Philippine call center companies should treat the recession in the United States as an opportunity rather than as an obstacle for growth and expansion, industry experts and an economist said.

During the Call Center Expo and Conference held recently, executives from call center companies said they believe that the ongoing recession in the United States, where a huge chunk of Philippine business process outsourcing or BPO clients are, will be beneficial in the long run since it will create more opportunities for the country.

Dan Reyes, president of Sitel and director of the Contact Center Association of the Philippines (CCAP) said that the US recession may have some negative impact only in the immediate term.

“There may be reduced demand in certain industries but the need to reduce costs may likely lead to more outsourced work to countries like the Philippines,” he said.

Felipe Medalla, an economics professor at the University of the Philippines, said that the BPO industry is “recession proof”.

“A recession pushes the company to cut cost especially when the price of oil is high,” Medalla said.

Reyes, meanwhile, said call center companies are looking beyond the US—where 90 percent of call center clients are—and hope to tap European and Asia-Pacific markets like Australia, New Zealand and the United Kingdom.

“A long history of dependence on the US market is now a major liability,” said Medalla.

Reyes said that the recognition received by the Philippines as a top outsourcing destination can help attract more potential investments.

The Philippines has been named by the UK National Outsourcing Association as the outsourcing destination for 2007.

Cost-competitive

Experts believe that the Philippines' cost-competitiveness also attracts more investment in the BPO industry.

The Philippines is in the top 10 of the 2007 A.T. Kearney Global Services Location Index, which compares cost-competitiveness among countries.

“In the Philippines, growth in the sector and currency appreciation have driven up wages in U.S. dollar terms by as much as 30 percent, reducing relative cost advantage. Nevertheless, the Philippines remains one of the lowest wage locations in the Index and now offers the lowest telecom costs of any country in the Index,” the study said.

“Because of our cost-competitiveness, the Philippines is the place to be,” said Medalla.

The Philippines ranked 8th behind China (2nd), Malaysia (3rd), Thailand (4th), Brazil (5th), Indonesia (6th) and top outsourcing destination India (1st).

Effects of the local economy

The economy, Reyes said, has hurt some of the companies recently. “There have been some pressures on margins but companies have resorted to hedging by entering into forward contracts.”

Reyes added that the recent appreciation of the US dollar to the P44-P45 level eased any adverse impact of price pressures and economic slowdown.

“If anything, the economic slowdown and price pressures should lead companies to improve operational efficiencies and cost structure,” Reyes said.

Healthy growth

The CCAP, meanwhile, estimates that the call center industry will grow at a healthy clip. It estimates that in terms of seats and employees, the industry will grow 31 percent by year-end.

Revenues, meanwhile, are expected to reach $4.35 million by the end of 2008 and will account for two-thirds of the projected 2008 BPO revenue of US$6.7 billion.

Generating the biggest revenue and employing the most number of workers, call centers comprise the biggest sector in the Philippine BPO industry.

Last year, its revenue accounted for 73 percent of the BPO industry’s US$4.8 billion while its employees accounted for 60 percent of the 300,000 workforce of the entire industry. (abs-cbnNEWS.com/Newsbreak)

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