Hurricanes, Typhoons & Earthquakes (and the Philippines). Do you take them Serious?
Updated: Oct 31, 2018
A natural disaster free zone. Does this exist? Really? Why, yes, it does. In fact it exists in many locations around the world. One such location is Hermosillo, Sonora, #Mexico, a #nearshore call center outsourcing destination. This is one of the main reasons we exist in #Hermosillo vs. many other nearshore call center markets. Hermsoillo, Sonora, Mexico is almost 100% free of earthquakes, hurricanes, tornadoes and so many other disasters that impact major outsourcing destinations such as the Philippines.
I will apologize ahead of time for being direct. But, I ask myself this question all the time, "Why have so many companies jumped on the bandwagon and outsource their critical customer service, sales and technical support operations to the Philippines?" To be frank, it has not made a lot of sense to me. And I've been in the call center industry for over 28 years. I've been all over the world (yes, Philippines included), and it is very dangerous to have so much of your critical support functions in one location (ie. Philippines).
Why do I feel this way? Is it because I own a BPO focused on new and emerging labor markets (yes, to some degree!). But, the primary reason is because every CEO or owner of a business, where service is critical to their business, needs diversification and redundancy. Yes, this is common sense, but I am amazed at how many organizations still can't figure this out. They have too many seats in the Philippines. Way too many seats.
Let's look at a few things about the Philippines:
The Philippine Islands exist due to extreme geologic activity. (aka Volcanoes and Earthquakes, among other natural disasters). According to DFDRR, "The Philippines is at high risk from cyclones, earthquakes, floods, landslides, tsunamis, volcanic eruptions, and wildfires. Since 1990, the Philippines has been affected by 565 natural disaster events that have claimed the lives of nearly 70,000 Filipinos and caused an estimated $23 billion in damages. At least 60 percent of the country’s total land area is exposed to multiple hazards, and 74 percent of the population is vulnerable to their impact."
The Phlippines are saturated with call centers. Employee turnover is well over 50% a year at almost every call center located there. According to a Magellan Solutions report in 2016, the "Average employee attrition rates at Philippine contact centers was approximately 70% but has decreased to 50%". To be frank, this is terrible! (yes, it is good it has come down, it needed to!). You cannot save money and drive high Net Promoter Scores (NPS), a measure of customer satisfaction, with this type of employee turnover. Yes, there is a slight difference between attrition and straight employee turnover, but the the end-result is the same thing: Poor service delivery to your customers utilizing Filipino labor.
According to a World Bank report in 2016, the Philippine Labor market is near full employment (not good for call centers), and employees are underpaid (meaning, they do not make enough money). This creates desperation in the labor market resulting in problems when serving your customers. Download the World Bank Report here. It is very informative on many levels, not just related to contact centers.
Although this is not discussed too much, the Philippines are very susceptible to fiber optic breaks and slow-downs in internet connections to run your business. They are dependent upon a relatively small handful of underwater fiber optic cables to handle your work as compared to cities in North and/or South America (land based centers). This means your business is in the hands of a small group of people which equates to very high critical points of failure at almost any moment.
So, after reading this you may conclude I do not like the Philippines. No, that is not the case. I am just communicating that the Philippines, as a global outsourcing destination, is way over saturated. And, keeping business there (or putting even more business there), puts your business at high risk. Example, the approaching Typhoon Yutu, as of the date of this Blog Post (October 29, 2018).
Are you concerned? Call me at 602-312-8900, or email me at firstname.lastname@example.org today to discuss a disaster recovery strategy, or some type of global contact center redundancy strategy. The outsourcing destinations run by Emerging Global Services (EGS) are natural disaster free zones where you can be almost 100% certain you will not have the problems most commonly found in the Philippines.
It is time to redistribute your work out of the Philippines to ensure consistent customer service operations free of major disruptions. Call me today. We can turn agents up for you "on demand" if Typhoon Yutu keeps you awake at night!
Steve Shefveland, Founder
Emerging Global Services, LLC