Cebu Tagged as Top Global Outsourcing Destination
Tholons Inc., a renowned strategic advisory firm, recently named Cebu as one of the world’s top outsourcing destinations. Moreover, the country was seen outpacing established European locations.
According to House Assistant Majority Leader and Cebu Rep. Gerald Anthony Gullas Jr., Tholons ranked Cebu as the 8th best location in their 2014 Tholons Top 100 Outsourcing Destinations list, trailing after a strong line up that includes Bangalore, Metro Manila, Mumbai, Delhi, Chennai, Hyderabad, and Pune.
Gullas added that Cebu will likely attract more investors once construction of the Mactan Newtown, a 28.8-hectare special information-technology park and economic zone, is finalized. The township will be located in Lapu-Lapu City, Cebu and is fronted by Megaworld Corp. It is likewise anticipated to promote a "live-work-play" environment.
The official pointed out that Cebu has covered the fundamentals such as fiscal incentives, strong support from local government, college-educated human resources professionals, infrastructure, among other innovations to progress as an outsourcing hub. In addition to that, he said Cebu offers an environment that promotes well-being because it is less congested, therefore minimizing stress among workers. The region is also known to be less expensive than its counterparts such as Manila and other outsourcing hubs worldwide.
Of all the outsourcing hubs in the Philippines, Gullas said only Cebu and Metro Manila made it to the top 10 of the 2014 Tholons Top 100 Outsourcing Destinations.
A new process is expected to go beyond the growth rate of the information technology - business process outsourcing (IT-BPO) sector this year. Data analytics is a new higher level of outsourcing service that clients are pressing for. It is also where the IT-BPO industry of the Philippines can earn $7 billion.
Opportunities in the BPO sector
There are many uses for data analytics. Information is gathered, analyzed, and are converted into easy-to-process figures that can help organizations perform research, develop new products, monitor consumer behavior, among others. For instance, telecommunication companies, the banking industry, and retail chains deal with large volumes of data. These are then converted into useful information that can help guide corporations in making decisions.
At the Analitika’s press conference at the Manila Polo Club, Mariels Winhoffer, Country Manager at IBM Philippines, said the country is being prepared to become the global hub for smarter analytics.
The executive added that the Philippines only accounts for only one percent ($212 million) of the $212-billion global IT industry. She said the country can increase industry foothold to 10 percent ($7 billion in the $70 billion global big data/business analysis segment).
She also pointed out that the IT-BPO sector, though lucrative, is unsustainable and only grows five percent a year. Analytics, on the other hand, is growing by 15 percent per year. She then shared Gartner’s estimates where it is predicted that 4.4 million jobs in data analytics will be needed in 2015, but only 30 percent of the positions will be filled.
Department of Labor and Employment Secretary Rosalinda Dimapilis-Baldoz and Jose Mari Mercado, President of the Information Technology-Business Processing Association of the Philippines (IT-BPAP), are set to ink a partnership agreement and a two-year joint action plan for Filipinos who are working in the call center sector.
Action plan to address work environment problems in the BPO sector
The pact is expected to promote occupational safety and health standards (OSHS) and general labor standards (GLS) as well as IT-BPM best people practices. This is to address the health problems and social issues that are common in the call center sector.
This month, the action plan will be launched together with a briefing on labor law compliance and occupational safety and health standards. Each organization is expected to appoint their respective technical working committee (TWG) to jumpstart the action plan that is said to take effect until December 31, 2015.
The action plan will also include strategies and activities that focus on the development of information and education materials, assessment on IT-BPAP hubs, monitoring on occupational safety and health compliance, and collation of relevant industry-specific data for future analysis.
Baldoz added that the action plan is only a part of the long-term goal that aims to address the work environment problems in the business process outsourcing (BPO) sector.
Talent Shortage in the Philippines' BPO Sector
For the Philippines to achieve growth targets for 2016, the Information Technology and Business Process Outsourcing (IT-BPO) sector of the Philippines has planned to increase its talent pool. In fact, Accenture, one of the major players operating in the country, said anyone who wants to be part of the outsourcing industry is welcome to apply.
Manolito Tayag, Managing Director at Accenture Philippines and Vice-chairman of the board at the IT & Business Processing Association of the Philippines (IBPAP), said there are a lot of employment opportunities in IT-BPO because of its diversity and scale. There’s also room for career growth.
Tayag added that last year, the IT-BPO industry posted US$15.5 billion in revenues and provided 900,000 jobs.
The executive further noted that the BPO sector will continue to expand. He added that outsourcing is one of the pillars of growth of the local economy. Based on the 2016 IT-BPO roadmap, the goal is to employ 1.3 million Filipinos by 2016, and generate US$25 billion in revenues.
Accenture Philippines is the third largest Accenture branch in the world with 32,000 employees - following Accenture India and Accenture US.
Tougher Competition in Global BPO
According to Wipro Board Member Jagdish N Sheth, Indian IT companies should prepare for new challenges as competition gets tougher. He cited the event where the Philippines snatched the call center leadership from India. Sheth added that Indian IT leaders should not be complacent and possess a mindset that their reign in the IT service world is permanent.
Sheth is also the Charles H Kellstadt Chair of Marketing at Goizueta Business School in Emory University in the US, and a key advisor to corporations such as AT&T, Ford, GE and Motorola, and many more. The professor stated that providers in India have not evolved and have not kept up with the changes globally.
Visa issues are also an important aspect that Indian firms should look into. It is hard for Indian tech companies to meet financial goals because strict immigration policies in the US are pushing them to hire onshore.
Data from brokerage Prabhhudas Lilladher highlighted the 2014 Salary Guide by Robert Half Technology. The report stated that the average base compensation for IT professionals in the US is likely to increase by 5.6% this year and the tech segment will experience the highest increase out of all the fields included in the research.
Sheth further explained that Indian firms need to hire Americans while maintaining margins. Americans are preferred over Indian IT workers because they are believed to be more productive.
The Philippines on track in Reaching Millenium Development Goals
During his speech at the Economic Journalist Association of the Philippines (EJAP) last Saturday, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said as the economy of the Philippines continues to develop, the local government has been able to achieve its Millennium Development Goals (MDG). According to Guinigundo, more Filipinos now have jobs and are able to sustain their daily needs.
He then pointed out that this target is the first item indicated in the government’s MDG. Moreover, he stated that the certification program under the Technical Education and Skills Development Authority (TESDA), which aims to assist those who want to work for the government, boosts their chances to get employed not only locally, but abroad as well.
For domestic opportunities, he cited the business process outsourcing (BPO) sector as a key provider of jobs in the country. Guinigundo added that the sector has contributed immensely to the growth of the country’s gross domestic product (GDP). The BPO sector is also a crucial factor in the growth of the food industry. Because of the increased purchasing power of Filipinos, restaurants are popping up where the BPO hubs are.
Business Hubs Perfect for Outsourcing Providers in the Philippines
Recent information shows that Megaworld, one of the Philippines’ frontrunners in the property development segment, is eyeing to construct 10 "townships" valued at $5 billion within the country. These townships will be fashioned based specifically on the needs of business process outsourcing (BPO) companies. This proves that outsourcing is an integral factor in the evolution of the country’s major cities.
Bloomberg anticipates that these townships will yield about 16 million square feet of office space over the decade. However, the office spaces will only be the focal point of a much larger plan which includes residential and commercial properties.
It’s actually a concrete plan wherein travelling to and from the office will be much easier for BPO workers, especially the ones clocking in for the graveyard shift, if they live within the township. It would also be more convenient if the operating hours of shops are similar to the schedule of the workers.
The design of the townships of Megaworld will also be based on its prominent development called Eastwood. The business and residential hub boasts of 40 acres and is only eight miles from the center of Manila.
Megaworld is also planning to develop townships outside Manila. These hubs will be located in Iloilo, Davao, and Lapu-Lapu in Cebu, all of which are in southern and central Philippines.