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August 13, 2006
Call centers seen to grow 30.9% a year
(Business World (Philippines) Via Thomson Dialog NewsEdge) Revenues from call center operations outsourced to the Philippines are expected to grow 30.9% per year in the next seven years, hitting $5.6 billion by end-2012 from $852.9 million as of end-2005, amid an anticipated transfer of operations from India and Australia, research firm Frost & Sullivan said in its recent industry report.
At $5.6 billion in revenues, the voice-based segment of the information technology-enabled services industry, alone, would be about one-fifth of the $27.3-billion semiconductor and electronics industry, the country's biggest exports industry to date.
Bulk of the projected revenues is expected to come from voice-based customer services like general inquiry, helpdesk and technical support, with some contribution from collection services of companies engaged in banking and finance, telecommunications and consumer goods.
Inbound call services are expected to account for bulk of transaction type in the country, since most service types revolve around customer service and technical support.
But demand for outbound services like collection and telemarketing is also expected to pick up.
According to the excerpt of the report's Philippine chapter furnished BusinessWorld, total number of agents in the country is expected to increase to 341,000 by the end of 2012 from 54,750 as of end last year, equivalent to a compounded annual growth rate (CAGR) of 29.2%.
"Throughout the period in review, it is anticipated that corporations will move their operations from India and Australia. Lower costs and better conversational skills by the Filipinos are among the driving factors for migration," Frost & Sullivan senior research analyst Siva Sundaraj said.
Unlike other call center destinations in Asia and the Pacific, particularly India, Frost & Sullivan said operating costs in the Philippines are "generally lower."
For one, the industry rate for an E1 telecom line - which can transfer data at a speed of two megabits per second - from the Philippines to the United States is anywhere from $2,500 to $3,000, lower than the $6,000- $8,000 range in India.
Still, the report also singled out real estate prices in Metro Manila as "generally high," compared to those in other countries. Today, prime buildings in key business districts in Metro Manila have monthly lease rates ranging from P600 per square meter to P700/sq.m.
To offset these costs, Frost & Sullivan said a common trend being adopted by companies now is the setting-up of centers in urban areas outside Metro Manila.
Aside from cost and the population's relative proficiency in English, the report said the growth will also be prodded by the passage of the "'do not call' legislature and regulations" in the United States, which prohibit telemarketing services for the benefit of consumers.
"There is a likelihood that a similar act will take force in Australia. Countries like the Philippines and India are likely to see an increase in the demand from global corporations requiring telemarketing services," Frost & Sullivan said.
Zeroing in on Australia, the research firm said third-party call center service providers and corporations in Australia are currently in the process of studying the feasibility of setting up operations in the Philippines.
"A similar demand is expected to come from Asian-based corporations that require English-speaking contact centers [agents]. There will be some traction [sic] from the UK, and it is expected that some corporations are in the process of shifting their call center services from India to the Philippines," Frost & Sullivan said.
"The largest adopter will still be US-based corporations. [But] some traction will be seen from most other countries, apart from Japan," the report added, noting that approximately 86.5% of services that will be outsourced to the Philippines will come from US multinationals.
Bulk of the demand for voice support will be sourced mainly from the banking and finance, telecommunications and technology industries. In addition, the research firm said information technology companies, that outsourced their regional call center operations to the Philippines, and those on the retail, healthcare, airlines and hotels will also outsource their helpdesk and customer service operations to the country.
The report said telephone will remain the preferred call center medium in the next seven years as most corporations channel their helpdesk, general inquiries and technical support to the Philippines.
"[But] as more data and back office services are being handled by outsourcers, the demand for email and Web-based services will grow in tandem," the research firm clarified.
And as banking and finance, telecommunications and consumer goods- related industries are now offering more products and services to cater to customer demands, the research firm said the demand for interactive voice response (IVR) type transactions from these industry verticals will also increase.
Frost & Sullivan has projected a CAGR of 70% in revenues from IVR-type transactions in the next seven years.
Moreover, providers are exploring the potentials of short message service (SMS) to address customer inquiries and other needs. "However, only a few outsourcers have deployed this service [SMS]...Demand for this medium is only expected to pick up towards the tail end of the period in review," it said, projecting a 55% CAGR for this medium in the next seven years.
Industry organization the Business Processing Association of the Philippines has already projected that year-on-year growth in number of call centers will fall to 50% this year, after experiencing four years of 100% year-on-year growth since the industry took off in 2000.
(source: http://www.tmcnet.com/usubmit/-call-centers-seen-grow-309-year-/2006/08/13/1791261.htm)
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