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Call Center
Advantage
By Michael Alan Hamlin
April 15, 2002
Contrary to the knee-jerk logic too
often associated with Philippine "competitiveness," Department
of Trade & Industry (DTI) undersecretary Greg Domingo told me
last week that quality, not cost, is the Philippines principal competitive
advantage. To illustrate his argument, he said, "consider the
call center sector. We're not cheap. In fact, before long we'll
be charging more than U.S. call centers."
Call centers are a fast-growing sector in the Philippines.
DTI estimates that the total number of seats will grow from 3,000
in 2001 to 15,000 in 2004, representing 24,000 jobs and $864 million
in revenue. U.S.-based Reese Brothers, Inc. recently invested $400,000
in a new call center in the Subic Bay Freeport, formerly the largest
American military facility outside the United States. America Online,
of course, has operated a call center there for years. In all, about
22 contact centers have been set up in the country so far, as far
as I can tell. The number is a moving one.
Domingo says that local investors in the sector frequently
assume that the growth in call centers is driven by low costs compared
to the U.S. and other developed countries. In fact, that kind of
thinking is a great way to get caught in a low value-added space
where it's extremely difficult to make real money. Like any business,
the attractiveness for investors in call centers is the return on
investment.
It is true that call center representatives here are
paid somewhat less than they are in the U.S., but generally three
times as much as say, entry-level college graduates are typically
paid after graduation in other sectors. But the difference in salary
scales isn't just pocketed. Instead, it's invested in quality management
programs. For example, Domingo says that U.S. call centers typically
record and assess around five calls per customer service representative
per month.
Call centers in the Philippines generally record around
20 calls a month per representative. The calls are evaluated, graded,
and used as feedback to enhance, commend, and sustain quality service.
The differential in services also provides room for Philippines
call centers to invest in world-class equipment, pleasant working
environments, and employee benefits such as onsite day care centers
for children.
"I've been to these call centers in the United
States," Domingo says, "and they're dumps. We have great
environments, the latest equipment, and smart, motivated people."
People of course are a major part of the competitive
advantage formula for Philippines call centers. "In the U.S.,
turnover is around 100 percent annually," Domingo explains.
That makes it difficult to keep people trained, attain consistency
in product knowledge, and motivate representatives to deliver real,
timely, and polite service. "Most call center representatives
in the U.S. are high school graduates, and look at the job as a
temporary one until they get a real job," Domingo says.
The contrast with the typical call center representative
in the Philippines is dramatic. They are graduates of top universities
and look at the job as permanent or at least semi-permanent. As
a result, turnover is significantly lower, around 20 percent. The
Philippines also enjoys the advantage compared to its other Asian
neighbors of close cultural affinity with the U.S. This means call
center representatives can better empathize, laugh, and even cry
with their clients' clients. They know what makes them who they
are.
"While cost is a concern, the principal concern
of U.S. and other customers is quality," Domingo reiterates.
Indeed, poor service costs customers. Fred Wiersema, the customer
intimacy guru that wrote the book Customer Intimacy says in his
latest work, The New Market Leaders, that in today's competitive
environment customers are increasingly scarce. That makes attracting,
keeping, and expanding relationships with customers a vital strategic
concern.
"The starkest challenge facing business today
is customer scarcity," Wiersema says. There are "too many
sellers for too few buyers." And, "from a manager's viewpoint,
the change has been swift and scary. In just a few years, customers
in nearly every field have metamorphosed from dependable, pliant
shoppers to elusive, picky know-it-alls who tell you precisely what
they want, how and when they want it, and how much they will pay
for it.
"And if for some reason you are unable to gratify
them, off they go to someone who will," he concludes.
Addressing the supply glut and the customer shortage
is a matter, then, of gratifying profitable customers, and in the
process making them more profitable customers. Low-balling customer
service isn't the way to do that. For Domingo and Wiersema alike,
adding value - not providing cheap but lousy service - is the key
to sustained profitability. And the Philippines, in this case, has
the means - I mean the people - to do just that.
(Michael Alan Hamlin is the managing director of consultancy
TeamAsia and the author of three books on Asian economies and companies.
His latest book is Marketing Asian Places, of which he is co-author.
His e-mail address is mahamlin@teamasia.com.ph.)
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