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Philippines call centres: Hot seats

Although the Philippines has largely failed to compete against its northern neighbours in manufacturing, it has managed to find other niches to compensate. One of the fastest growing of these is the business process outsourcing (BPO) or call centres industry, encompassing everything from help desks and transcription to telemarketing and credit collection.

Philippines tries to match promises with delivery

This is estimated to have been worth some $1.5 billion in 2005 from a standing start in 2000 and is targeted to grow to $10 billion by 2010.

With a young, well-educated and English-speaking workforce, BPO in the Philippines has benefited from low labour costs similar to those in India, some of the lowest office rents in Asia and a series of very positive investment incentives from the government.

Telecom costs have also reduced significantly over recent years, thanks largely to a deregulated market. With labour and telecom costs accounting for some 90% of BPO operating costs according to CLSA, that already makes the Philippines an attractive location for BPO centres. Add to that the natural competitive advantage the country enjoys over other regional rivals in its strong English language skills and cultural affinity with western markets, most notably the US, and it all makes for a compelling business case.

According to CLSA, the Philippines already has about 100 call centres and 165,000 seats. The government is expecting that to increase to 500,000 seats by 2010. While the only domestic pure call centre play in the Philippines is Paxys, larger local conglomerates, including Ayala Land, SM Prime, Metrobank and PLDT either operate their own BPO operations or stand to gain in other ways, either as landlords or telecommunications providers.