TMCnet Feature
July 21, 2021

Call Center Outsourcing Philippines: The 70% Savings Trap



If a US$6-8 per hour rate for call center outsourcing work in the Philippines sounds too good to be true, well, that’s because it simply is. It’s an attractive figure, for sure, but a promise of 70% cost savings is simply luring your company into a trap. The loss in quality can never compensate for the reductions in cost.



Of course, the origin of outsourcing is rooted in companies’ quests to improve their operational efficiencies while saving money in the process. Call center outsourcing to the Philippines has provided just that—and given that this industry continues to thrive thanks to the plethora of talent, it’s no wonder that companies from the US and other countries keeping comin’ back, as the song goes, to Manila.

However, as any business leader knows, there is a delicate balance between achieving cost savings and maintaining high standards of quality when outsourcing call center work to the Philippines. If long-term success is an organization’s goal—and it usually is—then forming sustainable partnerships with the right call center vendors is essential.

Bear in mind that while the Philippines’ call center outsourcing industry as a whole has been highly successful, not all companies in this specialized field are cut from the same cloth. “It is important to note that the growth and success of the country’s contact center outsourcing industry been primarily driven by globally leading third-party outsourcing providers and captive operators, not small-scale ones.

“Taking the low-cost route is almost always a recipe for disaster if quality is crucial to your organization’s goals,” says Ralf Ellspermann, CEO of PITON-Global, an award-winning call center in the Philippines.

The promise of 70% savings is nothing but a fairy tale with no happy end, but if you analyze the market for offshore solutions, the leading contact centers in the Philippines are consistently saving companies half of what they would normally spend on the same kind of service in the US.

“Gunning for an additional discount of 20% will force companies to partner with low-cost providers that compete on price, not people, processes, and technologies. In short, they are sacrificing quality,” says Ellspermann.

“Low-cost outsourcing cannot work in the long term. As with any business, high-quality services always come with a cost. US$6 an hour is what a highly experienced and English-proficient call center agent makes.  So, it should be common sense that a call center charging clients US$6-8 per hour for voice-based services has to work with sub-par agents, infrastructure, and technologies. They simply can’t afford to hire and retain the country’s top talent. And with C-, D-, and F-grade agents, it’s impossible to deliver an A-grade customer experience. That’s the bottom line, and you don’t have to be a rocket scientist to figure it out,” Ellspermann explains. “The 70% cost savings trap just sets companies up for failure.”

Companies outsourcing call center work to the Philippines are likely banking on the idea that Filipinos have a high level of English language proficiency on a national scale—much higher than their Southeast Asian neighbors.

However, those with experience outsourcing to call centers in the Philippines know that not all Filipinos have the same level of conversational proficiency. Depending on their background, some are fluent and can even adopt an American accent—these are mostly individuals who come from more urban areas—while others are not really adept at conducting a basic conversation in English.

Aside from communication skills, operating efficiencies are at risk when a company looks at call center outsourcing to the Philippines through a cost-savings lens. The more experienced companies naturally charge more for their services; those that just offer steep discounts might not be fully equipped to address companies’ pain points.

Lastly, outsourcing companies running on a shoestring have no wiggle room to invest in employee engagement activities. In an industry plagued by attrition, call center companies in the Philippines that are worth their salt know that happy and motivated employees perform better, which equates to satisfied customers—something that can only happen if the agents are compensated well.

“Any business that enters a partnership, be it in the call center outsourcing industry or not, should do so with a win-win scenario in mind. Cost savings should never be the end-all and be-all of your outsourcing goals. A well-planned and executed offshore call center outsourcing strategy paired with a capable and experienced provider will always lead to cost savings. But achieving high quality results should always be the top priority. In a hyper-competitive marketplace, cost reductions are meaningless if the customer experience takes a hit,” Ellspermann says.



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