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InvestingStock MarketsCall Center Outsourcing Philippines: 3 Red Flags

Over the last twenty years, the Philippines has emerged as the world’s largest and leading call center outsourcing destination. Today, there are more than 800 outsourcing providers operating in the country.

It is important to know and understand, however, that not all call centers in the Philippines are set up to provide high-quality services. Let’s take a look at ways to identify call centers that might not be the best partners for your business.

A call center with 100+ clients? Run!

There’s no shortage of call centers in the Philippines claiming to have more than a hundred clients. Some even proudly mention numbers like this on their website. Trust us, dealing with a small- to mid-sized contact center that has more than a hundred client programs to manage is a nightmare. Seriously, who would want to be client #137 of any call center in the Philippines? What kind of program management could you possibly expect from a company trying to serve more than 100 accounts at the same time? The world’s largest and leading third-party outsourcing providers typically  have fewer than sixty accounts—and that’s globally. So, any call center in the Philippines that brags about having more than one hundred clients should be avoided like the plague. Look for a company with a limited number of clients, ideally fewer than forty. This will allow them to focus on your particular outsourcing needs and do a good job at it. You want to be more than just a number on the production floor.

Let’s assume you are an SME with an outsourcing requirement of between five and twenty seats or agents. In that case, a call center that operates more than 1,000 seats would not be good fit for you. Finding a right-sized vendor is of mission-critical importance for the success for your program. A call center that operates more than 1,000 seats or employs more than 1,000 agents would be way too large for your outsourcing requirements. You’d be much better off partnering with a smaller contact center in the Philippines that operates between 100 and 300 seats and employs fewer than 500 agents. Ideally, your program should be between 3 and 10% of the call center’s total seat capacity. Only then will your program be considered an important account. Keep that in mind!

You get what you pay for. 

You also want to stay clear of low-cost call centers that offer their services in the £4-6/hour range or advertise 70% cost savings. You don’t have to be a rocket scientist to figure out that these companies compete on price, not quality. Successful call center outsourcing to the Philippines requires a healthy dose of common sense. If you booked yourself a two-star hotel room, you’d very likely not expect Ritz Carlton levels of accommodation and service. The same logic applies to call center outsourcing to the Philippines. You get what you pay for. Let’s see what comprises that bottom line.

In the Philippines, a highly skilled agent with impeccable English and three to five years of work experience can easily earn £480–640 a month with a globally leading outsourcing provider or  captive operator. This equates to an hourly agent salary of £3–4.

A call center that charges £4–6 per hour or offers 70% cost savings over services in the UK simply cannot afford to hire the top-performing and English-proficient agents who make programs work and achieve high customer satisfaction levels. There are, of course, still other operating costs that need to be covered by the hourly service rate. These include the vendor margin of 30%, cost of management (operations manager, program manager, team leader, trainer, workforce manager), support staff (HR, finance and accounting, IT, admin, legal), facilities, infrastructure, technologies, utilities, and security. After covering the overhead costs, it becomes clear that the low-cost contact center or BPO can’t afford to pay agents more than £1.5-2 per hour, which is half the rate that others at the country’s leading outsourcing provider or captive operators are earning. It is also important to understand that these relatively high-paying industry giants generate 70% of all employment in the Philippine BPO industry. So, why would anyone want to work for less than they could be making? You guessed it—they do so only when they haven’t the skills to do better. Red flags don’t get any bigger than this. If you go shopping at the bottom of the barrel, don’t expect any miracles.

Beware jacks of all trades and masters of none.

Most of the low-cost call centers in the Philippines offer as many services as possible. Simply check out their websites and click on the “Services” section. If you see more than eight services, you know what type of vendor you are dealing with. They seem to be domain experts across all industries. If you talk to them, you will quickly find out they there is nothing they can’t do or haven’t yet done. That is another enormous red flag. Avoid these jacks of all trades, masters of none at all costs.

In contrast, premium contact centers in the Philippines typically specialise in a limited number of services and industries. There is no shortage of call centers specialising in, for example, financial services, eCommerce, logistics, or healthcare. The key to success is finding and partnering with one of these highly specialized outsourcing providers. But be warned, they don’t offer their services in the £4–6 range or at 70% cost savings. These premium contact centers and BPOs don’t compete on price but on people, processes, and technologies. In short, they compete on quality, not price.

If you needed a bypass, you’d look for a cardiologist who specialises in open-heart surgeries and has an excellent reputation and track record. You would probably not let a general practitioner to do the procedure, right? It’s the same with call centers in the Philippines. You want to find and partner with the experts in your industry, which will significantly increase the chances of a successful, long-term outsourcing partnership. If you go offshore, go premium. An hourly rate of £8–11 will still generate at least 50% cost savings compared to onshore vendors. Going for an extra 20% savings is not worth the squeeze. Always remember that there’s a cost to providing and/or obtaining high-quality services. Offshore call center outsourcing to the Philippines works, and it can deliver exceptional quality, but take the right approach and heed the red flags.

Ralf Ellspermann is the CEO of PITON-Global, a leading mid-sized contact center and back office outsourcing provider in the Philippines. Ralf has over 20 years of award-winning outsourcing experience in the Philippines. He has worked on both the vendor and client sides of the business, which gives him an unmatched understanding of the Philippine contact center outsourcing industry, its vendor landscape, and service capabilities. An internationally recognised expert on business process and call center outsourcing to the Philippines, Ralf has been a keynote and expert panel speaker at some of Asia’s largest and leading outsourcing conferences and summits.

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