The business process outsourcing (BPO) industry sub-sector started in the Philippines in 2001 when American Online (AOL) set-up an in-house call center at the Clark special economic zone in Pampanga (Aquino 2004).  A call center is an office with many employees in cubicles answering incoming telephone calls. The calls range from people asking about their computers, to card holders inquiring about their credit card balances, to subscribers checking their phone bills, to travellers booking their flights.According to Rene Soriano (1985) offshore outsourcing (or offshoring) was made possible by internet communications technology (ICT).  Business processes, projects, tasks and jobs were transferred to virtual workforces across the world.  Today, companies choose to farm out their call center jobs to countries where costs are lower.

The main motivation for offshoring, according to Soriano (1985) was to minimize production cost and maximize profits.  Salaries in developing countries are 50% to 80% less than in the U.S.¹  For example, the salary of a customer service representative (CSR) in the U.S. is $25,000 while the cost in the Philippines and India is $2,828 and $1,689, respectively².  While costs are lower from the point of view of the U.S. companies, the skilled and knowledge workers in the developing countries are benefited by the increase in their incomes since their current salaries for local work are still lower compared to the workers of the developed countries.

Many U.S. firms have shut down and laid off their American call center employees and transferred the jobs offshore to developing countries.  Internet service provider Earthlink for example closed its call centers in Harrisburg, Pennsylvania and Roseville, California and laid off 1,200 American workers³.  A Columbia University survey of 45 U.S.-based companies showed that the Philippines was the second largest recipient of outsourcing with almost 30% of the market.  Aside from the U.S., Australia and the U.K. were the other countries targeted for BPO services (Aquino 2004).

Being the world’s third largest English-speaking country, the Philippines attracted many college graduates to the new industry by offering higher salaries than most other jobs. In fact, the expansion of the BPO industry sub-sector has been described as moving at a blistering pace.  Economic Planning Secretary Romulo Neri cited projections by the Board of Investments and two industry groups (Business Process Association of the Philippines and the Commission on Information, Communication and Technology) that the industry sub-sector will experience a 52% growth rate in revenues and 42% in investments in 2006 (AFP 2006).    

Many enterprises in the contact sector business are large players and have become the country’s most profitable firms.  According to Nantes (2004), 63 contact centers with 25,000 seats made $200 million in 2003.  In 2005, BPO jobs increased by 63% (162,250 jobs) and generated $1.8 billion earnings with $1 billion (or 56%) contributed by the call centers (PIA 2006, Domingo 2006).  In 2006, 120 BPO companies and call centers are expected to earn $3.8 billion and contribute at least 72%.  The projected revenue for 2010 is $10 billion (AFP 2006). 

Makati City and Eastwood in Libis, Quezon City are the main venues of contact center operations with the industrial park facilities in Alabang, Muntinlupa City, a close second.  There is now a shortage of office spaces in the urban areas.  Construction and real estate companies and 24-hour restaurants have been immensely benefited by the booming BPO enterprises.

The contact center companies have set up not only in Metro Manila but also in other regional areas of the country.  The Philippine economic zone authority (PEZA) recorded an investment of P854 million and the hiring of 3,802 call center workers in February 2004.  Convergys, the world’s largest contact center with 8,000 workers in the country at present, invested the most at P257 million.  Ambergis Solutions Philippines Inc. came in next with P233.5 million investments and 650 Filipinos hired annually.  Others included Sitel Customer Care Philippines Inc. at P196 million and 600 workers hired, PeopleSupport with P91 million, and Pacifichub with P76 million (Nantes 2004).    

Aside from Convergys, 4 other U.S.-based call centers (Teleperformance USA, Teletech, InfoNXX and Epixtar) were reported to have expanded operations in Clark Pampanga.  In Cebu, other call centers expected to start or expand operations were Convergys, Sykes Asia, Western WATS, Teradyne, Page Computers, Bigfoot Global Solutions Inc. and 88th Floor (Nantes 2004).      

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