The Information and Communications Technology Office (ICTO) of the Department of Science and Technology (DOST) is actively planning on developing more Next Wave Cities to accommodate business process outsourcing (BPO) firms in the Philippines.
Louis Casambre, Executive Director at ICTO, said they are hoping to create attractive alternative outsourcing destinations outside Metro Manila. Moreover, the organization anticipates that the new ICT destinations will spur development and reinforce growth in the nation’s provinces.
Philippines' Next Wave Cities for BPO
The Next Wave Cities in the Philippines are Metro Cavite (Bacoor City, Dasmariñas City, and Imus City), Metro Laguna (Calamba City, Los Baños, and Sta. Rosa City), Metro Naga (Naga City and Pili), Metro Rizal (Antipolo City, Cainta, and Taytay), Baguio City, Davao City, Dumaguete City, Iloilo City, Lipa City, and Metro Bulacan (Baliuag, Calumpit, Malolos City, Marilao, and Meycauayan City).
DOST-ICTO and iBPAP made sure that Next Wave Cities are qualified in terms of talent, innovation, connectivity, costs, accessibility, and business and political soundness.
Emmy Lou Delfin, Program Manager of Next Wave Cities, said their plans are supported by local government units, local ICT organizations, and school administrators.
In other news, seven cities in the Philippines made it to Tholons’ top 100 outsourcing destinations in the world.
According to CBRE Philippines, a renowned commercial real estate services company, the country’s property sector will stay resilient this year as more and more investors are now familiar with the vast opportunities the Philippines has to offer.
The BPO sector included in the key propellers of the real estate industry
Rick Santos, Chairman at CBRE Philippines, cited the business process outsourcing sector as one of the key propellers of the real estate industry. 2014 could yield the best market for the local property sector in the last 20 years - whether it be commercial, residential or for office use.
Santos cited Urban Land Institute’s 2014 report which stated that among the countries in the Asia-Pacific region, the Philippines took the fourth spot, following Tokyo, Shanghai, and Jakarta.
The country is seen as the premier market for office, residential, and retail sectors due to the young demographic and strong economy.
The Philippines is one of Top Outsourcing Hubs in the World
According to the recent ranking of top outsourcing destinations in the world from Tholon’s, an investment advisory firm, Manila placed second, outpacing one of India’s strongest cities - Mumbai.
Cebu, another city in the Philippines, took the 8th spot. Other Philippine outsourcing hubs were also included in the top 100 list: Sta. Rosa, Laguna, Davao, Iloilo, Bacolod, and Baguio.
Meanwhile, other reports indicated that the demand for manpower in the business process outsourcing (BPO) industry is rising, and it is looking to target 1.3 million full-time Filipino employees by 2016.
However, in order for the industry to reach its target, they would have to address a number of challenges first. Gillian Joyce Virata, Senior Executive at the IT and Business Process Association of the Philippines (IBPAP), said applicants are screened based on their critical thinking, computer know-how, and good command of the English language. In fact, for every 100 BPO applicants for entry-level positions, only nine applicants pass the initial exams and interview. Twenty to 40 of the 100 are subject to training while the rest are rejected due to lack of the needed skills.
According to a report by consulting firm Tholons, India and the Philippines are still the prevalent hubs for business process outsourcing (BPO) worldwide.
PH second in Global Outsourcing Market
The firm’s report, which ranks the top 100 outsourcing hubs, showed that the top 8 cities can be found in the Philippines and India. Bangalore is still at the top spot, with Manila taking second place from Mumbai. Another city in the Philippines that made it to the top 8 is Cebu.
India’s edge was found to be its large workforce. In fact, it employed 2.8 million citizens in the BPO industry back in 2012, a far cry from the Philippines’ 750,000 in the same year.
In terms of revenue, industry body NASSCOM predicts that by 2020, India will generate $50 billion. The Philippines, on the other hand, is targeting $27.4 billion by 2016.
Meanwhile, the Philippines’ improving infrastructure and support from the government make it a stronger candidate in the outsourcing arena. It has a number of emerging cities for BPO, and 10 more are strongly considering developing their area to become outsourcing hubs.
Some of the Philippine cities that were included in Tholons’ list are Davao, which climbed one spot from 70th to 69th, Metro Laguna at 82nd from 84th last year, Bacolod at 93rd and Iloilo at 95th.
"I wish we could fully express how humbled we are by the donations and sacrifices of MicroSourcing employees for Typhoon Yolanda survivors," says Cecile Corvera, from OIC National Resource Development of World Vision.
MicroSourcing turns over P1M donation to World Vision for Typhoon Yolanda suvivors
MicroSourcing turned over a donation of Php1,021,746.61 to World Vision for the relief and rehabilitation of communities affected by typhoon Yolanda.
In a turnover meeting last January 15, MicroSourcing employee representatives received updates from World Vision's Visayas operations and the organization's ongoing programs that will be funded by the donation. World Vision has recently concluded the phase of immediate relief. They were able to distribute food supplies, shelter kits, and hygiene kits to over 560,000 families. For children who experienced trauma, World Vision built child-friendly spaces for the use of 20,269 children now receiving support and psycho-social services for holistic recovery.
MicroSourcing's donation will go to the next phase of disaster aid - Rehabilitation. Programs for repair and reconstruction will be focused on rebuilding school infrastructure and shelter and restoring livelihood and sources of basic necessities like water. In the following months, World Vision will carry out the rehabilitation phase in the following areas: Alang-alang, Leyte; Dagami, Leyte; Dulag, Leyte; Matag-ob, Leyte; Merida, Leyte; Villaba, Leyte; Ormoc City, Leyte; Tacloban City, Leyte; Batan, Aklan; and Estancia, Iloilo.
MicroSourcing's Yolanda Fund was raised by employees. Over 1,000 employees donated part of their 13th month pay (annual bonus) and voted to donate the Christmas party budget to the fund. "This is the first giving idea we have encountered from corporate donors. Our hearts are moved by such a unique gesture of generosity," Ms. Corvera thanks MicroSourcing for their contribution.
World Vision is planning a visit to affected areas in the Visayas region in March. MicroSourcing will join the trip to assess the progress of school infrastructure reconstruction and its other projects with the organization.
Stronger Philippine Peso to Result to more BPO Jobs
According to House Assistant Majority Leader and Cebu Rep. Gerald Anthony Gullas Jr., the recent depreciation of the Philippine Peso against the US dollar means the business process outsourcing (BPO) industry of the Philippines and overseas Filipino workers (OFWs) are earning more. This also implies that the robust BPO industry will be able to produce more jobs faster this year.
Gullas, who is also a member of the Nacionalista Party, noted that BPO companies are paid in dollars, but operation and salary expenses are in Philippine Pesos.
Last Firday, the peso closed at its lowest level in over three years at Php45 to a dollar. It is a 10.48 percent difference from the 40.73 to 1 dollar exchange rate in January of last year. Gullas said BPOs now have a stronger Peso spending power, which they could use to expand and hire more employees.
He also estimated that for every $10,000 spent by BPOs on expanding operations, one full-time job is usually produced.
The Cebu Representative added that Cebu is an emerging BPO hub as it now has 25 fully functional IT parks, and 12 more on the way. More than 100,000 are now working full-time in BPOs located in Central Visayas where revenues reached $516 million in 2012.
Meanwhile, the IT and Business Process Association of the Philippines (IBPAP) projected that the industry will produce 372,000 new jobs starting this year up to 2016.
Information Services Group (ISG), a market intelligence and consultancy firm, recently released a general report on the global outsourcing industry’s activities for 2013 called the ISG Outsourcing Index.
Data from the report included findings on deals with annual contract value (ACV) reaching $5 million or more awarded in the last quarter of 2013 increased 13 percent, but the total ACV decreased 12 percent to $4.6 billion. For the entire year, the volume of closed deals climbed two percent, but values dropped 18 percent to $18.7 billion. 2013 accrued 1,155 contracts in total – 309 of which were awarded in the fourth quarter.
ISG notes that global outsourcing activity was strong during the fourth quarter, but then again, contract value continued to fall as buyers are now moving towards smaller deals.
Slowdown in global outsourcing activity
Some of the reasons ISG found that have contributed to the drop in value are the decrease in number of mega deals (deals with ACV of $100 million and up), the slowdown in activity within the manufacturing industry, as well as financial services and overall weakness in the business process outsourcing (BPO) sector.
According to John Keppel, President of ISG, the figures they have reported are consistent with the organization’s initial predictions where the fourth quarter of 2013 was not able to recover the poor performance of 2013’ first half. However, for the long-term standpoint, the figures are in proportion to the pre-recession market levels. He added that they are starting to see a shift in demand for sourcing as economies are recovering from recession. He said outsourcing was once a tool used to take advantage of labor arbitrage during the economic downturn, and now, it is used to improve strategies for growth models.
It was also found that activity in contract restructuring increased 22 percent as more enterprises are moving towards multisourcing with short-term contracts. Information technology outsourcing (ITO) also climbed eight percent, specifically in the applications development and maintenance (ADM) segment. Activity in the EMEA region was also noticeable as contract volume jumped 18 percent – but in smaller average-sized deals.