Vol. XXI, No. 191 [ Business World Online ]
Wednesday, April 30, 2008 | MANILA, PHILIPPINES
DAVAO CITY — Fierce competition in the business process outsourcing industry is speeding up the expansion throughout Mindanao of BPO firms looking to lower operating costs and access new sources of talent to fill demand.
Davao and Cagayan de Oro are becoming known as BPO hubs offering a wide range of services, but there is still room for regional expansion, the United States Agency for International Development (USAID) said.
Current estimates of the total number of call centers in the Philippines range from 90 to more than 120. Fewer than 10 of these are in Mindanao, which has a quarter of the national population.
The global BPO industry will generate an estimated $310 billion by 2010, according to the Oxford Business Group. "The Philippines is projected to take 10% of the world market, and Mindanao stands to benefit from the country-wide expansion," the USAID said through its Growth with Equity in Mindanao (GEM) program.
Most larger-scale firms now investing in Mindanao are in Davao and Cagayan de Oro. "There are 3,000 existing seats in five call centers in Davao alone, with 3,000 more in the pipeline," said Andre Fournier of the Davao City Chamber of Commerce and Industry.
Link2Support, Inc. already employs several hundred call center agents in Davao and Cagayan de Oro. Western Wats, a US-based firm, is said to be investing P60 million in its Davao operations.
Joji Ilagan Bian, president of the Philippine Call Center Alliance, said Mindanao is also attracting firms planning small-scale centers with 250 seats or less. "They’re considering other urban centers like General Santos, Zamboanga, Iligan and Cotabato," Ms. Bian said.
General Santos, a bustling agroindustrial hub, is said to be planning a citywide wireless network using WiMAX technology, which should make it more attractive to BPO investors. It already has a fiber optic network in place.
The three-hectare Mabuhay IT Park, set up in General Santos by private developer Mabuhay Technopark Corp., is a one-stop facility for voice, video and data services, with secure network communications and backup power supply.
The potential BPO labor force in the city includes 5,000 new graduates from colleges in the city per year, with about 10,000 more from Sarangani, South Cotabato, and Sultan Kudarat, according to a report prepared with the Board of Investment.
"General Santos is definitely at par with other information and communications technology hubs," said Ellorence Cruz of the BOI. "The only hindrance is the lingering perception of security risks in the region. We had the same problem in 2002 when promoting the country as a BPO hub. Little by little, the firms started coming to Manila, then to other cities. And now they’re coming to Mindanao."
Filipino-owned BPO firms appear to have discounted these security perceptions, Ms. Bian said. "I tell other firms less familiar with the region that they should just come over and judge for themselves. They can incubate accounts with a limited number of seats and see how well things work out."
Skilled BPO workers can be found throughout Mindanao, said Ms. Bian, who operates several call center training schools. Most of the region’s universities and vocational institutions are now offering extension courses in BPO skills. Iligan City and Zamboanga have particularly large labor pools and strong college level programs in IT. "Graduates with IT skills or call center training end up migrating to Cebu and Manila to get jobs. "Why not bring the business closer to the labor pool?" Ms. Bian said.
Setting up BPO operations right at the manpower source has advantages for both the firms and their local hires, according to the USAID’s GEM program which, with the oversight of the Mindanao Economic Development Council, is helping to expand employment opportunities and improve IT infrastructure in the region.
Mindanao-based personnel who do not have to commute and pay rent as they would in Manila and Cebu are content with a lower pay scale. "Also, since call center jobs carry more prestige in Mindanao, personnel are more committed," Mr. Fournier said. According to the GEM program, the employment of young people ensures peace and economic development of their communities.
Call center agents from Zamboanga have been known to trade P20,000 call center jobs in Manila for P12,000 jobs in their home city because, they say, there they can enjoy better quality of life. Brenda Nazareth-Manzano, regional director of the Department of Science and Technology, said incoming BPO firms would have the benefit of strong interagency collaboration.
Operating costs in Mindanao can be 25% to 30% less than in Manila or Cebu. Power in General Santos and Zamboanga is less than P5 per kilowatt-hour (kwh), compared with P10 per kwh in Cebu and P8.23 per kwh in Metro Manila. Labor economists forecast the creation of up to two million jobs in BPO-related industries by 2010. The USAID wants to help ensure that Mindanao receives an equitable share of this pie. — Growth with Equity in Mindanao
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