Contact Center

Contact center industry expects continued growth despite short labor supply
Industry associations to tackle the human resources challenge at ESP 2006 conference

(Manila, Philippines, February 16, 2006) - The local contact center industry anticipates continued growth on the strength of strong demand for its services, said Rainerio Borja, president of the Call Center Association of the Philippines (CCAP).

Borja is also president of PeopleSupport Philippines, a fast-growing contact center and business process outsourcing (BPO) services firm.

Approximately 90 call centers collectively employ around 100,000 people in the Philippines and that number increases by several thousand every month according to Borja. The industry has experienced rapid growth in the past five years, when this "sunrise industry" first caught the attention of investors and analysts alike. Then the contact center industry consisted of fewer than 10 firms and a total work force of less than 5,000.

"From 2000 to 2004, the local contact center industry posted a 100-percent annual growth, and we don't see rapid growth abating," Borja said. While the growth rate is expected to technically decrease from 100 percent to anywhere between 50 to 70 percent, Borja explains this is because the industry is now growing from a much larger base. "In terms of the increase in the number of seats, we are confident that we will be posting the same raw numbers this year."

But competition for human resources and increased industry interest in the Philippines has resulted in the decentralization of contact center locations. It's also the expected result of the capability-building and promotional efforts of regional information and communications technology (ICT) hubs such as Baguio, Cebu and Iloilo. PeopleSupport alone, one of the largest call centers in the country, employs 4,500 people, with 1,000 employed in an operations center in Cebu.

The Philippines' Offshoring Opportunity, a September 2005 report by McKinsey & Co., estimates that demand for global outsourcing services will reach $180 billion by 2010. The Philippines' outsourcing industry aims to acquire five percent of that market, making it a $10 billion industry, up from about $1.5 billion in 2004. The contact center industry is expected to account for 24% of this market according to the Business Processing Association Philippines (BPA/P), which Borja chairs.

The increasing number of multinational firms that are either locating in the Philippines or moving their business processes to the country support Borja's - and those of other key industry figures - growth expectations. Most recently, Dell, the world's largest producer of personal computers, began operations at its new call center in Manila. The center provides customer and technical support to international customers and is expected to quickly grow to 700 representatives.

Prior to locating in the Philippines, Dell outsourced similar work to third-party call centers which contributed to the firm's knowledge and appreciation of the Philippines as a center for customer relationship services. Other global brands such as General Electric, HSBC and AIG are likewise taking leveraging Philippines' quality workforce and pro-business government policies. Pressure to reduce costs and improve margins globally will continue to stimulate interest in the Philippine BPO sector among multinational brands, Borja believes.

"After watching the first wave of companies outsource to the Philippines and gain business benefits - such as cost savings and increased efficiency of operations - from that time, outsourcing has emerged as a compelling option," Borja said.

As a result, the greatest challenge that the contact center industry faces is how to develop the 60,000 qualified recruits needed to fill anticipated growth in 2006. According to the Trade Union Congress of the Philippines, call center operators intend to interview as many as 1.6 million applicants for those jobs. While the dwindling number of qualified applicants is a concern, investors and service providers say they remain enthusiastic about the Philippines.

That's in part because the contact center industry, through the Contact Center Association of the Philippines and the Business Process Association of the Philippines (BPA/P), is working closely with government to meet the challenge of developing greater numbers of qualified applicants. The association, other private sector organizations, and government are collaborating to develop IT and IT-enabled services (ITES)-centered curricula, promote English as the principal language of instruction, and strengthen math and science courses.

They are also accelerating efforts to promote the industry internationally. "Industry associations like BPA/P and CCAP are participating in the e-Services Philippines (ESP) 2006 conference and exhibition - which is only one of the government's promotional initiatives - as part of our concerted efforts to increase awareness of the Philippines as a principal provider of ITES," said BPA/P executive director Mitch Locsin.

Dubbed the premier ICT outsourcing show in Asia, ESP 2006 aims to provide a venue for local IT and ITES providers to showcase their capabilities, network with potential foreign clients, and develop strategic partnerships. ESP 2006 takes place at the Edsa Shangri-La Hotel in Mandaluyong City February 16-17, 2006, and will feature sector-specific business conferences that will run concurrently.

For its part, CCAP is presenting a business track on the contact center industry, which is titled "Our ICT Advantage: Quality Human Resources." Scheduled February 17 from 1 pm to 5 pm, the conference track will provide industry updates and consider emerging issues such as evolving client requirements, quality standards and training development. Resource speakers include Ruchira Mehrotra, director of Human Resources, Sykes Asia Pacific; Rebecca Opalinski, senior manager of Optimum Rewards, TeleTech Holdings, Inc.; Carol Dominguez, president and CEO, John Clements Consultants, Inc.; and Dan Reyes, president, Client Logic. The track will be moderated by CCAP executive director Jojo Uligan.

"We recognize the need for enhanced cooperation between the industry and the government in terms of promotional and capability-building efforts. And we are committed to pooling our resources and collaborating with the government in order to achieve our goals," Locsin said.

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