Monday, September 3, 2012

Illusions of prosperity


The Philippines has already surpassed India as the world’s leading provider of voice-based outsourcing services, otherwise known as call centres. Comprising 80 per cent of the booming Business Process Outsourcing (BPO) industry, call centres have been singled out by Philippine President Benigno Aquino III in his most recent state of the nation address as the principal engine of job growth during his watch as president of the country.
Growing from only 5,000 workers in 2000 to 680,000 in 2011, the BPO industry has contributed 11 billion dollars to the Philippine economy. Raving about the prospects of the BPO industry, President Aquino predicted that by the end of his term in 2016, the industry would have brought 25 billion dollars and employed over 1.3 million Filipinos.
Together with dollar remittances by Filipino overseas workers, BPOs are propping the country’s economy. According to government statistics, the Philippine economy has grown by 5.9 percent during the second quarter, exceeding earlier predictions of 5.4 to 5.8 percent. The last quarter’s growth rate however dipped from the first quarter performance of 6.1 per cent, but it remains the third highest in the region compared to China’s 7.8 percent growth and Indonesia’s 6.4 percent clip during the period.
Overall, the economy is looking good, say economic forecasters. This is helping make the Philippines an economic bright spot in Asia, while others are starting to believe the Philippine economy is “no longer a jeepney economy,” and that it can now run on a faster mode.
Future call centre workers, kids from local schools talking to technology firms in
Manila. Photo courtesy of markhillary. Click link to view "No Longer a Jeepney
But for how long can this consumption-driven growth be sustained by remittances from migrant Filipino workers and revenues of business process outsourcing companies?
There are genuine concerns that the country’s newfound prosperity has not sufficiently eradicated poverty. Unlike China and Japan, also Thailand and Vietnam, the Philippines has not successfully developed export-driven manufacturing that could bring millions of people out of poverty and increase the size of the middle class.
While the BPO sector in the Philippines has grown impressively, it only provides about one per cent of jobs in the country. According to the Asian Development Bank (ADB), this sector does not create jobs that are accessible to farmers or to millions of Filipinos in the rural areas who would like to get out of poverty. Rajat M. Nag, the ADB managing director, believes that the Philippines “needs to aggressively develop its manufacturing sector to create more jobs.”
Domestic spending as evidenced by consumers going to shopping malls and fast food chains or buying cellular phones from retailers and purchasing real estate assets is creating illusions of prosperity. These are soft manifestations of growth and the economy cannot rely on domestic consumption alone to fuel the economy.
The BPO industry in the Philippines is still driven by traditional low value-added services like call centre services, and has not evolved into the higher value-added types of outsourcing services such as programming, legal services, accounting and medical transcription. Most call centres in the Philippines service the U.S. market, which is the biggest for IT-enabled services and other BPOs. Being closely tied to the U.S. economy, the country’s BPO sector could be hurt by the economic downturn in the United States and the European sovereign debt crisis, and consequently, there could be cutbacks in demand for BPO services.
India, which used to be Asia’s leading outsourcer, has already turned away from call centres since U.S. companies have been driving prices down. This is one reason why many U.S. companies hard-hit by the economic slowdown have gone to the Philippines where they could negotiate for cheaper contracts with local BPO companies. To protect their profits, call centre operators can cut down on salaries and benefits for their employees, a scenario that is not farfetched. There is evidence that call centres are alternatively relocating their operations from Metro Manila to other regions in the country where there is a cheaper pool of English-proficient workers. To date, call centres are being set up in Baguio, Cebu, and Davao City.
Philippine call centres are not immune to the global economic crisis. It is therefore unwise to pin the hopes of the unemployed and new college graduates on the BPO sector that is not a sustainable source for jobs. It also highlights the fallacy in the government’s economic plan to rely on external sources for job creation, instead of building the country’s domestic economy that will generate sufficient and stable employment for Filipinos.
There are roughly more than half a million Filipinos who now spend their nights talking to mostly American consumers. Giant companies like the AT&T, JPMorgan, Chase and Expedia have hired local call centres in the Philippines, or probably they have also built their own, according to industry officials. The Philippines is now the preferred choice of the outsourcing business, primarily because American customers want American English. A former colony of the United States which introduced English as the medium of instruction in public schools, the Philippines has a large population of young people who can speak American-accented English. Unlike Indians who previously cornered the outsourcing business, these young Filipinos are also steeped in American culture.
Now, just because the outsourcing business has created this astonishing number of jobs and fueled domestic consumption, it doesn’t necessarily augur well for the health of our economy and our young labour force. The Philippines cannot over rely on the BPO sector to generate jobs because the current economic slowdown in the U.S. and Europe can affect the industry, and when this happens jobs will disappear or wages can be pushed down by competition that could lead to exploitation.
There’s also another side to the outsourcing business in the Philippines that has never been talked about. We should learn our lessons from India with their experience with call centres.
Sometime in 2004, Thomas Friedman, the Pulitzer Prize-winning journalist from The New York Times, traveled to Bangalore, India, to make a documentary on the outsourcing of American business to India and to inform Americans who are incensed about jobs being shipped overseas may also have some hidden benefits to the U.S. economy. It was a highly creative documentary that featured Friedman’s animated interviewing style, intimate ethnographic scenes of young Indians performing their routines of work and leisure, and the range of interviews with Friedman’s selected host of respondents.
Thomas Friedman of The New York Times traveled to Bangalore, India in
2004 to film a documentary of call centre workers called "Outsourcing." Click
link to view the documentary,

In the documentary, young Indian female call centre workers were portrayed as having “hot jobs” and earning more money than their parents and older workers. These “hot jobs” offered them a form of empowerment that allowed them the freedom to purchase lifestyle commodities and brand-name goods in the global marketplace. Friedman’s video suggested that call centres represented India’s encounter with progress, their embrace of globalization, when actually the video was highlighting the global economy’s migration to South Asia in search of cheap skilled labour.
Friedman’s video also described the grueling night shifts of young Indians in 24/7 call centres who work at night to accommodate U.S. customers’ daytime calls. A critic observed that this rigorous work schedule concealed the multinationals’ opportunistic manipulation of world time zones. All call centre employees work at night and spend their money on consumer goods in the daytime.
Maybe, like Philippine President Aquino and many economists who are enamoured with the BPO sector as a boom to the local economy, they share Friedman’s conclusion that the newfound disposable income, disposable time and their young age made the jobs at the call centre a “hot” prospect for Indian youth. While the call centres provided lucrative employment for hundreds of thousands of young women and men, Friedman’s documentary however failed to consider the stress of night shifts, highly repetitive work, and little or lack of opportunities for mobility. In addition, Friedman evaded the effect of assuming “American or European identities” by these call centre workers to satisfy the image their customers would require, which could possibly lead to multiple personality disorder in some workers.
Some critics of call centres in India have noted the lack of daytime social life for those who sleep during the day and the packed schedules of those who forgo sleep to maintain ties with family and friends, which have led to complaints of stress, panic attacks, depression, relationship troubles, alcoholism, and eating disorders.
Of course, that was India and not the Philippines. But Filipino call centre workers are also operating under similar circumstances, thus we could infer a similar cultural impact of outsourcing upon young Filipino workers in the BPO industry. The local BPO industry is slowly creating a “zombie workforce,” an army of workers wide-awake at night and asleep during the daytime.
The practice of forcing workers to assume American or European identities to please their customers in the United States and Europe also sustains racism. Likewise, these workers could face forms of abuse from American customers, whose tantrums are sometimes racist and often inspired by anger over outsourcing.
Although economic globalization has enabled certain sections of the Philippine labour force to gain employment and improve their purchasing power, the ideology of prosperity that it promotes has not benefited the vast majority of poor urban and rural Filipinos who continue to struggle to provide for their basic needs like food, clean water, shelter, education, and health care. BPOs should not be looked at simply from the viewpoint of job generation, without examining their harmful social and cultural impact on our young workforce.

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