Thursday, July 2, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
DAVAO CITY — The entry of big business processes outsourcing (BPO) firms in this city has been reduced to a waiting game as the city’s property sector remains reluctant to allocate enough space without specific commitments from investors.
Lizabel G. Holganza, president of the Information and Technology Association of Davao, Inc., said the real estate sector has not been aggressive in preparing the necessary infrastructure for firms as the city seeks to graduate from the list of "next wave" locations and be considered on the same playing field as Metro Manila and Cebu.
Business process outsourcing firms want ready infrastructure allowing them to relocate in one or two months, she said. Davao City was ranked fourth by the Philippine Cyber Corridor Report 2008 on the top 10 list of "next wave" cities for BPOs.
It gained 82 out of 90 points from the Commission on Information and Communications Technology for being an attractive information and communications technology investment location, and was proclaimed by the Asian Institute of Management as the "Most Competitive City in the Philippines" for 2007 (Urban Category).
For now, the city has the edge over Metro Manila and Cebu in terms of real estate prices, at an average of P300 to P400 per square meter, apart from cheaper labor cost, Ms. Holganza said. That’s significantly lower even among Metro Manila’s cheaper sites where rent is estimated at P800 per square meter.
Oscar R. Sañez, head of the Business Processing Association Philippines, had said Davao City should strive to encourage property developers to target at least 90,000 to 180,000 square meters for BPO locators.
The global business process outsourcing industry is estimated to reach $130 billion in annual revenues by next year. "If we could get a good share of the $130 billion, we will really, really be happy in the Philippines," Mr. Sañez said, adding that BPO is the only industry that has consistently recorded 50% annual growth rate in the past three years.
The industry is beginning to spread toward the provinces after outsourcing firms noticed an unusual concentration of BPO companies in the National Capital Region, which accounts for up 80% of the total.
The talent pool, however, has not been encouraging, with only 25% coming from Metro Manila.
"We have 25% of the talent and yet 80% of offshoring and outsourcing companies are in Manila. There must be something wrong with this picture," said Mr. Sañez.
Ms. Holganza pointed out that Davao City has a large pool of human resources even if a skills survey by the National Economic and Development Authority had found a gap in the competency of graduates and industry demand.
"We will sit with the CHEd (Commission on Higher Education) and DepEd (Department of Education) on talent development. It’s not enough that we have 15,000 graduates a year, [we must] make sure they have the skills," she said.
Davao City has at least 50 BPO firms, including close to a dozen big ones, employing 6,000 workers, Ms. Holganza said. — Joel B. Escovilla
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