Leadership and Democracy LabWestern Social Science

The Philippines: The New Call-Centre Capital of the World?

Primary Article Analysts: Ma’ailah Blackwood

Team Leader: Ma’ailah Blackwood

The Philippine economy has experienced significant development in recent years, and it currently has the potential to become a “tech tiger” in Southeast Asia—that is, a leading producer of technology and technical services within the region. While the Philippine market is relatively open for new and more innovative technology investments, the primary technology industry has focused on Business Process Outsourcing (BPO), which is also known as Information Technology and Business Process Management (IT-BPM).

BPO refers to the designation of specific jobs to third party contract workers. Usually, companies will recruit a BPO provider to fulfill certain tasks such as payroll, human resources, accounting, telemarketing, customer service and technical support. BPO is often used as a cost saving measure, and in recent years the trend has been for American and Canadian companies to outsource these types of jobs to Asia in general and the Philippines in particular due to the region’s low average wage.

It is in this industry that the Philippines has had the chance to emerge as a leader in the BPO industry. The Philippines’ focus on the BPO industry has positioned the country as a strong competitor to India, the traditional leader in this sector. While the size of the BPO industry in the Philippines is smaller than that of India’s (when measured in dollar value), the Philippines has surpassed India in the voice and call-center sub-industry.

The BPO industry has continued to grow at an impressive rate generating $18.4 billion in revenue in 2014. Revenue in 2016 is expected to hit $25 billion, and by 2020 the Philippines will make $55 billion in revenue through the BPO industry. As a result of this growing industry, the Philippine GDP has similarly increased, and over one million jobs have been created.

Call centre jobs employ approximately 1.2 million people, making up about 8% of the country’s GDP. Most workers in this industry are highly educated as call centre operators must be highly skilled. English is usually a requirement as well, as most Philippine call centres service American customers. Starting salaries for call centre workers are about $400 per month, which is double the wage of average service jobs in the Philippines.

The BPO industry is poised to grow and continue benefiting the Philippine economy. As this is one of the fastest growing industries in the country, the government has been supportive of call centre creation and the introduction of foreign companies to the country, maintaining a positive working relationship with government agencies will make accessing this market this market easier for investors and corporations. The current Philippine political atmosphere is rather uncertain due to the unpredictable nature of President Duterte; specifically, his habit of making problematic remarks about foreign leaders. Many political commentators have dubbed his rhetoric as "anti-American," which may have long-term implications the countries' business relationship with the investors from the west. The best things investor can do to mitigation this unpredictability would through consultation with the political entities both in their home countries and within in the Philippines.

Additionally, while the political arena has numerous with uncertainties, another area of importance for investors societies outlook on the industry as a whole.  In this context, the Filipino workforce contains individuals who are eager and willing to take part in this new emerging job market. Thus, by maintaining friendly working relationships with the employees in this industry, the likelihood of success in the face of political uncertainties will increase.