A report today from an online news outlet in the Philippines speculates that outsourcers, in their quest to attract good talent, have raised wages for call center workers in that country way too much in the past five years -- and now that the recession has hit they are finding these wage increases "unsustainable." The news comes despite the fact that the call center industry in the Philippines is predicted to grow 15 to 20 percent this year.
In the article, Benedict Hernandez, president of the Contact Center Association in the Philippines (CCAP), said that salaries of call center agents increased annually by 10 percent, starting in 2004, when the industry experienced rapid growth as the Philippines became a preferred outsourcing destination. He said 10 percent year-on-year salary inflation is "simply unsustainable," regardless of whether the country is in a recession or not.
The concern for outsourcers is that the call center industry in the Philippines, which represents about 70 percent of the BPO industry in that country, will end up pricing itself out of the market if call center workers continue to get higher wages. The problem is, the outsourcers will have to pass the cost of these higher wages onto their customers - and this could cause companies to terminate their contracts and seek outsourcing in other countries where labor is cheaper. It's basically a no-brainer when you consider that roughly 80 percent of any call center's operating budget is labor.
The article indicates that there are two other factors that have caused costs to rise considerably for call center outsourcers in the Philippines: First, there was a high number of holidays last year, and when call center workers are required to work on holidays they generally get time-an-a-half or double-time wages. The article also mentions that there has been an increase in recruiting efforts - the recruitment rate among call center companies rose from 5 percent to 8 percent - and this also equates to increased operational cost. Many of the BPO firms now offer language training to their agents, which boosts the cost of recruiting and training. Recruiting and training has also become more expensive due to the overall growth of the industry, which in turn has led to a smaller labor pool to draw on and a shortage of qualified applicants.
The concern for outsourcers is that the call center industry in the Philippines, which represents about 70 percent of the BPO industry in that country, will end up pricing itself out of the market if call center workers continue to get higher wages. The problem is, the outsourcers will have to pass the cost of these higher wages onto their customers - and this could cause companies to terminate their contracts and seek outsourcing in other countries where labor is cheaper. It's basically a no-brainer when you consider that roughly 80 percent of any call center's operating budget is labor.
The article indicates that there are two other factors that have caused costs to rise considerably for call center outsourcers in the Philippines: First, there was a high number of holidays last year, and when call center workers are required to work on holidays they generally get time-an-a-half or double-time wages. The article also mentions that there has been an increase in recruiting efforts - the recruitment rate among call center companies rose from 5 percent to 8 percent - and this also equates to increased operational cost. Many of the BPO firms now offer language training to their agents, which boosts the cost of recruiting and training. Recruiting and training has also become more expensive due to the overall growth of the industry, which in turn has led to a smaller labor pool to draw on and a shortage of qualified applicants.
I think its just fine for the agents to have an increase but I think its too much if they do it annually. They have the right to get a big salary because of the night shift, which actually will jeopardize their health so I guess its just okay for them to earn big bucks. Again not annually. Philippines is considered one of the best in BPO but we should also take into consideration the hard work of the people in this industry.