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Tag Archives: Economic Development

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The Call Center Industry: The Next Big Thing For Economic Development?

Trevor No Comments

Nowadays you open a newspaper and most jobs relate to call centers. Advertising competitive salaries, great growth opportunities and low entry barriers, companies like Xerox, Capgemini, Telus and [24]/7 have enchanted the young workforce who want to make a lot with the little they have.

Between 2009-2013 the BPO (Business Process Outsourcing) industry in Guatemala experienced an incredible income growth of 300%, reaching $650M in total revenues by the end of that period[1]. Focusing mostly on customer service and financial operations Guatemala soon became the Central American hotspot for outsourced call centers employing around 35,000 agents[2].

This boom, however, did not only attract business investors and entrepreneurs. Economists and development agencies also grew interested, as call centers became a promising solution for poverty alleviation in developing countries.

“If you want Guatemala to prosper take the people from the fields and give them a job in a call center.” Economics professor Edgar Ortiz from the “Universidad Francisco Marroquin” expressed.

Being labor-intensive and known for profiting on low wages it is hard to imagine call centers as poverty alleviators. Surprisingly enough, these businesses paired up with other forms of investment can promote development and break the poverty trap in more than one way.

 

 

Source: IB/Economics

Source: IB/Economics

 

  1. Call Centers Offer Income+

 The Human Development index calls education, health and disposable income the three pillars of development. Therefore, to be poverty alleviating, companies must (1) create stable income-generating opportunities for the poor, (2) offer their workers enough income to live and (3) make health, education and financial services accessible to their workers.

Call centers achieve this in the following way:

  • First, they create job opportunities that target the poor by setting low entry barriers (regarding experience and skills) and opportunities to grow.
  • Second, call centers offer most of their agents a higher wage compared to their alternative source of income. For example, an average Guatemalan farmer that makes $354 a month can now make up to $700 by working at a call center. An increase of 100% allows workers to meet their essential needs, spend more on health, nutrition and education and accumulate capital for later investments or remittances (which spurs development even further especially in Latin America).
  • And third, the different worker benefits offered by call centers give agents and their families the opportunity to save and afford otherwise unaffordable options such as health insurance, credit services, family planning, meal plans and other essential packages.
Source: celfoundation.org

Source: celfoundation.org

         2. Call centers have a direct effect on education

Another development benefit of call centers is the direct role they play on education. Although they provide specific training to their workers, these end up learning much more than that.

Studies from Princeton University show that people who worked at call centers often left with newfound interpersonal, confidence, language and communications skills that made them more competitive and eligible for better paying jobs.

Furthermore, those who sacrifice school for work could consider call centers as the next best option, since they act as vocational training entities that have the means and talent to prepare skill-savvy workers. Although, to achieve true development, countries must set policies in place that allow all citizens to finish their studies.

Source: World Bank

Source: World Bank

           3. Call centers attract large amounts of foreign direct investment (FDI), which leads to economic growth

Finally, if we think macro economically, call centers spur a country’s development by attracting large amounts of direct foreign investment and growing sustainably over time.

FDI increases a country’s capital stock, improves productivity and brings better and more globalized skills and technology into the host country. Additionally, investments also encourage competition, forcing companies to develop themselves and their workforce continuously to stay in the market.

Higher productivity and competition means more and better choices for all owners, clients and workers, better wages, better education opportunities, better products and more profits.

Before you bet on FDI, it is important to understand that FDI can work only if there’s little political interference, a proper investment environment, little corruption and capable individuals to administer the capital.

Source: Sundaytimes.lk

Source: Sundaytimes.lk

Conclusion

In conclusion it might be wise to admit that call centers could indeed be the next solution for poverty alleviation. Their structure and labor-intensive nature makes them ideal to attract and develop the poor by offering income+ opportunities without compromising profitability. Nonetheless, in order to achieve true poverty alleviation, call centers need to focus on reducing their attrition rates and in giving their benefit packages a genuine poverty-alleviating focus. Also, if they were truly going to alleviate poverty, call centers have to offer jobs that give people enough time to gain all the skills, benefits and financial boosts they need to reach a sustainable and increased standard of living, on top of creating environments that won’t be detrimental to the worker’s physical and mental health.

A couple recommendations to reduce attrition and create stability, according to experts, are to reach less stressful work environments, provide various schedule options, create physical and mental care programs and adopting a culture that promotes a healthy life-work balance.

Call centers can help countries develop but they need to focus on people as much as they focus on profits and attract investments both for industry and infrastructure growth.

 

Sources:

[1] BPO Industry In Guatemala, recovered from: www.investinguatemala.org on August 2016.

[2] Ibid.

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