Canlubang which is a joint venture with Japanese investors. He told me he wants to bring jobs to Leytenos, and a call center would be appropriate since Tacloban seems to have the right mix of educational institutions and infrastructure particularly with PLDT’s ability to provide the necessary technical and technological components, like the use of fiber optics which can assure higher quality of telephony.

One big consideration in setting up a call center is finding land and property – which should not be a problem since Freddie has property in Tacloban. Considering that rental costs are increasing in Metro Manila, this could significantly lower overhead costs by about 25 percent. Entry levels for call center agents is between P12,000 to P15,000 in Metro Manila, but in the provinces the range would be lower at P10,000 to P12,000 – still a significant salary especially for fresh graduates in the provinces.

With Freddie was Mike Smith, an American who has been living here for many years but unfortunately will be leaving soon. Mike, who had visited Tacloban, observed that English is given higher priority there than in most schools in Metro Manila. He also had a call center which he had sold recently, and he disclosed that the problem of English proficiency can be solved with call center companies partnering with universities, consolidating the curriculum to accommodate intensive English training for college seniors – who can then be hired as call center agents when they graduate.

According to Freddie, it will take about $2.5 million for a call center to be put up, and by the third year, you can expect $12 to $15 million since the business pays back very quickly. “I’m hoping to convince local investors in Tacloban,” he says.

But more than returns on investment and generating jobs for his fellow Leytenos, what particularly concerns Freddie is the displacement that happens to young call center employees who get transplanted from the provinces to Metro Manila. Majority of call center agents are single girls one or two years out of college who come to Manila and live by themselves. There have been a lot of stories about these girls eventually getting pregnant, with nothing to show even after two years of working in the city.

If more call centers would be put up in the provinces, obviously such problems could be avoided since employees will be coming from the area, with roots firmly established in the community. It won’t be surprising if a lot of the first hires would be Metro Manila agents – even supervisors and managers – who have transplanted themselves to Metro Manila and would like to go back to the province.  Naturally, this would also help decongest Metro Manila. 

Obviously, this man’s motivation stems from a call at the center of his heart. Hopefully Freddie Pacho will be able to convince not only local investors but others to join him in this noteworthy undertaking.

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