The Call Center Industry and the Imperatives for an ICT-driven Knowledge-Intensive Employment in the Philippine Economy

Jose V. Camacho


Globalization or the global integration of markets has further strengthened the supremacy of economic and structural adjustment geared towards enhancing market efficiency and competitiveness. One significant driver of globalization is the rapidly changing landscape of information and communication technology (ICT). The access and capacity of an economy to adapt modern ICT has spelled a lot of difference in its economic growth and development path, in particular, in altering the workplace and in changing the face of its labor market, employment and industrial relation. New innovation and technology led firms and companies to require its workforce constantly oriented to new ways of doing things, in producing goods and services. Thus, the new knowledge worker and the knowledge-intensive forms of production and delivery of products and market transactions have emerged. The transaction cost of market transactions and business operations had significantly declined as greatly facilitated by the information highway. In the global labor market, globalization has intensified capitalists’ various forms of efficiency enhancing strategies in all phases and facets of labor-industrial relation. Indeed, globalization offers huge benefits for the world ‘ s labor force – but there are no assurance as some economic and social cost are internalized particularly by those in the vulnerable sectors. As World Bank 1995 argues, sound domestic and international policies are indispensable for realizing the promise of a prosperous, integrated global workplace.

For instance, labor process and structures are altered leading to multiskilling of workers, the computerization and automation of labor processes and market transactions thereby increasing competition and a greater division of labor on a global scale. In order to maintain or improve their position, many firms have sought flexible labor arrangements and production patterns through downsizing their labor force, using contract labor and introducing lean management systems, for example, on more impersonal and intangible mode of service delivery such as outsourcing, telemarketing and call centers. However, the deregulation of product and labor markets has also weakened labor market institutions, promoted high work turn over, greater job insecurity, deskilling and discouraged formation of labor unions, all with the aid and facilitation of information and communication technology.

This paper will describe the dynamics of ICT globalization and its impact on the Philippine labor market, specifically, on the rapidly increasing employment in call centers service industry. It will examine the changing patterns of flexible labor arrangements in call center firms and their effects on Philippine economic performance, for instance, on national output, foreign direct investment, poverty alleviation, human resource development as indicated by employment, unemployment, underemployment, and investment in human capital of firms and the government. It will analyze policies and institutions being put in place in order for the economy seize the opportunities and advantages of ICT-driven knowledge economy, and therefore the subsequent impacts on labor market policies and development strategies to achieve a more equitable income distribution, strong job security, and higher workplace standards, while enhancing the efficiency of labor market and its economic consequence on other productive sectors of the economy.

For some decades now, the Philippine labor market was not able to exploit the potentials of its growing labor surplus in order to effectively facilitate poverty alleviation. For example, with a large informal sector employment, unemployment rate in 1992 was 8.6 percent or about 2.26 million unemployed. This has climbed to 3.42 million workers or 10.2 percent in 2002. Urban employment is higher in the same period soaring to 13.2 in 2002 from 11.4 percent from 1992 (National Statistics Office, 2003). The Philippine government aims to generate six to ten million new jobs in the next six years and much of the hope lies on the service industry, particularly on call centers firms who are very much dependent on modern ICT facilities.

Call centers are telemarketing firms where the products and services of a particular firm are being promoted offering multilingual and multi-media supported premium services for marketing, sales, customer care, crisis management, investor relations and other key business applications. These firms hire computer-literate staff that receives incoming or make outgoing telephone calls which are processed and controlled either by predictive dialing or an automatic call distribution system. The Philippine call center industry is rapidly emerging as the call center capital of the world, a development that is attributed to the English proficient, computer literate and highly skilled, educated and trainable Filipino professionals. In terms of software and hardware, in 2003, the Philippine call center industry spent US$9.8 million, ranking ninth in the Asian region after India that spent US$21 million and Singapore at US$20.3 million (Frost and Sullivan 2003). The government is exploiting the sizeable gains posed by the industry in recognizing its huge potential to generate jobs and earn dollar revenues. Curricular reforms with more emphasis on English, Math, Science and Technology are vigorously pushed geared towards the ICT trainings needs of the industry and in arresting the deteriorating educational quality.