New Challenges for World’s Outsourcing

Philippines’ call centres will have to reinvent itself as big firms switch to ‘virtual agents’. The number of live agents will be greatly reduced because of the efficiencies offered by these new technologies," he said. According to a recent Forrester Report, only 28 per cent of Americans prefer to call companies and talk to an agent. Most would rather look for answers themselves by trawling through websites.

Ella Ong had been bouncing from one unsatisfying clerical job to another before she landed at the Philippine unit of a California-based call centre in 2007, mainly through her credentials as a liberal arts major.

Seven years on, Ong is still with the same firm, one of a million workers that the Philippines' business process outsourcing (BPO) industry now employs.

"I've been able to keep my life together because of this job," said Ong, a 41-year-old single mother of three. Call centres, and the larger BPO industry, are doing much more than keeping humble lives like hers together.

They are fuelling the torrid growth that the Philippines has been enjoying for a decade. Central bank data shows that the industry accounted for about 5.4 per cent of GDP in 2011, soaring from just 1.4 per cent in 2004, and it is forecast to contribute up to 10 per cent by 2016.

Business outsourcing posted US$13.3 billion in revenues last year, 10 times the US$1.3 billion it earned in 2004, and it is looking at a figure exceeding US$18 billion by the end of next year.

Over a million, mostly young, professionals are now working for outsourcing companies, more than 10 times the 94,488 labour force surveyed in 2004. By 2016, some 1.3 million will be in the industry, about 3 per cent of the Philippines' total workforce.

The BPO industry has also sparked a property boom. Property consultant KMC MAC Group said call centres fill more than half of the office space being opened in metropolitan Manila, and 90 per cent of the demand outside the capital comes from BPO companies.

Analysts see the BPO industry humming along for five to 10 more years, mainly on strong demand for voice services. After that, everything will depend on how quickly the industry can move beyond just answering the world's calls. Tech analyst Rajiv Rao claims that pure voice is fast fading, and that is all the Philippines really offers now.

Industry data shows that call centres - the businesses that make money off answering calls and dealing with customer complaints - made up 77 per cent of the Philippine BPO industry's revenues of US$13.3 billion last year. Seven in 10 workers in the BPO industry work for the Philippines' more than 1,000 call centres.

"The Philippines will continue to have a niche, but not the whole industry as it is today," said former IBM Philippines president Roberto Romulo.

Four years ago, the Philippines dislodged India as the world's king of call centres. Its phenomenal rise was driven by a workforce deeply influenced by 48 years of US occupation and a culture drenched with everything American. That has made Filipinos natural mimics of American accents, and it was that accent that the outsourcing world preferred. An accent alone, though, will not carry the Philippines over the long haul.

Research has shown that callers would rather interact with an AI (artificial intelligence) rather than talk to a human being at the other end of a line. According to a recent Forrester Report, only 28 per cent of Americans prefer to call companies and talk to an agent. Most would rather look for answers themselves by trawling through websites.

Big companies like Vodafone and eBay are already employing "virtual agents" that can handle basic queries like "What's my credit card balance?" Companies like New York-based IPSoft are going a step further and working on not just "virtual agents" but also "virtual engineers".

In June, it rolled out "Amelia" to some 600 clients. The self-learning "virtual engineer" can work in 10 languages and solve engineering problems much faster than humans can. As far back as 2011, outsourcing guru Tom Topolinski had been predicting the "rise of the machines" in the BPO industry.

"Yes, we will still need 'butts in seats' or live agents; however, the number of live agents will be greatly reduced because of the efficiencies offered by these new technologies," he said.

Without needing to be paid each month, virtual agents cost a quarter less than humans. A call centre agent in the Philippines earns on average US$300 a month. AIs are also able to operate at peak levels 24 hours a day. With these advantages, "robotic automation" will eventually take over some 90 per cent of call centre functions, mostly the repetitive work human staff currently carry out, according to Alastair Bathgate, chief executive of robotics firm Blue Prism.

Romulo, who as an adviser to former president Gloria Arroyo pushed for government incentives for what was then a nascent BPO industry, said that for outsourcing firms to have any future at all, they would have to "hire people more for their hard skills in analytics and AI technologies rather than for their accents".

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