A Telus call centre in a Manila mall. The Philippines has overtaken India as the world’s No. 1 call centre outsourcing country. (Andy Hoffman/The Globe and Mail)

You call them when you are angry. You call them when you’re frustrated – when you can’t find what you’re looking for. You call them when you need something. And you call them when that thing that you “paid good money for” isn’t working the way it’s supposed to.

Every day, more than a million North Americans dial corporate customer service numbers to complain, to inquire, to activate accounts, to order products or to seek help. And every evening, hundreds of thousands of young workers pour into call centres more than 12,000 kilometres away in the Philippines, to be that friendly, patient voice on the other end of the line.

Endowed with a trove of young, well-educated workers who speak “American-style” English, the call centre industry in the Philippines is thriving. Last year, the southeast Asian country quietly overtook India to become the call centre capital of the world.

Manila’s call centre industry works when the rest of the city sleeps. The busiest time begins at around midnight.

On a recent Monday evening in the Fort Bonafacio district, hundreds of call centre workers sit clustered together fielding calls from the United States. They are providing 411 information services for a telephone company.

“For what city?” says a young woman in clear, unaccented English. “Please hold,” she says before a few clicks of a keyboard give her an address in a rural section of a northeastern state. Within seconds, she’s moved on to the next call. Neither she, nor any of her colleagues look much older than 25.

Economically hobbled for decades by systemic political corruption, high unemployment and subpar GDP growth, the Philippines was long referred to as “the sick man of Asia.” But the country, with a population close to 100 million scattered across more than 7,000 islands, is now capitalizing on a seismic shift in global business practices.

Labour pools in Asia are become increasingly transient as companies seek to reduce costs. Lured by competitive wages and an ability to maintain or even improve the quality of service, a portion of the call centre sector is shifting from India to the Philippines in much the same way that parts of the textile industry has relocated to Vietnam and Bangladesh in response to rising manufacturing costs in China.

At the same time, many Western companies are still facing a persistently uncertain economic outlook and remain reluctant to invest the capital needed to expand and hire new employees. Costs continue to be cut wherever they can.

Few industries have benefitted more from this prolonged corporate austerity than what is euphemistically called the Business Process Outsourcing (BPO) sector. Western companies are now outsourcing everything from back office services to forms processing to customer care. Call centres, such as the ones now flourishing in the Philippines, are the front lines of the $130-billion global BPO industry that has grown by more than 10 per cent a year since 2005.

The industry is expanding even faster in the Philippines, growing by an average annual rate of 28 per cent for the past six years. In 2011, sector-wide revenues topped $11-billion (U.S.), accounting for about 4 per cent of the country’s GDP. Almost 640,000 Filipinos work in the industry and 75 per cent of those are located in the capital region of Metro Manila.

Calls from North America are routed to places like Market! Market!, a cavernous mall in Fort Bonifacio. Teeming with shoppers and people looking for a respite from the city’s oppressive temperatures during the day, the mall’s top two floors continue to hum at night. They are home to about 3,000 workers at a massive call centre operated by Telus International, an arm of Canada’s second largest telecommunications company, Vancouver-based Telus Corp.

In a business venture that is rarely talked about publicly by its Canadian corporate parent, Telus International has placed a weighty bet on the Philippines, making it the cornerstone of its outsourcing operations. It acquired a local company named Ambergris Solutions Inc. back in 2005, slightly ahead of the industry’s Philippine influx. It now operates three call centres in Manila that employ as many as 8,500 workers during the busiest parts of the year. Telus’ investment in the Philippines makes it a rare breed among Canadian companies. Canada and the Philippines share a deep and growing tie, as the Philippines has become the biggest country-source of immigrants to Canada. But few Canadian companies are active there.

Ahead of the 2005 deal, Telus briefly considered India as a potential destination for its first call centres outside of Canada. It quickly zeroed in on the Philippines, however, which presented much better prospects, according to Telus International president Jeffery Puritt.

India “was already a heated market and we would be a slow arrival there,” Mr. Puritt says. “We weren’t convinced the longer-term financial opportunity was really going to be in our best interest. The Philippines was just then coming into its own.”

Seven years on, Telus International is now grappling with both its own success in the Philippines and the soaring growth of the local industry. From a base of 15 customers in 2005, Mr. Puritt says the company’s Philippines operations now provide services to about 40 clients. At the same time, revenue and profitability in the Philippines have quadrupled.

Telus’ clients include several North American telecom and cable companies. Call centre workers in the Philippines provide services such as 411, billing, and technical support to customers. Other clients serviced from the Philippines include utilities and electronics firms. It also handles support for one of the world’s largest online video game makers.

Ironically, it is the Philippines’ colonial past (it was a U.S. colony for much of the 20th century and before that endured more than 300 years of Spanish rule), that has helped foster the rise of the call centre. Young Filipinos are steeped in American pop culture, from music to movies to NBA basketball. Compared to their counterparts in India, they speak English with an accent that is more American and “more pleasing to North Americans,” says Jeffrey Uthoff, the president of Telus International’s Philippines operations.

Attracting and retaining qualified workers remains Telus International’s biggest challenge. Experienced call centre workers are in high demand in Manila and hopping from job to job in search of higher pay and better benefits is common. The industry’s average annual attrition rate is a staggering 61 per cent. Telus says it has an attrition rate of less than 50 per cent, but the company is now going to extraordinary lengths to keep employees happy.

Telus staff can, for example, work part-time toward a university degree at the office. Partnering with local schools, the company heavily subsidizes tuition costs and brings professors to its call centres during the evenings to deliver lectures and lessons to employees before they start their shift. The company calls the program Telus International University.

Almost all of the global outsourcing industry heavyweights – firms such as Infosys Ltd., Convergys Corp. and even a unit of the Indian multinational conglomerate Tata Group – have now launched operations in the Philippines. While India remains the dominant player in software and information technology (IT) support, the Philippines is now the preferred destination for voice-based customer service.

It’s an economic advance that is helping reshape a country that has endured decades of weak growth, corruption and persistent poverty. Common among industry executives and many government officials is a belief that call centres are contributing to the creation of a new middle class that could help propel the Philippines to join the economic ascent of its neighbours, including Thailand and Vietnam.

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BY THE NUMBERS

640,000 – number of Filipinos working in call centres or Business Process Outsourcing sector in 2011.

$11-billion – industry revenues in 2011.

1.1 million – number of Filipinos forecast to be working in the sector by 2016.

$15-billion – industry revenue projected by 2016.

Source: Business Processing Association of the Philippines

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Telus International’s big bet on the Philippines:

8,500 – number of Telus International employees in the Philippines (during peak periods).

28,000 – number of Telus Corp. employees in Canada.

5 – number of countries where Telus operates call centres – Canada, United States (Las Vegas), El Salvador, Guatemala and the Philippines.

15 per cent – cost savings of operating a call centre in the Philippines compared to Latin America.

15 per cent – cost savings of operating a call centre in Latin America compared to North America.

Source: Telus International

The head of Telus International’s Philippines operations, Jeffrey Uthoff, says it depends on the client. Some companies don’t want agents to reveal where they are. Telus says it would prefer if agents were able to say they are in the Philippines if asked.

Published on Saturday, Apr. 07, 2012 8:00AM EDT

Source: Asia Pacific Reporting – Globe and Mail