Rise of the Call Center

One of the most important pieces of customer relations management is the handling of calls from customers. Many American companies have found that they can reduce the costs of handling these calls by outsourcing these services to countries such as the Philippines. In today’s economy, consumers increasingly use the telephone or internet to purchase goods, inquire about transactions, and obtain technical support. It is estimated that more than 70% of the interactions between the customer and a company occur through call centers.

American companies can reduce call center costs 5% by outsourcing to Canada, 10% to Latin America, and up to 30% in some Asian countries such as India or the Philippines. South Africa is also beginning to emerge as a popular call center provider. BPO (business process outsourcing) has enabled foreign companies to reduce their customer service costs a great deal while improving the quality of their customer service at the same time. One of the reasons for the popularity of Philippines for call centers is the widespread use of English, the lower costs of labor, and an ability of the Filipinos to outperform workers from other countries with respect to achieving customer satisfaction.

For the Philippines, the growth of call centers has created opportunities for employment and better than normal wages (10-15,000 pesos starting wage) for the capable call center employee. Call centers attract foreign investment that flows into the country that benefits other companies that support call center operations. And today, India and the Philippines are the major leaders in offshore call center services.

However, the news is not entirely rosy for this growing industry. A number of disturbing trends are emerging that suggest that changes may be in the works for this industry.

Protectionism: in countries such as the USA, there have been efforts to penalize companies that outsource work to foreign countries. Often lead by labor unions, many politicians have supported legislation that attempt to place limits on outsourcing. One of the biggest fears driving this protectionist movement is the concern that American jobs are being lost to foreign countries.

Competition: one of the countries that is beginning to emerge as a major provider for business process outsourcing is China which seems able to provide even lower costs (up to 30% less) than the Philippines for various BPO services. Some experts believe that China will ultimately catch up to India and the Philippines in the future and possibly compete for call center services.

Attrition: many of the workers who take call center jobs are in actuality “under-employed.” Some are engineers or nurses who are only taking on the job of a call center operator as a temporary step until they can find a better job. For other workers, the requirement of working graveyard shifts make the work less than ideal, particularly for those with family responsibilities. Others, simply find the work boring or stressful. As a result, the attrition rate in call centers is close to 20% and many call center operations find it difficult to retain workers.

Although call centers have been of benefit to the Philippines by creating new jobs and bringing in foreign investment, there are potential problems that the industry will have to face to continue to be at the forefront of business process outsourcing.

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