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Mindanao building up its BPO sector

Vol. XXI, No. 239 [ BusinessWorld Online ]
Monday, July 7, 2008 | MANILA, PHILIPPINES

ZAMBOANGA CITY — With Davao and Cagayan de Oro ahead of the rest of Mindanao to becoming business process outsourcing (BPO) hubs, other cities on the island are working to attract BPO locators in search of a sustainable supply of trained workers and low overhead.

The Business Processing Association of the Philippines (BPA/P) has said in its recently completed industry roadmap that the BPO sector and its allied information technology and engineering sectors have the potential to grow by 40% annually through 2010.

To succeed in this, BPA/P said, the Philippines must "develop the 75% of all available talent that presently resides outside the National Capital Region, which is not being fully leveraged by the industry."

This could "raise total direct employment to 900,000, meaning 600,000 new jobs," says BPA/P.

Both Davao and Cagayan de Oro have started attracting leading call center operators like Link2Support, Inc. Other Mindanao cities are looking to benefit from the rapid growth of the BPO industry in these two hubs, as firms continue to search for trained labor and cheap locations.

To maintain the Philippine industry’s momentum, BPA/P advocates a more balanced geographic spread for locators, to help mitigate overhead costs and salaries, "and even rates of attrition."

Promising locations in Mindanao include General Santos, Zamboanga, Cotabato City, Marawi and Iligan, according to USAID’s Growth with Equity in Mindanao (GEM) Program.

Davao’s work force is estimated to be twice that of Cebu, seven times that of Angeles/Clark, and six times that of Baguio, according to a study by industry analyst XMG. Another major advantage cited is Davao’s large annual yield of information technology- and BPO-qualified graduates, 40% higher than that of Baguio.

Mindanao’s tertiary-level academic institutions are concentrated in urban centers which are likely BPO locations. Zamboanga City, the sixth most populous city (with approximately 750,000 inhabitants) in the Philippines, has over 60 universities and colleges.

The cities of Iligan and Marawi, just half an hour apart, have a combined student population of 25,000 in their Mindanao State University campuses alone.

Moreover, BPO agents in Mindanao earn P6,500-P10,000 a month, against P9,000-P18,000 earned by agents in Metro Manila.

Brenda Nazareth-Manzano, regional director of the Department of Science and Technology in Zamboanga, points out that BPO firms locating in her region have the benefit of strong backing by local governments, line agencies and the private sector. "In Zamboanga, the telecomms and energy sector agencies are working with the city government and the business community to bring in firms," said Ms. Nazareth. "BPO firms who come in will have the full benefit of this cooperation."

There is also support from among Mindanao academic institutions which have grown increasingly aware of the BPO market for their graduates. "Schools are tailoring the curriculum to integrate English into the entire academic program, which develops the students’ facility with the language," says Joji Bian, president of the Philippine Call Center Alliance and owner of an academy which has conducted call center training across Mindanao, in partnership with private schools and government agencies.

Iligan’s MSU campus houses the Iligan Institute of Technology, which is collaborating with a Manila-based BPO firm to provide its faculty members with software development training. "The firm is looking to us to help them source IT talent from among our students," said Emmanuel Lagare, an MSU-ITT faculty member and chairman of the ICT Council of Iligan. "We’re also in the process of forming an in-campus unit that can be contracted for software engineering projects."

Cities with telecommunications infrastructure less developed than Davao or Cagayan de Oro may still have an edge in BPO subsectors. Zamboanga and Cotabato City, where universities have strong nursing and commerce programs, are promising locations for medical and business transcription centers.

Mindanao has also begun to spawn smaller firms with services ranging from legal transcription and financial accounts to software engineering, web development and multimedia design. Ateneo de Zamboanga graduates have gone into animation production.

English is the universal language for call centers, but its variations among ethnic groups may spell opportunity for specific areas of Mindanao. "We’ve noticed that our trainees from Cotabato don’t have a strong Visayan accent," said Trexia Garcia, the head of call center training at Davao 1st E-Academy, which trains agents for accounts in Singapore, Australia and various US regions. "Another plus is that they don’t mix English with Tagalog."

Kim Elago a city councilor who sits on the Regional Information Technology and E-Commerce Committee in Zamboanga City, says that speakers of Chavacano (a Spanish-based creole language) are suited to speaking Latino English. Call center agents from Zamboanga have been successful in servicing Latino clients in the US, Mr. Elago points out. "This is a labor resource which can’t be found elsewhere in Asia."

Ryan Dorego, business development manager at Davao 1st Transcription Center Corp. and QualiServ Contact Solutions, said "Zamboangueños have done well in accounts covering Latino areas in California." — GEM

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