GMA forecasts 200 per cent growth for call centres

Call centre seats in the Philippines will grow from 20,000 to 60,000 by 2004, the fastest growth rate by any nation including India, the country’s biggest rival in the global outsourcing industry.

President Gloria Macapagal-Arroyo made the prediction despite growing concerns over increasing political risks in the Philippines following the latest coup attempt in Makati last month.

In a speech delivered at the eServices Forum held last week at the Makati Shangri-La, Mrs. Arroyo pointed out that while India boasts of a bigger workforce, the Philippines posted higher growth in the outsourcing industry last year. The Philippines, whose population now stands at around 80 million, increased its labour pool by 60,000 people, while India, which has a population of about one billion, added around 100,000 call centre agents. “In terms of proportion, the call centre industry in the Philippines grew bigger,” President Arroyo noted.

Mrs. Arroyo’s growth projection appears overly optimistic, but market trends indicate that the Chief Executive might be right on target. International research firm International Data Corporation predicts that by 2004, the worldwide call services market will be worth $73 billion.

The growth in labour force corresponds to about 20,000 call centre seats, according to third-party industry monitor Martin Conboy, founder and chairman of, presented statistics on the Philippine call centre and business process outsourcing (BPO) industries, including market projections, during the forum that was organized by the Department of Trade and Industry (DTI).

Conboy estimated the value of the entire Philippine outsourcing industry at 328 million pesos (US$6 million), most of which comes from services rendered to companies in the U.S. and U.K.

In terms of number of seats, Conboy projected that the Philippines would double its current 20,000 seats in 2004, while India would grow by 65 per cent. China, which now has 38,000 seats, is forecast to grow by 41 per cent next year.

Terry Seaford, Convergys Corporation senior director for offshore operations, predicted that from two per cent of the total U.S. contact centre spending in 2002, projects outsourced offshore would balloon to 12 per cent by 2005, with the Philippines and India getting the bulk of these projects.

“The huge demand for offshore service providers and the relatively cheaper cost of operations in countries like the Philippines remain very attractive incentives to MNCs looking to cut expenditures,” explained Sujay Chohan, Gartner Research’s vice president for offshore BPO.

“Companies have always known that there is a certain level of risk involved in investing in (the) Asia-Pacific because of the political tensions prevalent in the region, but it hasn’t stopped them so far. The India-Pakistan situation is a clear example of this. That’s why most invest in redundant sites and disaster recovery facilities,” Chohan said.

But the real issue, contended Conboy, is quality. “You can always talk about cost advantage and cultural affinity, and it’s all well and good to say that demand is increasing and that projections are good, but all this will mean nothing if you cannot provide the same value as the call centres in the U.S.,” he said.

For this to happen, two issues must be addressed: the quality of the labour pool and the hiring policies of contact centres, he stressed, pointing out that the hiring rate just cannot seem to catch up with demand.

“While the call centre industry does attract a significant number of new graduates, the numbers simply aren’t enough. We have to make employment packages more attractive, and ensure that the location of the company is not too isolated. Clearly, if the commute takes more than an hour or two, not many people will apply,” he said.

Another issue is literacy. While the literacy rate in the country is still at 94 per cent, English proficiency has slipped.

In an attempt to address these issues, the government, said President Arroyo, had the educational system re-evaluated. “We have devoted more hours to the teaching of math subjects and deepened the curriculum of our science subjects. We have made English our medium of instruction,” she said.

Arroyo said the government is trying to “deepen its ICT infrastructure” to extend support to the industry, from the call centre and BPO sectors to other areas such as software development. In this regard, the government had forged partnerships with industry associations like Outsource Philippines to help position the Philippines as an outsource hub.

As she pointed out steps that her administration has taken to produce more “knowledge workers” to support the development of the IT services industry, President Arroyo encouraged industry players in the forum to participate in bolstering the growth of the sector.

Already heeding the call of the President, industry players have begun looking at areas outside Metro Manila to set up more contact centres.

Cebu, Dumaguete and cities in Northern Luzon are seen as prospective areas by call centre operators, said Bong Borja, chairman of the Contact Centre Federation of the Philippines (CFP).

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Jim Love, Chief Content Officer, IT World Canada

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