Is Portugal the new 'India of Europe?' | Europe | News and current affairs from around the continent | DW | 18.03.2014
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Is Portugal the new 'India of Europe?'

Portugal is one of the eurozone's poorest countries. But there's one bright spot: the outsourcing industry. Multinational companies are increasingly turning to Portugal as a base.

Filipa Neves speaks five languages but still couldn't find steady work in her native Portugal. So she was about to move to Angola, a former Portuguese colony in Africa, where the economy is booming.

But she sent off one last resumé - to a call center. It was sort of a last resort. She'd heard about the stereotype.

"You know: A contact center is like this dark hole they put you in. You're sitting all day with a headset, and it's like a scary movie and they don't pay you," she recalls thinking. "But then I saw this ad for French [language skills] and I said, 'You know, why not?'"

Multilingualism brings bonuses

She got the job. Neves now works as a customer service agent for some of the biggest European companies, out of a glass office building overlooking Lisbon's riverfront, doing what she loves: speaking foreign languages.

"And it's kind of a whole new world of people speaking so many languages," she exclaimed. "During the day, I might speak five languages!"

An instructor holds a training class for new hires at the Lisbon office of Teleperformance (Photo:Teleperformance, via DW Correspondent Lauren Frayer)

Many of the employees love their work as they get to speak multiple languages

Sure enough, workers on their cigarette break outside Neves' new office in Lisbon speak perhaps a dozen languages. Many are half-Portuguese and half-French, or half-German, or half-English - the offspring of generations of Portuguese forced to go abroad to find work.

A result of migration

Many Portuguese went to France in the 1960s and '70s. According to the last census, some 240,000 Portuguese immigrants reside in Paris.

Now Europe's debt crisis has sparked a new wave of Portuguese migration, as educated youth flee to jobs abroad. Portugal's overall jobless rate has hit a record 16 percent, but youth unemployment is at almost 40 percent.

For Neves, her fluency in five languages - Portuguese, Spanish, French, English and German - virtually guarantees her a job elsewhere in Europe. But by landing a job at a call center at home, she won't have to leave her family.

Outsourcing gives hope

With Portugal's economy tanking, the outsourcing industry offers one glimmer of hope and economic growth. Multinational companies are increasingly turning to Portugal as a cheap base for their call centers and customer service hotlines. They're taking advantage of Portugal's low wages, high unemployment and facility with languages. The average salary for college graduates in Portugal is about 600 euros a month (about $812).

Call Center in Portugal

Call centers like Teleperformance are booming in Portugal

"This specific market is absolutely booming! We are almost doubling the size of this business, year on year," said Neves' boss, Joao Cardoso, the CEO of Teleperformance Portugal. It's a firm that manages local call centers of multinational companies. "So this market is totally unrelated to the Portuguese economic situation."

Portugal's economy shrank by more than three percent last year. But call centers are adding thousands of much-needed jobs while other industries shed them. And Portugal is joining countries like Bulgaria, Ireland and Poland as outsourcing leaders in Europe.

'Near-shoring' benefits poorer economies

Portugal is also benefiting from an outsourcing trend dubbed 'near-shoring,' in which Western companies base their call centers closer to home, rather than farther afield in countries like India, the Philippines and China.

"A lot of strong Western companies are coming back home, in terms of the operations that in the past they had placed in offshore locations," said Guilherme Ramos Pereira, executive director of the Portugal Outsourcing Association, which lobbies global firms to come to Portugal. "They went [to India] because they needed large numbers of resources and low cost of operations. But stuff like innovation, quality of the service provided, quality and maturity of professionals - that's what we have. As we lobby, we use those arguments."

Advantages for Europe

Scene of downtown Lisbon, where the youth unemployment rate is around 40-percent. Portugal is the eurozone's poorest country (Photo: DW correspondent, Lauren Frayer)

Outsourcing is the one bright spot in a very depressed economy

For European companies, basing call centers in Portugal means there's no currency conversion, nor significant time difference. It's a bargain for companies, Ramos Pereira said, and also for the few foreigners recruited as call center agents for the few languages Portuguese might not know.

"It's a lot cheaper than living and breathing in Scandinavia!" exclaimed Tommy Nielsen, a Danish citizen who grew up in Sweden and speaks several Scandinavian languages. He was recruited by a call center in Lisbon for his language abilities and made the move in part because his paycheck goes farther there.

Economists say the growth of Portugal's outsourcing industry is promising, and reveals how educated the population is, in terms of languages. But they caution against thinking of outsourcing as a cure-all for Portugal's economy, which was previously heavily dependent on manufacturing.

"Portugal won't be the 'India of Europe.' That's just not realistic," said Pedro Lains, an economics professor at the University of Lisbon. "We shouldn't be thinking of a doomed, low-paid economy. We should be thinking of an economy that will remain poor but with some growth, and where wages will have to increase in the near future."

Until that happens, though, Portuguese call center operators like Filipa Neves are happy to have a steady job. She wants to start a family.

"And that means that I need a stable job and a stable income," she said. "So that's one of my plans, to get pregnant and have a child. I think it's time now," she adds with a grin.

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