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Philippine Outsourcers Scramble for New Markets

As the Call Center and Consumers Protection Bill (US House Bill No. 3596) gains traction among U.S. lawmakers, one of the world’s leading off-shore outsourcing destinations, the Philippines, is looking for new customers – while fighting to kill the legislation.

Currently, 70% of the Philippines’ outsourcing clients are U.S. companies, reports ABS-CBN News. And with a goal of giving jobs to more than four million Filipinos by 2016, leaders are focusing on other markets such as Australia, Canada and the U.K. to close the gap that the U.S. legislation could create.

Meanwhile, the Philippines won’t give up on the U.S. Eastern Samar representative Ben Evardone, chairman of the House Committee on Public Information has urged President Benigno Aqiuino III to send a team to the U.S. to lobby against the legislation. “I believe this [legislation] will kill the BPO industry in the country,” Evardone told Manila Bulletin Publishing Corporation.

Is It Cheaper to Off-Shore Contact Centers?

In a recent ICMI QuickPoll, 24% of call center professionals said neither government penalties nor customer sentiment backlash would keep them from sending call centers offshore – “You just can’t beat the cost benefits of offshoring.” But is that really true?

Mary Murcott, CEO of the U.S. outsourcer NOVO 1, says absolutely not. “Offshoring is 15% more expensive than home-shoring when you figure the total cost of ownership,” she says, adding that offshoring may also be costing in customer loyalty and opportunities to cross-sell and up-sell. “They [offshore BPOs] say I’m scary but that I’m right.”

Murcott says that legislative penalties and customer sentiment shouldn’t be driving the decision to bring call centers home; rather, CEOs need help understanding an operating model that takes overall cost into account.

What’s Driving Down the Total Cost of Ownership?

Two major trends in the call center industry are having a significant impact on total cost of ownership: home agents and cloud (hosted) services.

Home Agents: Home agents are 20% less expensive, says Murcott, and you can staff below peak and keep agents on call to work one to three hours to handle peak traffic when you need them. Work-at-home programs also allow organizations to take advantage of a larger, more diverse workforce pool. Murcott offers the example of the over-40 workforce: “The over-40s have a strong work ethic, you see lower attrition among them and they’re efficient. But going to work in a call center has a certain stigma for them. Working from home removes that stigma.”

Hosted or Cloud Services: Hosted services, or cloud services, as they’re increasingly known today, offer significant savings in total cost of ownership.

Savings offered by hosted call center services, as well as the potential savings in real estate costs, cover the costs to the company. Hosted services expand the population call centers are able to search for people with the necessary skills by allowing remote agents to connect and work from their local area. “Using normal attrition, the call center can replace agents that leave with agents in a lower cost labor market,” according to a recent ICMI whitepaper. The saving in labor costs for a 100-seat call center with a 30% attrition rate over a period of two years, where the salary reduction is $3.00 per hour, would be nearly $400,000.

While the cloud may be making it easier to include home agents in the mix, there’s still some concern over moving to hosted services for many organizations. These concerns will have to be addressed and overcome for centers to realize the cost benefits of following this trend.

Bringing the Money Home

The bottom line, says Murcott, is that offshoring will still be attractive to uneducated executives. Until they look for and put to use advances in call center operations, they’ll be shelling out the dough to other countries. Penalties may be a deterrent to some, and customer sentiment and loyalty will jar others into homebound action, but until they realize the true cost and control benefits of home-shoring, the Philippines, India and other offshore outsource leaders will still have a U.S. market to rely on.

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Mina Karpouzas — 2:59PM on Feb 9, 2012

I would have to say that whilst your article raises good points and most definitely some good suggestions on initiatives to drive back call centres, you have left a rather tasteless aroma by stating -uneducated executives. You would have to be kidding yourself if you honestly believed that it was that easy to have a business case approved to send a call centre offshore. It takes a lot more than that. Are you familiar with what needs to be justified in a business case? Honestly it takes a lot more than putting fluffy bits and pieces. It takes numbers and these numbers are cost to operate, call cost etc; Please next time when you write an article don't tarnish yourself by making others sound like we don't know what we are doing. Thanks.

Bob Jones — 1:01PM on Feb 9, 2012

Holly, Holly. You are sadly mistaken. Please check your facts before you embarrass yourself.

Nobody, I mean no one that works in the Outsourcing industry in the Philippines is even worried about that bill, at all!. All empty threats. Almost the same senerio in 2004, 2008 and now in 2012. No one here is scrambling regarding Obama's bill. They are not scared one bit, we know why and we all know what will happen. Companies will always do what's best for them, it will always be about the bottom line. Let's not kid ourselves.

If you can't beat em', join em'! That's why I'm hear and I'm planning to retire when I'm 50! BTW, I'm american, working here for 10 years.

Edward Smith — 2:41PM on Oct 10, 2012

Philippines have lots of quality BPO companies. For sure AICOM, our chosen provider, is a cream of the crop.