Empathetic Robots Are Killing Off the World’s Call-Center Industry
The coronavirus pandemic has been tough on the global call-center industry, and nowhere more than in the Philippines, the world leader in the field. Hundreds of thousands of employees in the former U.S. colony field queries from the other side of the planet, and for the past year many of them have had to work alone from home through the night, grappling with frequent electricity outages, isolation from friends, and the snores of parents, partners, siblings, or children crammed into tight quarters. What comes after Covid-19 is likely to be even worse.
The lockdowns of the past year have accelerated the shift to greater automation in responding to inquiries to lenders, insurers, and telecom operators. Callers looking for assistance with a bill or bank statement increasingly communicate with artificial-intelligence-powered bots. And when they do connect with a human, it’s more frequently in a chat window with someone who’s engaged in multiple conversations at once.
Before the outbreak, clients used chat and AI bots less than 10% of the time, but that’s climbed to almost 25% and could reach 35% by yearend, says Mike Small, the executive responsible for U.S. and Canadian corporate clients for Miami’s Sitel Group, an operator of call centers with more than 20% of its 100,000 employees in the Philippines. “Because of Covid, plans that would have taken four to five years to implement were implemented in months,” says Small, who hasn’t increased staffing since 2019.
The shift away from voice operators threatens many of the 1.3 million people employed by outsourcing shops in the Philippines, about half of them call-center operators. As companies have taken advantage of the country’s low wages, cultural affinity with the U.S., and widespread English fluency, the sector has grown to account for 9% of gross domestic product, according to Oxford Business Group, generating $26 billion in revenue in 2019.
The threat is building as AI enables bots to be as efficient—and empathetic—as humans for many basic transactions. The Asian Development Bank predicts that by 2030 AI and similar technologies could displace 286,000 workers, or almost a quarter of the people in the Philippine outsourcing industry today, though the bank says productivity gains may create other jobs. The country’s IT and Business Process Association expects the sector to employ just 1.4 million next year, down from the 1.6 million it forecast before the pandemic. “We are alarmed,” says Mylene Cabalona, president of BPO Industry Employees’ Network, a union for call-center workers. “This will lead to massive displacement.”
Some local industry executives insist the situation isn’t as dire as many predict. AI is a long way from replacing humans for more complicated voice calls or chats, says Jonathan De Luzuriaga, president of the Philippine Software Industry Association. He predicts that companies fearing a slow payoff from expensive technologies will continue to stick with the cheap labor readily available in countries such as the Philippines. “The chatbot is at the bottom of the rung,” he says. “The high-level, industry-killer type of engagement—it’s not going to happen yet.”
And creating and perfecting those systems requires workers, says Arthur Nowak, head of the Philippines for TTEC Holdings, an outsourcing shop based in Englewood, Colo., with about 20,000 employees in the archipelago. True, up to 40% of simple transactions can be automated by implementing the latest technology, he says, and fine-tuning can increase that by 5% or more annually. But that’s shifting the focus of many TTEC workers in the Philippines to keeping the bots running smoothly. “Part of the job now is not only to answer customer inquiries, but also to work with teams on identifying areas where the customer experience is inhibited by digital gaps,” says Nowak, whose head count has been flat in the past year, vs. the 3% to 5% growth he typically sees.
To meet the evolving needs of the industry, the government in Manila is stepping up efforts to retrain workers at risk of being bounced by bots and shift the focus to more sophisticated areas of business process outsourcing, or BPO. President Rodrigo Duterte is increasing scholarships for science and technology education and wants to offer tax incentives to outsourcing companies that focus on non-voice services less at risk of automation, such as health-care information management and game development. The programs “will enable the creation of a Filipino workforce that is better able to adapt to the disruption brought by increased automation,” says Acting Economic Planning Secretary Karl Chua. “There is potential for the Philippines to transition from a BPO services hub to a big data-processing and analytics hub.”