Call centers in the crossfire

It may be too early to say but it seems that the growing number of call centers in the country tend to vindicate the government’s strategy of encouraging the private sector to channel investments in this "industry" as part of the Philippines‚ eventual bid to become the Asian region’s IT hub.

Call center seats stood at a measly number of about 1,000 in year 2000, but soared to 7,000 a year later. Investments grew by more than 180 percent from P565 million in 2000 to P5 billion last year.

As of April this year, new investments in call centers registered with the Board of Investments and the Philippine Economic Zone Authority already reached the P1.89-billion mark.

There are now some 37 foreign and local contact center players in the Philippines that service Fortune’s top 500 companies. Included in the list of call center providers are giants like America Online, Convergys, InfoNXX, Ambergris, C-cubed, Reese Brothers, e-PLDT, and Cyber City Services.

Low-end IT but good enough

Considered as belonging to the bottom of the information technology industry’s value rank, contact centers are often scoffed by those in the high end of the business as synonymous to the not-too-glamorous lechon manok businesses. But like the ubiquitous lechon manok, call centers are feeding lots of Filipino families.

The success of call centers in the Philippines is because of the relatively lower labor cost and the high quality service of English-speaking call center officers. Filipinos working in call centers are usually fresh college graduates who are lured by the higher pay. Among Asians – and even compared to Americans – Filipinos mind their grammar and spelling, and take pride in their English proficiency.

While most Filipino call officers are overqualified for the job, many view it as a stepping-stone to entering the global human resource market. Besides, by local standards, the pay is much better than most starting posts in even multinational companies.

Constraints to opportunities

While the work force quality is a competitive edge in this sector, the Philippines‚ overall telecommunication infrastructure and service is not up to par. On this aspect, we have remained inferior compared to other countries.

For example, it is not unusual for typhoons in the country to cause delayed text messages and drop calls. Landline communication may not be as erratic as in the past, but severe weather conditions can still bring about some decline in quality of transmission.

The quality of our IT infrastructure and our telecom service will increasingly become important to these call center investors if the country wants to keep investments coming in to achieve its target of doubling the contact center capacity to 30,000 seats this year from 15,000 seats last year.

A pawn in the telecoms war

Another threat to the growth of this sector is the ongoing row between the Philippines‚ and the United States‚ telecommunications industry. This issue started when local telecommunication firms imposed higher termination rates effective Feb. 1, which prompted the US Federal Communications Commission to order all American phone carriers to stop paying termination fees to its Philippine counterparts (BizLinks, "A tale of two bullies," May 30, 2003.)

Those in the local call center industry feel that they are being unreasonably dragged into the conflict and, like in a chess game, are finding themselves in the position of becoming a sacrificial pawn.

Which is why they are attempting to wriggle out of the telecoms row by stressing that they are not affected by the higher termination rates being imposed by local phone companies. Contact centers, for instance, rely heavily on leased lines and circuits for both data and voice connectivity. These are priced under a different structure, usually as monthly lease charges.

Ripple effects of pressure

The action of the FCC ordering the American phone carriers to stop paying termination fees to its Philippine counterparts was followed by veiled threats of some US officials that a refusal from local carriers to bring back its fees would lead to a costly standoff in the form of reduced investments.

For instance, recent statements gleaned from newspaper reports narrate how US deputy assistant trade representative Barbara Weisel reportedly warned Philippine trade undersecretary Thomas Aquino that US call centers and other investors in information technology could view the ongoing telecom dispute as a negative signal.

Weisel supposedly also said that the telecommunications dispute was sending a wrong signal that could persuade US investors to bring their call centers to other countries.

Bullying as a negotiating stance

All of the above could be just a negotiating stance as the US and Philippine telecommunication sectors try to achieve each other’s objectives. This is similar to how US officials are behaving in the current auto tax issue. They have been heard describing local automotive industry policies as being skewed, and complaining loudly that the playing field is lopsided and unfriendly to big, high-powered American cars.

We hope that eventually, an acceptable solution will be crafted to resolve the telecoms issue. In the meantime, let us leave the local call centers sector alone as they continue to provide quality service to customers and good returns to US and other foreign investors.

Traffic mess on TV

"Isyung Kalakalan at Iba Pa" on IBC-13 News (4:30 p.m. and 10:30 p.m., Monday to Friday) starting today tackles the perennial traffic problem. Several schemes have been tried but with limited success. With the onset of classes, frustration and tempers will run high again as commuters inch their way towards their destination. Is there no end to this "commuters‚ Calvary"? Watch it.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected] or at [email protected]. If you wish to view the previous columns or telecasts of "Isyung Kalakalan at Iba Pa," you may visit my website at http://bizlinks.linkedge.biz.