Davao City is top BPO destination

CITING its large available talent pool and modern infrastructures, a business group official said Davao City enjoyed 91 percent support among business process outsourcing (BPO) shareholders.

Lagging behind the home of the Kadayawan Festival is Sta. Rosa in Laguna province at 85 percent.

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Oscar Sañez, president of the Business Processing Association of the Philippines (BPAP), made this report during the 2010 Top 10 Next Wave Cities for Outsourcing confab in Pasig City.

On the more than 30 locations assessed, Davao City ranked the highest for availability of graduates and workers, the report said, adding “that the talent criterion carries the largest weight (40 percent) in the overall ranking, which explains the Davao City's position on top.”

Included in the Top 10 emerging BPO destinations are Bacolod City, IloIlo City, Metro Cavite, Lipa City, Cagayan de Oro City, Malolos City, Baguio City, and Dumaguete City.

Although outside the top 10 circle, the following areas are expected to show improvements in the next few years: Dagupan City, Legazpi City, Metro Subic, Metro Naga, and General Santos.

“These areas are still facing issues, whether in the area of talent availability and accessibility. To put it simply, it is quicker to fly to IloIlo than to drive for four hours to Dagupan,” Sañez said.

The same report also elevated the “Next Wave City” status of Metro Clark to an “established” BPO-IT location due to its sound infrastructure, global marketability, and capability to provide professional investor assistance.

According to Sañez, the cities were subjected to the following criteria: talent (40 percent), infrastructure (30 percent), cost (10 percent), and business environment and risk management (20 percent).

The project specifically looked into the capability of the cities in vulnerability to natural disturbances; crime rates; the presence of export zone sites and Information and Technology councils; cost of business; quality of roads; access to international and domestic flights; hotels; presence of fiber optic networks; rates and reliability of power supply; and cost of labor and office space.

The cost of doing business was also raised from five to 10 percent to reflect the change in market sentiment of investors following the global financial crisis last year.

Gillian Joyce Virata, BPAP Executive Director for Information and Research, said more than 47,000 people will be employed in the next wave cities, with revenues expected to grow by 60 percent between 2009 and 2011.

The sector contributed around $1.2 billion in the country’s economy last year.

The annual listing keeps track on the alternative sites for the growing BPO-IT industry in the country, outside Metro Manila and Cebu.

Started in 2008, the project was supported by the Commission on Information and Communications Technology (CICT) and the Department of Trade and Industry (DTI).

“Having 10 Next Wave Cities and more will ease the pressures to raise salaries and rental rates in these major hubs, and spread the benefits of employment, higher incomes, and increased business activity across the country,” BPAP said in a statement.

It added that as of last year, BPO activity in Metro Manila declined to 78 percent from 82 percent in 2007. This is an indication of the continuous expansion of foreign BPO firms to key cities nationwide.

Power crisis woes

As this developed, industry leaders have expressed concern over the continued power shortage that beset the country, a real estate services representative said in the same press briefing.

David Leechiu, Jones Lang La Salle Leechiu country head, said the BPO industry will be affected because it is electricity intensive.

“The industry is really concerned with the power crisis especially in Mindanao, which is a potential growth area,” he said.

But Leechiu said a well-equipped BPO facility should have 100 percent back-up power so as not to hamper operations.

Earlier, Socio-economic planning Secretary Augusto Santos said the manufacturing and services sector, of which the BPO belongs, might bear the brunt of the power crisis intensified by the El Niño phenomenon.

Recommendations

In order for the Philippines to maintain its clout in the global BPO portfolio, Leechiu said private and public sector should be accumulate and document scale of qualified labor pool; improve access by building more airports, and seaports; keep travel to within two hours from National Capital Region; build more viable BPO sites in special economic zones; and ride with tourism wave to build more accommodation for foreign clients.

The BPA/P estimated that the BPO revenues might reach $9.5 billion in 2010, a 26 percent increase from last year’s $7.2 billion with employment expected to breach half a million mark. (Virgil Lopez/Sunnex)