Why the Philippine economy is trading call centres for casinos

Business process outsourcing, a little known backbone of the country’s prosperity, is under threat from Chinese online gambling and efforts to spread the wealth outside big cities

The sector is propped up by an army of call centre workers capitalising on the Filipino knack for English, but some industry experts predict AI could bring all that to an end in as little as five years

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A call centre in Manila. Photo: Alamy Stock Photo

Published: 1:30pm, 11 Aug 2019Updated: 3:40pm, 12 Dec 2019

For more than a decade, business process outsourcing (BPO) has been the goose laying the golden eggs for the Philippines. Now the fairy tale is threatened by three things: the arrival of Chinese online gambling firms, a government programme that stops new call centres being built in Manila, and the rapid improvement of artificial intelligence (AI).

Twenty-five years ago, BPO was a tiny mote in the economy – now, it’s a multibillion-dollar industry. Jonathan Ravelas, chief market strategist at BDO Unibank, the Philippines’ largest bank, estimates BPO earnings at about 10 per cent of gross domestic product – close to the US$26 billion sent home yearly by overseas Filipino workers (OFWs). This makes it the second largest earner of US dollars in the country. In its 2015 annual report, the Philippine Statistics Authority said the income came mainly from the United States, Netherlands, Australia, Britain and Canada.

Entire blocks of gleaming towers, located largely in Manila, are dedicated to call centre operations. Photo: Alamy Stock Photo

Although most of the BPO sector’s activity involves call centres, outsourced jobs also include computer programming, medical transcription and animation, and cartoon production.

Ravelas pointed out to This Week In Asia that unlike OFWs, BPO agents can work for foreign companies without having to go abroad – and families can remain intact because opportunities are available at home.

Growth has been helped by government tax breaks, but the secret behind the runaway success has been Filipino talent: hardworking agents skilled in English and strong in empathy for clients. According to Ravelas, “one of our strengths has always been high EQ [emotional intelligence] – we’re very patient”.