Loading ...By John Mark V. Tuazon
Computerworld Philippines
April 16, 2010
The Southern Mindanao city of Davao has been declared the top next-wave city for 2010 by BPA/P (Business Processing Association of the Philippines), making it the foremost recommended IT-BPO destination of choice in the country.
Other cities that made it to the list announced Thursday include: Sta. Rosa, Bacolod City, Iloilo City, Metro Cavite, Lipa City, Cagayan de Oro City, Malolos City, Baguio City, and Dumaguete City, listed according to rank.
Next-wave cities are key IT-BPO destinations outside of Metro Manila which BPA/P, in cooperation with CICT (Commission on ICT) and DTI (Department of Trade and Industry) recommend and support as prime outsourcing destinations in the country.
They are determined based on a four-factor scorecard, which is broken down into talent pool, infrastructure, labor cost, and business environment.
Most viable site
Davao City scored the highest among the 2010 list, registering a 99% score for talent, 95% for infrastructure, 74% for cost, and 76% for business environment, averaging a total of 91% to take the top spot.
Davao could’ve taken better ratings overall, if not for the numerous travel advisories issued by various embassies for the whole of Mindanao, according to Gillian Virata, executive director for information and research, BPA/P.
Changes in the scorecard mechanics, Virata said, ushered the entrance of new next-wave cities in the list, as well as the decline of some cities in rank. Baguio and Dumaguete, for example, were not included in the 2009 next-wave cities list, “but the elevation of Clark as an established city joining the ranks of Metro Manila and Metro Cebu allowed for a slot to open up,” explained Ray Anthony Roxas-Chua III, chairman of the CICT.
Chua said the group has also streamlined the list, consolidating Metro Bulacan and Central Bulacan into Malolos, and Metro Laguna into Sta. Rosa, in hopes of highlighting key cities instead of locales as BPO destinations, the likes of Bangalore and Hyderabad in India.
Metro Laguna, then the top next-wave city, dropped to second place, also due to a change in metrics. “The former method included graduates from Metro Manila, because they were included in our count of schools within a radius,” Virata clarified. “Now, we shrunk it to 25 kilometers, and chose to focus on Sta. Rosa alone.”
Post-Metro Manila
BPA/P said the next-wave cities are expected to ring in a total of US$1.2 billion in potential revenue for the industry. “The next-wave cities are a very important element of our 2010 roadmap, because it enables building capability at the grassroots level outside Metro Manila,” explained Oscar Sañez, president and CEO of BPA/P.
The efforts to spread talent and revenue across the country has paid off in recent years, if the slight decline to 78% from 82% of market concentration in Metro Manila is to be observed.
Growth rates in the capital region also stalled at 42%, while 2009 next-wave cities such as Metro Cavite and Ilioilo registered whopping 1,528% and 921% growth rates respectively. “This only shows that next-wave cities are accommodating more and more BPO companies, and are ready enough to sustain the industry,” Sañez added.
Return to Manila?
While the exodus of BPO companies to provincial locations remains unhampered, David Leechiu, country head of real estate services firm Jones Lang LaSalle Leechiu, believes market forces are driving Metro Manila to regain its state a prime destination for investors.
The amount of office spaces in the region, for example, are currently enjoying a surplus, with at least 449,996 square meters of floor space unoccupied, bringing rates down. “Very little movements of rents in the province is driving investors to go back to Makati and Fort Bonifacio,” Leechiu said.
Next-wave cities, therefore, have a long laundry list of tasks to address investor concern, which, according to Leechiu, include: security and validity of labor market; preference of clients for developed environments; accessibility; solid recovery platform from disaster; and the challenge of provincial expansion.
“Of these concerns, the top issue is documenting the scale of their qualified labor pool,” he said. Very few academic institutions, Leechiu pointed out, monitor where their students eventually end up after graduation, making it hard to determine the quality and quantity of the talent pool in the industry.
“Communities must also build more PEZA-ready sites and buildings in their cities, as well as ride with the tourism wave in order to build more accommodations,” he added.
The road ahead
Development of next-wave cities is just a portion of a four-core strategic plan for the IT-BPO industry—dubbed “Roadmap 2010”—developed by BPA/P in cooperation with consulting firm McKinsey in 2007.
Other themes in the roadmap include talent development, business environment, and the establishment of Team 2010 who will oversee that the projected tasks are carried out.
BPA/P celebrated the culmination of the roadmap during its general membership assembly meeting held on April 5.
During the event, Fred Ayala, chairman of BPA/P highlighted industry achievements over the years, including increasing overall talent pool from 163,000 to almost 500,000 in three years; partnering with over 30 universities and establishing six partner training centers; training for at least 100 BPO managers; and pioneering the first International Outsourcing Summit attended by at least 250 delegates from 10 nations.
The group also gave recognition to key personalities who made the execution of the roadmap possible: PEZA director general Lillia de Lima, who amended the old rules for PEZA incentives for five-hectare horizontal parks to include office buildings; Chris Beschouri, managing director of McKinsey & Company; and Ernest Cu, current CEO of Globe Telecom and then-CEO of STI, who worked closely with then-DTI secretary Manuel Roxas III in fortifying the industry.
BPA/P is slated to hold the 2nd International Outsourcing Summit on October 26-27, expecting at least 300 delegates from 15 countries to attend.
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The success of Davao is an example of well trained, knowledgeable and professional workers. If these continues, it might make the company’s size grow bigger.