Davao is top ‘next wave’ BPO site

MANILA, Philippines – Davao has been named the Philippines’ top “next wave” city for business process outsourcing (BPO).

The city, located in the province of Davao del Sur, was tagged by the Business Processing Association of the Philippines (BPAP), Commission on Information and Communications Technology (CICT), and the Department of Trade and Industry as heading a list of top outsourcing sites.

Rounding up roll were the cities of Sta. Rosa in Laguna; Bacolod in Negros Occidental; Iloilo in Iloilo; Metro Cavite (Bacoor, Imus and Dasmariñas cities); Lipa in Batangas; Cagayan de Oro in Misamis Oriental; Malolos in Bulacan; Baguio in Benguet; and Dumaguete in Negros Oriental.

Sta. Rosa, Metro Cavite, Lipa, Malolos and Bagiuo are located in Luzon. Bacolod, Iloilo and Dumaguete are in the Visayas, while Davao and Cagayan de Oro are in Mindanao.

BPAP chief executive Oscar R. Sanez said Davao ranked the highest for availability of graduates and talented workers and also had good scores in terms infrastructure and cost.

Davao — along with other cities in Mindanao — suffered in terms of their business environment scores due to advisories issued by other countries against travelling to the island.

“Davao was penalized by two points due to the travel advisories of countries like the United States; it scored a three from the possible five. Other cities in Mindanao were also affected. What we should do is make sure that investors are informed that troubles are far from Davao and Cagayan de Oro,” Mr. Sañez said.

Davao currently hosts 20 outsourcing companies with 6,500 workers.

Changes in the top 10 list, meanwhile, included the “graduation” or the promotion of Clark as a center of excellence for outsourcing. The freeport joined Metro Manila and Metro Cebu.

Mr. Sañez said Davao bested Metro Laguna, last year’s topnotcher, because of a revision in the radius of available talent category. This year only talent found within a 25-kilometer radius from a BPO site was counted.

As a result, the areas comprising Metro Laguna and Bulacan were reduced to just Sta. Rosa and Malolos.

Gillian Joyce G. Virata, BPAP executive director for information and research, said potential revenues coming from the next wave cities over the next two years was $1.2-1.5 billion. Employment is also expected to increase 60% from 47,000.

“The list of next wave cities is really to promote these cities so they have something to sell to investors and help them convince investors to build and invest in their cities,” she said.

Many of the cities named in the top 10 have big student populations.

The cities which almost made it to the top 10, said Mr. Sañez were Dagupan in Pangasinan, Legazpi in Albay, Metro Subic in Zambales, Metro Naga in Camarines Sur and General Santos in South Cotabato.

Transport infrastructure, said an observer, is one of the biggest challenges facing cities outside of Metro Manila which looking to attract BPO investors.

David T. Leechiu, country head of real estate service firm Jones Lang LaSalle Leechiu, said that more airports should be built.

“More airports and seaports, both domestic and international, must be built as well, keeping travel to within two hours,” he said.

Mr. Sanez noted that the power situation has not directly affected the BPO industry, but said the stability of supply was also a factor in attracting investors.

The Philippine BPO industry and employed around 442,000 employees and garnered revenues of $7.2 billion last year, the latter a 19% gain from 2008’s $6.06 billion.

The BPAP expects revenues to hit $9.5 billion this year as more markets become confident in the country. –Emilia Narni J. David, BusinessWorld