GLOBALIZATION

AND THE

BUSINESS PROCESS OUTSOURCING

(BPO) INDUSTRY

Decerie M. Alcain

The Contemporary World (GE6102)

Prof. Ladylee Catabona

July 22,2019
 CHAPTER I

APPROVAL SHEET

This research entitled “Globalization and the Business Process Outsourcing (BPO) Industry”,
prepared by Decerie Alcain as partial fulfillment of the requirements for the course GE6102-The
Contemporary World has been examined and recommended for acceptance and approval.

Prof. Ladylee Catabona

Research Advisor

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 ABSTRACT

This paper aims to study the history of the BPO Industry or call centers in the Philippines.
Globalization has helped the economy of the Philippines through these BPO companies in acquiring jobs
from an offshore or foreign company. This paper will also define what BPO means, as well as explain the
different functions of call center agents/employees under this industry. It will also show the advantages
and disadvantages of working under the said industry. The trend of increase in employees under the
industry will be shown as well as the contribution of the industry to the economy of the Philippines.

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 TABLE OF CONTENTS

Title page ………………………………………………………………………………………… i

Approval Sheet ………………………………………………………………………………………… 1

Abstract ………………………………………………………………………………………… 2

Introduction

Rationale/background of the study ……………………………………… 4

Statement of the Problem ……………………………………… 4

Purpose/objective of the Study ……………………………………… 4

Significance of the Study ……………………………………… 5

Scope and Limitation ……………………………………… 5

Conceptual Framework and Theoretical Framework ……………. 5

Review of Related Literature ……………………………………… 6

Methods ………………………………………………………………………………………… 10

Conclusion ………………………………………………………………………………………… 10

References ………………………………………………………………………………………… 11

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 CHAPTER II

INTRODUCTION

RATIONALE/BACKGROUND OF THE STUDY

Business Process Outsourcing (BPO) is a subset of outsourcing that involves contracting the operations
and responsibilities for a particular business process to a third-party service provider (TaskUs.com,
2019). Most of these operations or processes are receiving inbound calls for customer service or making
outbound calls for telemarketing or what we call the Call Centers.

Call Centers has given livelihood to a lot of Filipinos. There are currently 1.15 million call center
employees (and) it is expected to grow and reach 1.8 million by 2022 (Magellan Solutions, 2019). With
the high amounts of people working in this industry, this study aims to answer the following research
questions:

STATEMENT OF THE PROBLEM

1. What is Business Process Outsourcing?

2. How and when did call centers started in the Philippines?
3. What are the advantages/disadvantages of call center employees?
4. Why do employers outsource employment?
5. How do these Call Centers contribute to the economy of the Philippines?

PURPOSE/OBJECTIVE OF THE STUDY

This study aims to

 define Business Process Outsourcing or the Call Center Industry

 study the positive/negative effects of the BPO industry to employees
 to understand the effect of globalization in reference to the call center industry and its
contribution to the economy

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SIGNIFICANCE OF THE STUDY

This study will help us understand the nature of work of Call Centers and how it originated in the
Philippines. This study will also allow us to understand how beneficial is globalization into acquiring
offshore jobs to add employment rate and offer more jobs to the Filipino people.

SCOPE AND LIMITATION

The study will primarily focus on the origin of the acquisition of offshore jobs or the start of call centers.
We will show how call centers began and how it grew over the years. This study will also evaluate
benefits of employees in general in the call center industry.

CONCEPTUAL FRAMEWORK AND THEORETICAL FRAMEWORK

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REVIEW OF RELATED LITERATURE

What is BPO?

Business process outsourcing (BPO) is the contracting of non-primary business activities and functions to
a third-party provider. BPO services include payroll, human resources (HR), accounting and
customer/call center relations (Techopedia Inc., 2019).

Although a number of people works on the admin side of the company, most Filipinos under this
industry works at the customer/call center relations part of it. Meaning, these call center agents receive
or make calls to perform the functions needed by the company.

Inbound agents are those who have their headphones on at all times as they are expecting to receive a
phone call from the customer. Their primary functions vary depending on the account they work for but
most of these accounts are for customer service support, technical, or billing support.

Technical support agents help customers calling in troubleshooting or fixing their services at home
without the need of a technician visit. Billing support agents help customers with their billing questions
or disputes. Customer service support helps answer customer questions or inquiries about a certain
program or services provided by the company.

Outbound agents are those who make the phone calls to reach an individual to offer services, most
outbound agents are called telemarketers.

HISTORY OF BPO AND ITS CONTRIBUTION TO THE ECONOMY

Let’s take a look of the timeline of BPO industry in the country:

In 1992, the first call center starter its operation in the Country. According to Contact Center Association
of the Philippines (CCAP), call centers began as providers of basic services such as email response and
service management.

In 1995, under former President Fidel V. Ramos’ term, the Philippine Economic Zone Authority – the
government agency tasked to promote investments and facilitate business operations of investors in
export-oriented manufacturing – was instituted. This paved way for the Philippine Congress to pass the

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Special Economic Zone Act – an act that seeks to attract foreign investments to generate employment
and bolster economic growth.

In 1999, former employees of a multinational management consulting company Jim Franke and Derek
Holley founded the first call center company in the country (called eTelecare).

In 2000, the BPO industry contributed 0.075% to the country’s GDP.

In 2001, Mar Roxas established the Contact Center Association of the Philippines (CCAP) during his term
as trade secretary. According to the association’s website, CCAP is the umbrella organization of the
Philippine contact center industry which aims to promote the Philippines as a global leader in the IT-BPO
industry.

In 2005, the Philippine BPO industry contributed 2.4% of the country’s GDP and gained 3% of the global
BPO market.

In 2006, the BPO Industry started to witness a 46% annual growth.

In 2008, majority of the top U.S. BPO firms already had operations in the Philippines. In the same year,
the country had surpassed India as the number one BPO destination.

In 2010, the Philippines was officially declared as the World’s BPO Capital.

 About 525,000 employees were employed in the sector.

 The call center industry generated $8.9 billion revenue, which was expected to increase with a
five-year CAGR of 38%.
 The country remained as an attractive location for foreign investors.

In 2011, a total of 638,000 Filipinos were in the BPO industry – 400,000 of which were working in call
centers – making it the biggest and fastest growing job providers in the private sector. The BPO Industry
generated $11 billion revenue and contributed to 4.9% of the country’s total GDP.

In 2012, the revenue of the BPO industry comprised of 5.4% of the country’s total GDP. Over 700,000
Filipinos were working in the BPO sector.

In 2013, the industry’s revenue increased to $15.5 billion. Meanwhile, around 900,000 Filipinos were
working for full time for the industry.

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In 2016, The industry was anticipated to generate 1.3 million jobs and was expected to reach 17%
annual growth. Projected revenue of $27.4 billion.

In 2018, the industry is forecasted to rebound after slightly slowing down in 2017. (Magellan Solutions,
2018)

ADVANTAGES/DISADVANTAGES OF WORKING IN THE BPO INDUSTRY

Being a call center agent myself for the past 5 years, let me enumerate the common benefits that we
receive from working in call centers in general:

 Competitive salary with minimum of 15,000-25,000 monthly depending on the account or

company we work for and depending on the tenure of the agent.
 Night differential benefit
 Paid vacation and sick leaves
 Paid Health Maintenance Organization which includes free hospitalization, health check-ups,
reimbursements of medicine bought, and free dental and ophthalmology check-up.
 Competitive incentive programs for agent for better performance which ranges from 10,000-
15,000 monthly depending on the account or company.
 Monthly-quarterly team buildings to improve work performance and employee relationship paid
by the company.

However, working in this industry also has disadvantages.

 Most call centers run a 24-hour service therefore some agents are needed to work in the
evenings which we call the graveyard shift. One incident included a female call center agent
killed in Cebu. A female call center agent was shot dead by an unidentified assailant while on her
way home to Barangay Bacayan, this city (Cebu), around 1:30AM, Saturday. (Galarpe, 2018)
 You will have to expect to receive yelling and being cursed at. Some customers calling are
problematic with the financial situation or lack of service that they are in that they pour their
anger for the company to you as a representative of the company.
 You may get fat. From all the stress of working and since you are just sitting on an 8-hour shift, if
not careful, you may get weight.

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 The metrics or the scores needed to be attained are high to almost impossible. Since they offer
high incentive programs for agents, they make it very difficult to achieve, too.

WHY DO FOREIGN EMPLOYERS OUTSOURCE EMPLOYEES?

Upon the start of call centers in the Philippines, it has significantly increased over time. Many
foreign companies put their trust to run a part of their business with the help of Filipinos. They did
so not only because they trust the Filipinos so much but because it is also beneficial to them and
their business. According to Indeed.com, 2019, the average hourly salary of Call Center
Representatives in the U.S. is $14.15 or P722.83 but the average hourly salary of Filipinos is only
$1.67 or P85.52. (Payscale Inc.,2019)

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 METHODOLOGY

Research Design

This research obtained information gathered from different sources from the internet as well as
personal experience from being an employee of this industry for well over 5 years. Since this research
studies the general scope of the BPO Industry, this paper has shown ideas and information in a general
scope.

CONCLUSION

Globalization has greatly affected the economy of the Philippines and one of the industry which
contributed the most is the BPO industry. If globalization did not happen, the BPO jobs that we currently
operate here in the Philippines would most probably be still operated in their country of origin and we
would have 1.3M less jobs. Although employees in this sector are being paid less compared to the
employees in the country of origin, we could say that most of these employees here are still being paid
more compared to the minimum wage earners here in the Philippines. This job has its advantages or
disadvantages but so are the other jobs. We could say that globalization has positively affected our
economy and the lives of 1.3M Filipino people.

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 CHAPTER III

REFERENCES

1 https://www.magellan-solutions.com/studies/call-center-benchmarking-report/

2 https://www.taskus.com/glossary/business-process-outsourcing-bpo/

3 https://www.techopedia.com/definition/13776/business-process-outsourcing-bpo

4 https://www.magellan-solutions.com/blog/the-philippine-call-center-industry-a-brief-history/

5 https://www.pna.gov.ph/articles/1054170

6 https://www.indeed.com/salaries/Call-Center-Agent-Salaries

7 https://www.payscale.com/research/PH/Job=Call_Center_Agent/Hourly_Rate

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