World's leading location for call centers? It's not India.

Global outsourcing firms have flocked to the Philippines, lured by tax breaks, cheap labor, and an abundance of college-educated English speakers. It's a rare piece of good news for that struggling economy.

Frustrated by her stagnant 12,000-peso monthly salary ($275) managing one of Manila's top record stores, Joepi Paloma quit her job and took a leap of faith on the Philippines' then-nascent call center industry.

Seven years and four promotions later, she earns a handsome six-figure (peso) monthly wage leading a team of more than 550 people in one of the archipelago's fastest-growing outsourced call centers. The sector is a rare spot of good news in an economy that has habitually underperformed, leaving around a third of the estimated 94 million population in poverty.

"It's exciting for the Philippines," she says. "I make good money, but my goal is also to make sure we keep creating jobs. If we keep our seats, [jobs] are filled. That's 550 families with at least one bread winner."

Lured by tax breaks, cheap labor, and an abundance of college-educated English speakers, global outsourcing firms have flocked to the Philippines.

Big names such as IBM, Shell, HSBC, Proctor & Gamble, and the Hershey Company all have Filipinos taking and making calls on their behalf.

So gilded is the industry that the southeast Asian nation last year stole India's perch as the world's leading location for call centers. Around 600,000 Filipinos are employed in outsourcing and the government forecasts the sector to generate $12 billion to $13 billion in 2012, rising to $100 billion by 2020.

After just a decade in existence, call centers account for 5 percent of gross domestic product, half the amount sent home by the estimated 9 million overseas Filipino workers, according to research by the Business Processing Association of the Philippines (BPAP).

"India is the call center pioneer, but the neutral accent of Filipinos means clients and their customers now prefer us to answer their calls," argues BPAP's Martin Crisostomo. "Filipinos have a natural gift for customer service: we are polite, respectful of elders, patient, and good shock absorbers for angry customers."

Taking advantage of the industry growth

In recognition of the success in the call center industry, President Benigno Aquino has pledged 62 million pesos ($1.4 million) to drum up new information- and technology-outsourcing business.

But industry leaders want more. They are pressing for the retention of tax holidays for new entrants to the outsourcing market, income tax breaks for skilled expatriates, and state-funded training for aspiring call center workers.

The goal is to capture the specialized, and more lucrative, outsourcing markets such as accounting, medical transcription, animation, and gaming – for which India still holds most of the aces.

The 'magic' industry

For now, Philippine businesses are enjoying the cascade of new money.

Cab firms, bars, cafes, car showrooms, and retailers of luxuries such as iPads, laptops, and other gadgets have scooped up customers from young workers with cash to spend.

"You can call it a magic industry – it's created an entire night economy in the Philippines," says Jojo Uligan of the Contact Center Association of the Philippines, an industry lobby group.

Eighty percent of call centers are in Manila, the sprawling capital, but outsourcing hubs are also opening in the provinces, bringing roads, airports, and jobs to poor areas.

Despite unforgiving hours that compel agents to inhabit a twilight world to serve US working hours, the sector appeals to a swath of young, driven Filipinos.

Workers start at around 13,000 pesos a month, about a third more than most graduate jobs, but top earners can take home 10 times that.

The big hope is that call centers will eventually convince more young Filipinos to stay in the country in search of prosperity.

"The more decent-paying jobs we have here, the more of our people we can keep," says BPAP's Crisostomo. "That keeps Filipino families together."

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