Call Centres Philippines: The True Cost of Outsourcing

contact centre in the Philippines

In the past decade, the Philippines has become home to the largest offshore call centre industry in the world, with over 1 million Filipinos working as call centre agents.  With such a huge choice of vendors, and pricing at 40-50% less than in developed countries, it’s no wonder that the Philippines is now the world’s leading contact centre outsourcing destination.

When the price difference between call centres in the Philippines comes down to just a few dollars, it might be tempting to go for whoever is offering the lowest price. What difference could a few dollars make, right? Wrong.

There’s a common misconception that a premium contact centre in the Philippines is working with an operating margin that’s twice as high as that of a low-cost vendor. This simply isn’t true, and the reality of paying a few dollars more for a premium provider could actually spell the difference between success and failure. Here’s why:

Firstly, we need to look at the cost structure of a call centre.  The reality is that premium providers actually work at a very similar operating margin to lower cost vendors – an average of 30%. Therefore, your extra investment for a premium provider isn’t going into the pockets of the owners, but instead back into the business.  Your extra dollars are being used to attract top talent with better pay and facilities, and investments in the latest contact centre technology, resulting in, you guessed it, an enhanced customer experience.

To give an example, a low-cost call centre charging US$8 per hour with an operating margin of 30% leaves US$5.60 left towards the cost of paying the agent and management, support functions (IT, HR, admin, finance, legal), tech and utilities. Compare this with a premium provider charging US$14. They still operate at a 30% margin, meaning they have US$9 to reinvest in the aforementioned functions. That’s nearly double what the low-cost centre can invest.

This means the low-cost call centre in the Philippines will be forced to make significant compromises in all areas of the business. That’s less investment in infrastructure, facilities and tech, lower paid staff and management with less training, and compromised support functions like HR, IT and security.

Agents in a low-cost call centre in the Philippines earn an average 50% less than their peers in the leading contact centres.  Therefore, the country’s most skilled and English proficient agents are all working for the premium call centres, leaving the low-cost vendors with no choice but to employ those who didn’t make the cut.

We’re currently in an age where customer satisfaction is king – 61% of customers will stop transacting with a company following a bad customer service experience. Do you want to leave your customers in the hands of a call centre staffed with lower skilled, less English proficient agents? Again, would you want to leave your precious data with a company that has a compromised IT and data security?

Offshore call centre outsourcing to the Philippines is a cost-effective way of handling your customer service calls, however the providers need to be the right fit.  As the old saying goes, you get what you pay for, and customer service provided by call centres in the Philippines is no exception to the rule.