‘Next wave’ outsourcing centers cited

MANILA, Philippines - Potential players in the local business process outsourcing (BPO) industry are advised to consider investing in Laguna and Cavite, two of the top 10 "next wave" BPO destinations that offer the most potential to support the growing industry. In a briefing, the Business Processing Association of the Philippines (BPA/P) and the Commission on Information and Communications Technology (CICT) announced the latest top 10 "next wave cities" for BPO development. "These are high potential areas with hardly any BPO presence at all," BPA/P Chief Executive Officer Oscar R. Sañez told reporters in a briefing Monday. So-called "next wave cities" are areas around the country outside Metro Manila and Metro Cebu which offer the best potential to support the growing BPO sector. The 30 cities considered for the list were scored on talent (50%), infrastructure (30%) business environment (15%) and cost of doing business (5%). Topping the list was the Metro Laguna, which includes Santa Rosa and Calamba areas. This was followed by Metro Cavite area, which included Bacoor, Imus and Dasmariñas areas. Both areas were in the list primarily due to their large talent pools as a result of the presence of several colleges and universities within the area. Completing the list in the order they were ranked are Iloilo, Davao, Bacolod, Angeles-Clark-Mabalacat, Baliuag-Marilao-Meycauayan, Cagayan de Oro, Malolos-Calumpit and Lipa. Only the top two, Cavite and Laguna, scored high in the "talent" criteria, while Bacolod scored highest in the "business environment" criteria. The rest scored highest in terms of infrastructure. Both Laguna and Cavite produce around 10,000 college graduates — all potential BPO employees — every year. Graduates from the other cities were just around half this number. "These cities are an important ingredient in the Roadmap 2010 initiative," Mr. Sañez said. Late last year, the industry group launched its Roadmap 2010, which projects the industry to grow to 900,000 to a million employees by 2010, from 300,000 in 2007. Export revenues are also expected to grow to $12 billion by 2010 from under $7 billion by yearend. However, he said 80% of the country’s outsourcing industry is still in Metro Manila. "There is tremendous pressure on Metro Manilain terms of manpower supply," Bureau of Investments Executive Director of Investment Promotions Celeste B. Ilagan said. She said expanding the industry in Metro Manila further may result in higher salaries and rent that will turn off investors. "It is the quality of talent that drives [companies] to explore investment opportunities in the Philippines," she said. However, if the cost of outsourcing services get too high, it may defeat the purpose of outsourcing in the first place, she said. BPA/P said it would rank the next wave cities every year, as well as come out with a list of the cities that have the potential to specialize in certain kinds of outsourced services like engineering and software design tasks, as opposed to the normal call center and customer service operations. The local outsourcing industry is targeting to grow its market share to 10% of the global outsourcing market, which is expected to grow to be worth $130 billion by 2010. The Philippines currently corners 9% of the global outsourcing market — a far second to the worldwide leader India, which has around half of the global market. — Paolo Luis G. Montecillo, BusinessWorld