Diversification to fuel growth of PH contact centers

Industry specialization and market diversification would fuel the growth, albeit at a much slower pace, of the call center industry as it adjusts to the evolving trends of the market.

Players have yet to feel the impact of the feared inward looking policy of the United States under the Trump administration, but they see the weakening peso as an advantage in terms of costs and revenues.

Benedict Hernandez, chairman of the Contact Center Association of the Philippines (CCAP), in a press briefing said the industry is sticking to the goal of $20.4 billion revenues by 2022, factoring an annual growth rate of less than 10 percent.

Hernandez said three specific characteristics now define the industry. “One is that there is there no more pure call center or front office. The industry over the years has diversified into different areas, mid and back office doing call center, banking and finance and accounting. We are beginning to see true end-to-end contact centers,” he said.

Another development in the industry is its focus on industry-specific activities.

“That’s the name of the game,” Hernandez said.

For one, the Philippines developed an expertise in healthcare which is now the fastest growing in the contact center sector, as well as insurance and banking.

Another factor cited by Hernandez is the industry continues to diversify its markets.

“Five years ago, there was concentration in the US as a market but this has diversified more and more. While the US accounts for 70 percent, the Asia-Pacific market is growing significantly particularly Australia and New Zealand which are now high growth geographies year-on-year,” he said.

In the rest of Asia, he added, huge opportunities are seen in Japan, Singapore, Malaysia and Indonesia. Europe also remains an important market.

Hernandez said the contact center industry is the biggest contributor of high value jobs in the provinces.

“We are now in 26 cities and municipalities,” said Hernandez, adding the industry has become one of the most inclusive, having the most diversified workforce and does not discriminate.

According to Hernandez, the industry has not seen any direct material impact to the statements of US President Donald Trump to put a stop on outsourcing as work from clients in the US continues.

“We are focused not on policy changes but on building the business for the long term, to always stay relevant and give value for our services. We survive regardless of changes in geopolitics,” he said.

Cost-wise, the Philippines’ cost to service is about 40 percent lower compared to the US. In California, for example, the minimum wage is set at $12 to $15 per hour which is even more than the daily minimum wage in the country.

Hernandez said the weak peso benefits the industry being export-oriented, as it earns in dollars but spends in peso.

The depreciation of the currency has also has helped narrow the currency cost gap between the Philippines and its fiercest competitor, India.

“At P50 to the dollar, the cost gap has narrowed against India whose currency is at about 67 rupee to the dollar compared last year when the peso was about 40,” Hernandez said.

But he said CCAP has always been espousing a stable and predictable currency to better hedge contracts.

Source: http://malaya.com.ph/business-news/business/diversification-fuel-growth-ph-contact-centers

Industry specialization and market diversification would fuel the growth, albeit at a much slower pace, of the call center industry as it adjusts to the evolving trends of the market.

Players have yet to feel the impact of the feared inward looking policy of the United States under the Trump administration, but they see the weakening peso as an advantage in terms of costs and revenues.

Benedict Hernandez, chairman of the Contact Center Association of the Philippines (CCAP), in a press briefing said the industry is sticking to the goal of $20.4 billion revenues by 2022, factoring an annual growth rate of less than 10 percent.

Hernandez said three specific characteristics now define the industry. “One is that there is there no more pure call center or front office. The industry over the years has diversified into different areas, mid and back office doing call center, banking and finance and accounting. We are beginning to see true end-to-end contact centers,” he said.

Another development in the industry is its focus on industry-specific activities.

“That’s the name of the game,” Hernandez said.

For one, the Philippines developed an expertise in healthcare which is now the fastest growing in the contact center sector, as well as insurance and banking.

Another factor cited by Hernandez is the industry continues to diversify its markets.

“Five years ago, there was concentration in the US as a market but this has diversified more and more. While the US accounts for 70 percent, the Asia-Pacific market is growing significantly particularly Australia and New Zealand which are now high growth geographies year-on-year,” he said.

In the rest of Asia, he added, huge opportunities are seen in Japan, Singapore, Malaysia and Indonesia. Europe also remains an important market.

Hernandez said the contact center industry is the biggest contributor of high value jobs in the provinces.

“We are now in 26 cities and municipalities,” said Hernandez, adding the industry has become one of the most inclusive, having the most diversified workforce and does not discriminate.

According to Hernandez, the industry has not seen any direct material impact to the statements of US President Donald Trump to put a stop on outsourcing as work from clients in the US continues.

“We are focused not on policy changes but on building the business for the long term, to always stay relevant and give value for our services. We survive regardless of changes in geopolitics,” he said.

Cost-wise, the Philippines’ cost to service is about 40 percent lower compared to the US. In California, for example, the minimum wage is set at $12 to $15 per hour which is even more than the daily minimum wage in the country.

Hernandez said the weak peso benefits the industry being export-oriented, as it earns in dollars but spends in peso.

The depreciation of the currency has also has helped narrow the currency cost gap between the Philippines and its fiercest competitor, India.

“At P50 to the dollar, the cost gap has narrowed against India whose currency is at about 67 rupee to the dollar compared last year when the peso was about 40,” Hernandez said.

But he said CCAP has always been espousing a stable and predictable currency to better hedge contracts.

Source: http://malaya.com.ph/business-news/business/diversification-fuel-growth-ph-contact-centers