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Last year, BPO companies earned more than US$3.5 billion employing about 230,000 workers. The call center sub-sector is the major component of the BPO industry, but other BPO services include medical transcription, software development, engineering and architectural design, human resource management services, legal transcription, back office and digital content.
The rise of the BPO industry reflects the phenomenal growth of the service sector. Unlike other Asian countries, the Philippine industrial and manufacturing sectors have been declining while the service sector increased significantly since the 1980s. In fact, half of the country's employed labor force that used to be in agriculture is now part of the service sector.
The Business Processing Association of the Philippines is optimistic about the prospects of the BPO industry. According to its projection, BPO companies will employ more than 900,000 workers and revenues will reach US$12 billion in the next three years.
It also has an interesting study about the direct and indirect benefits of the BPO industry to the Philippine economy. For example, by the year 2010, BPO companies will spend US$5 billion in annual salaries and benefits, 2.4 billion Big Mac meals will be consumed, 230,000 middle-class houses will be built, 10 million iPods will be sold, 190 million Bench jeans will be used and 700,000 classrooms will be constructed from tax earnings.
Why is the Philippines an ideal investment destination for BPO companies? As the world's third largest English-speaking country, the Philippines has a large labor pool of college graduates. The Philippines also offers the second lowest cost of operating a call center seat in the world next to India.
But industry players are also worried that the Philippines is quickly losing its competitiveness to other countries. They cite the "insufficient quantity of suitable and willing talent to fuel growth, lack of office space to achieve BPO target expansion, persistent perception of Philippines as a high-risk investment and existence of well-organized, well-resourced and highly aspirational competitors" (e.g. India, China).
Prof. Jorge Sibal quoted a 2005 study which identified the prevalence of natural disasters, security threats, data theft, high levels of corruption, slow government bureaucracy, high electricity costs, expensive telecommunications systems and the digital divide in the country as factors why the Philippines received a poor investment profile.
BPO companies are also complaining about the deteriorating English language proficiency among the youth. They blame the mismatch between the training of students and the actual needs of the industry. Alarmed by this issue, President Gloria Arroyo signed an Executive Order which made the English language as the medium of instruction in schools. Education agencies were instructed to improve training infrastructure for call center agents. Some public universities have begun hosting call center operations and a new curriculum was offered to students who are eager to work in call centers in the future.
BPO companies may be offering higher salaries but they also confront labor issues. The United States is the biggest market of BPO industry which requires call center operations during the evening. Graveyard shift workers are exposed to many health risks. They are also deprived of "socialization opportunities" with family and friends. The call center sub-sector is changing the nightlife of Manila. Bars, restaurants and convenience stores are open every morning to accommodate the night workers.
There is almost no labor union in BPO companies. Collective bargaining agreements can improve salaries and benefits of call center agents, especially the night shift workers. BPO employees admit that there are many companies which discourage the formation of labor unions.
A 2004 study highlighted some of the frustrating work conditions encountered by call center agents: "Aside from working at ungodly hours, some work at the computer 7.5 hours a day, giving the same answers to the same questions. Workers are exposed to racist and insulting remarks and are not allowed to retaliate or hang up without the team leader's permission. When dealing with an irate caller, they have to read a script three times to warn the caller of their improper behavior before they can drop the call. Worst, they are not supposed to be Filipinos when they talk to their callers."
Wilson Wy Tiu of the Philippine Employers and Labor Solidarity Partnership believes call center agents require psychiatric counseling. He thinks that mimicking a foreign culture every day has a negative impact on the mental health of workers.
Dr. Edgardo Espiritu, an economist and former government minister, cautions the current administration against relying on the BPO as a "major driver of sustained growth." He is worried that call centers make the Philippine "growth prospects too dependent on foreign economic cycles." He warns that BPO investments do not offer much opportunity in terms of technology transfers and linkages with other domestic industries. He notes that the BPO industry has a "limiting effect on the development of human resources in terms of acquiring new learning and skills."
Aside from nursing, call center jobs will remain the most popular career options for young Filipinos in the next few years. This is indicative of the failure of the domestic economy to produce adequate opportunities for highly skilled college graduates. The BPO industry will continue to raise government revenues and individual incomes while encouraging Filipinos to stay in the country.
But it is also dangerous to exaggerate the importance of the BPO industry. The government should put more emphasis on propelling the domestic economy as a whole rather than making public institutions and laws serve the needs of BPO companies.
It is not certain how long outsourcing will remain a profitable industry. Foreign firms can decide tomorrow if they want to shift outsourcing operations somewhere else. If that day comes, what will happen to call center academies? What is the alternative employment for English-speaking and insomniac call center agents?
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(Mong Palatino, 27, is a Filipino youth activist, correspondent for Global Voices and news editor of Yehey!, a Philippine-based web portal. He can be reached at mongpalatino@gmail.com. His website is www.mongpalatino.motime.com. ©Copyright Mong Palatino.)
