By Audrey B.
The outsourcing industry is ever volatile and can be subject to the political and economic whims that threaten a country. While sometimes unrest in a country may have little effect on a call center services outsourcing hub, as when unrest in the Philippines made headlines last year and its current state now, it can also still have a negative effect on outsourcing; with Egypt’s unrest and uncertainties, its plans to emerge as a sought after call center hub may have now been threatened.
Currently leading the global call center outsourcing market in terms of revenues, the Philippines is one of the preferred destinations for call center outsourcing services worldwide. Business has not waned for the country, as outsourcing companies have continued expansion plans this year. The employment figure for the industry expects a 20% annual growth over 3 years with more companies shifting services to the country.
Philippine subsidiary of Canadian telecommunications company Telus Communications of Telus Corporation (NYSE:TU) vouched for the country, citing it as a vital global site for their global business process outsourcing operations on the 2nd of February. Telus’ call center operations currently make up 80% of the company’s revenues, and the company forecasts that call center operations will likely grow another 20% this year. Telus is planning to expand further and open a fifth site in the country’s capital adding to its 8,500 strong workforce of which the majority are functioning as call center agents.
New contact center operations are also being established in the country, including two new companies in just the past few days. Genting Hong Kong’s (OTCPK:GMALY) Norwegian Cruise Line established a call center on the 7th of February in the country. The contact center’s team consists of 15 consultants, which will support the company’s rapidly growing Asia Pacific markets as well as provide assistance to travel partners in the region, real time. Aside from this, a new, unnamed company is also setting up operations in Davao City in the Philippines, as reported in local newspaper carrier, Philippine Daily Inquirer on the 12th of February. The company, according to the report, will require 400 call center agents. According to a source, the unidentified company is, "one of the five large international contact centers."
For Egypt meanwhile, the unrest has seen the country’s hard work in terms of economic reforms sidetracked as companies lose confidence in the country especially with the curtailing of the internet, which analysts estimate cost Egypt $3 million per day within the outsourcing industry alone.
Egypt had previously seen major investments from outsourcing companies in 2009 at the country’s Smart Village in Cairo, including Sykes (NASDAQ:SYKE) and Stream Global Services (NYSEMKT:SGS) to name a few. But developments in the country have pushed investors out of the country including Microsoft (NASDAQ:MSFT) which has operations in the Smart Village. The company decided to distribute the services that it provides through Egypt to other locations, including its call center services. HP (NYSE:HPQ) employees were advised to refrain from going to work and Vodafone (NASDAQ:VOD), which had an 800 strong workforce for call center operations in the country, moved its International Services to its UK headquarters. Also, at that time, 180 of Vodafone’s staff was unreachable which forced the company to hire 100 new staff in New Zealand to handle the call volume. Wipro (NYSE:WIT) and Infosys (NYSE:INFY) have also stopped operations in the country and have evacuated their staff.
How fast before Egypt will be able to recover its standing in the call center outsourcing industry is anyone’s guess right now, whether it will be able to recover as the Philippines had, considering that Egypt’s problems are certainly larger than what the Southeast Asian country had faced before, it may take longer than just a few short months.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.