Philippine Business Magazine: Volume 8 No. 3 - Cover
Point of Contact
The Philippines takes its place in customer service

Michael Henderson reveals that Sykes chose the Philippines because of the good educational system that churns out very experienced and technical people

Henderson is Managing Director for Asia and the Pacific Rim for Sykes – one of the world’s leading providers of end-to-end customer care management solutions — and who is based in Manila. From Henderson’s headquarters in the Ortigas area, Sykes offers to people all over the world a host of customer support services which are, in the words of Henderson, “big volume, high transaction, high utilization, and for some, high-end --really high-end -- support.”

It is thus understandable why Sykes’ office is constantly frenetic with activity. At one corner, you see one female staff animatedly talking to someone from United States. Several paces away, you would see one of the Korean staff talking to her supervisor about a query she was handling, all from the confines of a workstation adorned with her favorite Korean stars. “This is one office where talking and not working quietly in your desk is encouraged,” Henderson muses.

It may not have been as hectic three years ago. “When we came here in April 1998, we had 20 staff including eight agents and one client. Now, we have got 905 staff with 850 agents and we’ve got 15 clients. The growth has doubled roughly every year. We just won another business and that would mean another 75 people. We hope to have 1,100 to 1,200 people by the end of the year. ”

Sykes has achieved much, so much in fact that the circumstances that led them to set up in the country seems more like a footnote rather than a brave concept. “Originally, we came here with a client who said that they wanted for Asia-Pacific a similar model that we have in Europe. We came down to Australia, Singapore, and the Philippines.”

Henderson explains the model they replicated. “In Sykes’ call center in Edinburgh, Scotland, we take calls from all over Europe — in French, German, Swedish. Obviously, there is a lot of economies of scale. The centralized model works, particularly when we are sharing a knowledge base. We get everybody together in a single point of contact for our clients.”

So eventually, the Philippines was it for Sykes and their Manila headquarters has become that point of contact in the Asia-Pacific region. It is where calls, e-mailed, and online inquiries about customer support come through and are entertained. “Let’s say you are a customer in the US. You have a problem with your PC application and you pick up your phone. You dial a toll-free number and your call will be routed to a phone switch in the US. That call will be forwarded to our center in Manila.”

Expert Handling
Henderson emphasizes over and over how each query is expertly handled by their Manila agents. That is one of the traits that has made their decision to set up in Manila a brilliant one. “The Philippines has got a lot to offer. We chose the Philippines for its very strong IT graduates. The educational system is very good so we were able to get very experienced technical people.” Henderson quickly adds more of Manila’s advantages, “the ability to support the major languages that we needed which were Mandarin, Korean, and English, primarily. We could get native speakers. And also because of the cost factor.”

Bong Borja, President of PeopleSupport, another customer service provider, would definitely agree with Henderson. He would probably say he agrees “very, very” much, as he tends to do when he wants to emphasize something. “The Philippines has several distinct advantages. I would be lying if I said that costs were not one of the considerations.

However, we found out that the biggest value yet out of the Philippines is not really cost but quality. We can offer higher quality services from here than from our other offices.”

Borja, who last year returned to the country from a long stint in Australia expounds, “We are one of the most hospitable people in this region and we do that naturally. In customer care, that matters. What also adds a lot of value is how we are able to show empathy for what is happening to the customers. Majority of our calls come from the United States, and yes, the Philippines has a very, very strong affinity to American culture and current events.”

All About English
Then the obvious. “The Philippines is the only country outside North America that speaks fluent American English. The countries around us — Hong Kong, Singapore, Australia, and New Zealand, the English they speak is obviously UK-type English and when you are giving service to North American clients, there is a big difference,” Borja says, with just a hint - albeit a very, very small hint - of an Australian accent.

Ultimately however, according to Henderson (who comes from Scotland), a neutral accent is ideal. He explains, “It is like creating the ideal CNN accent. In CNN, usually, there is a reader from Britain, America, Australia, and South Africa. But they all have very neutral accents.” Henderson places himself as an example. But give me two weeks back home and I am in lingo.” Henderson says, however, “Too much is made of accent. At the moment, a lot of companies are looking for an Americanized accent. Some companies are trying to hide the fact that they are putting their support services overseas. But I think eventually, in two or three years’ time, the customers won’t care. People would not mind because they are so used to it.”

In the meantime, agents in most call centers in the country speak like Americans. In the elevators going down for their breaks or as they go home from work, they would talk, in distinct American English, about how they were able to respond to a client’s need that day.

Expect More
There will be many more of them. Sykes has already indicated that they will probably grow by about 300 people this year. PeopleSupport says it will grow by as much. “In the next 90 days, we will double our size. We have some businesses in the pipeline already and these are big flagship accounts, so we are heavily recruiting right now. We will keep growing at this rate for a while,” Borja proudly says.

In fact, the entire industry might very well grow at that impressive rate, so much that Borja observes that “every man and his dog are putting up contact centers right here, right now.” Says one industry observer, “A lot of this activity is because of the downtrend in the United States. The demand for outsourced customer service providers is on the up because the companies in the US are looking for ways to cut cost. One of the things they do is shut down their internal contact centers and outsource them here.”

Borja admits that although they serve customers from virtually everywhere on earth, most of their customers come from North America. Henderson says, “Half of our business is in the US market.”

So that is why companies like Sykes, PeopleSupport, Etelecare, and some other men and dogs are expecting a boom shortly.

Virtues and Numbers
Companies are realizing the virtues of outsourcing customer service. So far, about 77% of Fortune 500 companies already outsource some aspect of their support services. They realize that with some of the more common customer issues and frequently-asked questions being outscored to customer agents, their own customer service agents can focus on more special customer-oriented projects.

The activity has been increasingly frenzied. Sykes already handles 25,000 e-mail messages for Microsoft a day, including 22 portal sites like Hotmail and MSN.com. Sykes also provides customer service for a full-range of Adobe Systems products, covering Singapore, Australia, Hong Kong, and Taiwan, among others. Henderson even takes to calling a certain client as Client X, citing the very high-level support that is being offered out of their Manila office.

The lists of clients that are being served by both Sykes and PeopleSupport read like a who’s who in the world’s top businesses — covering companies from wide-ranging industries as telecoms, personal care, IT, travel, and digital equipment. Upon running through their lists, you get the idea that yes, the Philippines is really serving the world, and the world’s best.
A study made by research firm Frost & Sullivan reveals that last year the Philippine call center industry spent US$9.8 million dollars in terms of hardware and software. The country ranks ninth in the Asian region, following India at US$21 million and Singapore at US$20.3 million. Expect the Philippines’ spending to grow in the next few years.

The Issue About India
Of course, there has to be India. The Philippines and India are singled out to be the more competitive places where companies can outsource their customer service requirements. Both countries have similar characteristics — a pool of good IT graduates, facility in English, and the cost advantage. Says Henderson, “I was in India last week and many companies are setting up in the scene as well. The Philippines is competing head-on with India.”

The Philippines may have several aces up its sleeve. Henderson reasons out, “The infrastructure here, the telephony infrastructure is quite good here compared to the less developed countries, including India.” Then there is the fact that the Indian accent may be less appropriate to the US market. But then again, Henderson quickly states that maybe too much is being made of accents.

India of course, holds a very obvious advantage: size. Henderson observes, “Places like Mumbai and Delhi may become saturated eventually because so many call centers are setting up.” Saturation is a more welcome thought in a time when unemployment in the Philippines continues to worsen. Distant as it may be, it is not too far a possibility, especially since many customer contact points are slowly being located in the Philippines.

Bong Borja says PeopleSupport is able to offer higher quality services from the Philippines than from their other offices

Borja agrees, “Saturation is being felt in the software development industry already. A lot of people are leaving or have left already. But it is a chicken and egg thing. At PeopleSupport, we are able to pay our employees well and we are able to do that because we can price it to dollars. If everyone were like that and if everyone in the industry were as competitive globally and earn their revenues on US-based rates and not on offshore rates, then everyone will benefit in terms of revenues for the company and salary for the employees. And then, we can invest more in the educational system so we will have more supply of good graduates.”

Both Henderson and Borja say that as the experience of the Philippines in being a customer contact point increases, the country will be able to deliver more specialized, more high-tech customer service. In fact, call centers in the country are already doing such tasks this early in the game. That is why Henderson cautions, “People used to talk about a back office to refer to what we do and that is not a good term to use. It has a negative connotation of something hidden, something like a sweatshop. The Philippines has so much more to offer.”

And indeed, the Philippines is taking its place as a point of contact for the customer service needs of companies. Henderson’s maps would have to stay on his walls for quite some time.