Outsourcing: the gold rush that may further impoverish Filipinos

There's been a lot of trumpets being blown over how the Philippines had recently surpassed India as the world's biggest remote supplier of call centre and back-end business process outsourced (BPO) services. The value proposition of such services to the market is quite clear as far as Filipinos are concerned: they are delivered on the cheap by a society awash with under-employed university graduates who speak excellent English.

However, success in the call centre industry (or any industry for that matter) is a two-way street. Despite the enormous population of the Philippines, only a small subset of its people are qualified or skilled enough to work in a call centre or BPO operation. And despite the industry supposedly set to post healthy growth in demand for such services in the "foreseeable future", the rate at which the Philippine education system is churning out the needed bright bulbs cannot keep up.

Indeed, the one thing that the Philippines has consistently produced and/or exported in large volumes is mediocrity. Once a foothold on a sure thing is secured, Filipinos ramp up capacity and churn out such products in value-crushing volumes, all but commoditising and economically trivialising their cash cows, whether it be jeepneys and tricycles, shawarma and lechon manok stands, nurses and physical therapists, or run-for-a-cause marathons.

In my book, I cited the excellent example how the renowned marble of Romblon Island failed to change the fortunes of Filipino marble craftsmen...

Ambeth Ocampo described how a lack of an ability to imagine and dream is readily evident in Philippine industry in an Inquirer article he wrote in September 2005 after a visit to the marble-producing Philippine island of Romblon.

Of this island's craftsmen, he wrote:

What did the people in this sleepy town do with their marble? They made them into tombstones, mortar and pestle. As a tourist, I asked myself: How many "lapida" [tomb markers] and "dikdikan" [pestle] do I want? How many lapida and dikdikan do I need? Come to think of it, how many lapida and dikdikan do they sell in a year? Here is a region that has skilled manpower and an almost inexhaustible natural resource, but their products are unimaginative. If culture comes in to introduce new designs and new uses of Romblon marble, that would go a long way in developing the industry and the province.

Indeed, one can draw similar analogies in the Filipino entrepreneur's penchant for following a "me too" approach to getting into business. There is an almost lemminglike behaviour in the way Filipino entrepreneurs get on a business model bandwagon. This behaviour accounts for the lechon manok (roast chicken) and shawarma (Mediterranean wrap) booms in the 80's and 90's. The proliferation of jeepneys and tricycles also illustrates how such safe but low-returning (and, in the long run, unsustainable) ventures are among the favourites of individuals with a bit of capital to apply.

As BusinessWeek observed...

[...] the Philippines produces only about 10 percent as many engineers as India. Indian outsourcing shops have gone from answering phone calls to account management, tech support, and consulting gigs such as helping banks manage financial derivatives and improving retailers' supply chains. While it's fairly easy to handle customer phone calls, higher-level work requires the kind of specialized education that India provides the 400,000 engineers it graduates annually.

Telemarketers, customer service clerks, and payroll processors are to the BPO industry as what the lapidas and dikdikans were to the marble crafting industry of Romblon. The challenge lies not in how many Filipinos can be employed but in how much of their minds can be engaged.

In the same way that jeepneys imprisoned the micro-capital of millions of unimaginative Filipino entrepeneurs, the outsourcing bonanza also presents a potential poverty trap to millions of intellectually stunted Filipinos. Already cybersex is emerging as the "dark underside" of this 21st Century gold rush.

They say cyber pimps are offering cheap services via the Internet in a seedy mutation of the country's sunshine outsource industry in which call centre work and other back-office operations are done for companies in richer countries.

In one recent police raid on a house in Olangapo city in the northern Philippines, five girls aged 14-18 and three women were found performing sex acts in front of web cameras for clients sitting at computers overseas.

"It's a lot like working for a call centre. We do shifts and we chat. They can also make us do anything, as long as they pay," said one of the girls picked up in the raid who used the working nickname of Rainbow.

Unlike jeepneys, the personal capital being tied up here is intellectual. While the proliferation of jeepneys and tricycles sucked up millions in hard-earned savings of returning Overseas Foreign Workers and trapped these forever in dead-end assets, low-level outsourced work will suck up millions of man-years of an entire generation's youth. Even for less seedy conventional call centre work, education experts already lament the way an industry that builds clerical skills and not much else already employs a large chunk of the premium products of the Philippine education system.

The challenge for Filipinos is to learn from the past, a past that abounds in lessons coming from our consistent failure to take sustainable approaches to employing our resources -- whether they be natural or human. One only needs to take stock of the vast wastelands where our magnificent tropical rainforests once stood. If we are not careful with the gold rush that is today's outsourcing industry, the term "wasteland" may one day be used to describe the landscape of Filipino intellectual wealth.