The Philippines: Giving India A Run For Its
BY TRACEY E. SCHELMETIC, CUSTOMER
I was recently invited to attend a press conference organized by Source
One Communications and its new partner, Philippines-based contact center
operator Customer Contact Center, Inc. The two companies have teamed to form
an entity called Source One Communications Asia, Inc., which will operate
out of Manila, the Philippines, and will offer both inbound and outbound
teleservices in English to the U.S. and Canadian markets.
In addition to formally marking the announcement of the new Manila-based
company, the conference's goal was to familiarize the U.S. call center
media with the concept of the Philippines as an up-and-coming challenger to
India's dominance as a foreign provider of voice and Web-based outsourced
customer care services. To that end, several ministers of the Philippines
government were present, and the coup de grace was the appearance of the
President of the Philippines, Gloria Macapagal-Arroyo.
The Philippines, a nation comprised of some 7,000 islands in Southeast
Asia, is in the process of settling down after a somewhat bumpy history
(though political problems remain endemic in the far southern regions of the
country). President Macapagal-Arroyo, sworn in just last year, has publicly
declared her goal of bringing the country's business climate in step with
the developed world. To that end, she has identified what she refers to as
ICT (information and communications technologies) as the Philippines'
primary business opportunity.
'IT Is Our Number One Way To Defeat Poverty'
President Macapagal-Arroyo spoke candidly about her government's goal
to foster in an age of IT in the Philippines, underscoring the fact that she
intends to help make information and communication technologies the country's
future. 'Every time I visit schools, I tell the students, 'go ICT, not
administration or communications, but ICT.'' She personally chairs the
country's IT and e-commerce councils, and her presence at the press
conference, held at the Waldorf-Astoria in New York City and which was fit
in to her intended schedule of meeting with President Bush in Washington,
spoke to her commitment.
The facts presented at the conference were noteworthy. The Philippines
has a skilled labor pool 29 million strong, and a literacy rate of 94
percent. Seventy-two percent of the Philippines' population is fluent in
'American English' (more on that later) and it is the third-largest
English-speaking country in the world.
The English spoken in the Philippines is American-style, as opposed to
India's British-style English. This is due primarily to the fact that the
country, first a colony of Spain from the sixteenth to the nineteenth
centuries, became an American protectorate when the U.S. defeated Spain in
the Spanish-American war of 1898. (The Philippines fought on the side of the
U.S. during this war.) The U.S. purchased from Spain the land occupied by
the Philippines after the war, and the country's journey to independence
took place during the first half of the twentieth century, full independence
being achieved post-WWII in 1946.
True development was stunted in the last several decades, most notably
due to the infamous and well-shod rule of Ferdinand Marcos from 1965 to
1986. Subsequent presidents, including Cory Aquino and Fidel Ramos, focused
largely on the reestablishment of democracy to the country, which helped
from a social standpoint but did little to boost the battered and bruised
economy. President Macapagal-Arroyo has made it her number-one goal to wipe
out poverty and corruption, and has thus far proved herself to be a tireless
whirlwind of economy-boosting activities for her country.
Open Market Economy
As President Macapagal-Arroyo and her ministers could have guessed, the
words 'tax holiday' go a great way in attracting the attention of
foreign investment. Many developing countries do not allow 100 percent
foreign direct investment (FDI), which can make companies about to stake
millions or billions of dollars into an overseas venture nervous. The
Philippine government has decided to allow 100 percent FDI, and is currently
offering four- to eight-year tax holidays, as well as tax and duty
exemptions on imported capital, to companies setting up business on Filipino
soil and hiring local workers.
According to government ministers, there are 100,000 IT-literate
graduates annually entering the workforce in the Philippines, and turnover
tends to be low. Additionally, it was pointed out that a call center agent's
salary is one-fifth of his or her American call center counterpart, and the
average salary of a manager is one-seventh of that of an American call
center manager. The total variable cost of operating a call center in the
Philippines as opposed to the U.S. was quoted as one-third. President
Macapagal-Arroyo stated that one of the country's current priorities is
the certification of programmers and the strengthening of math, science and
English in schools. A final bonus in the Philippines' language monopoly is
the presence of its ethnic Chinese population, which brings the globally
spoken Mandarin and Fukienese dialects into the call center.
Government ministers were particularly keen to point out that because of
India's position as a former colony of the British Empire, most
English-speaking contact center workers in that country speak with a
decidedly British flair. Because of the Philippines' position as a former
U.S. protectorate, the style of English taught in schools is American (a
distinction particularly important to companies who manufacture aluminum,
elevators or wrenches, if they'd rather not be trying to sell aluminium,
lifts or spanners. And the pants-versus-trousers discussion is best left to
the imagination.) Additionally, Filipino citizens, according to the
conference presenters, are more versed in American culture than contact
center workers in India.
'We Want To Promote Convergence'
Following India's example, the Philippines has begun a no-holds-barred
venture to build infrastructure, Western-style IT 'parks' and
high-quality, low-cost bandwidth. Offshore customer contact services would
be impossible without the cost savings of voice over Internet Protocol
(VoIP), and any country wishing to attract Western businesses must be savvy
enough to realize that in the end, it may all come down to bandwidth.
President Macapagal-Arroyo stated, 'I would like to have the highest
Internet penetration in our part of the world in a couple of years.' This
is a goal she and her government currently seem determined to achieve.
It's not hard to imagine that the Philippines will present a serious
challenge to India's dominance in Asia of the outsourced contact center
market. The breakneck speed at which the present government is moving to put
the people and processes in place seems to attest to this, not to mention
the industrious goals and activities of its president. Asked about the
country's lack of an intellectual property law and if she thought that
would deter Western companies from locating in the Philippines, the
President fixed the ill-informed questioner with a stern look. 'We do have
an intellectual property law,' she responded. 'I authored it.'
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