NOT too long ago, the Philippines outflanked India and became the No. 1 darling country of choice for business-process outsourcing (BPO) more popularly known as call centers.
Back in 2016, A.T. Kearney’s Global Services Location Index covering 55 countries was categorical it was the Philippines and India as BPO No. 1 and No. 2;sometimes interchanging places.
There was a time, the Philippines was so good, we were called “The Swiss Banking of Outsourcing,” which was a golden compliment. In 2016, the country’s BPOs scored $25.5 billion, rivaling the remittances of overseas Filipino workers (OFWs) and employing 1.4 million Filipinos.
Quite recently, by sheer size, China has been a new challenger and the more recent ones are “disruptors” like Canada and Israel and “creative” nations like populous Brazil and an unlikely Chile.
As a consequence, the recent Tholon Report, on the other hand, still saw five Philippine cities in the Top 100 BPO sites in the world but their rankings have dropped. Manila from 2nd to 4th, Cebu from 8th to 12th, Davao 69th to 85th, Bacolod 85th to 97th and Santa Rosa, Laguna, barely making it at No. 100th, dropping from 82nd.
In a September 2018 analysis by Collier International among 16 selected ranking BPO cities in the world, Manila was ranked only No 9, scoring poorly in traffic ($3.5-billion daily losses) and environment (with Edsa being one of the most polluted highways in the world).
Topping as the most attractive were Bangalore, Singapore and Shenzhen—carried high by issues like deep talent pool and aspirational attitude of employees. The Collier Ranking was weighed over issues like socioeconomic, property and human factors.
The Philippines’s good ranking has always been bannered by our large English-speaking pool, of Filipinos being very adaptive and culturally aligned to the West, as well as having relatively cheaper office rent (nationwide) and cost of living. Cashman and Wakefield 2015, for instance, gave the country 92.5 percent in national English proficiency.
The sometimes horrible situation in congested, expensive metropolis like Manila and Cebu had, in fact, allowed secondary cities to become alternative BPO centers, like the cities of Iloilo, Dumaguete, Baguio, Metro Clark and Cagayan de Oro, in that order.
In sum, the rather ambitious target of hitting $40 billion to $55 billion in BPO billings by 2020 now remains to be seen with the fiercer competition from new entrant countries and our own changes in the governance game. For instance, the removal of certain incentives, including tax holidays (even with the lowering of corporate taxes), is causing many existing and prospective BPO players to step on their corporate brakes. TRAIN 2 is considered a real BPO threat. However, the good thing about the BPO business is it is being diversified by the nature of work: contact centers, back-office services, data transcription, animation, software development, engineering development and game development. One nation need not be a profit leader in all counts.
Secondary cities and tertiary cities, therefore, have a leeway to compete based on their own relative strengths. Take, for example, the city of Tagbilaran in Bohol.
In 2014 the Philippine Long Distance Telephone Co. invested P700 million to erect a 328-kilometer stretch of inland and submarine fiber optics with an initial capacity transmission of 40 Gigabytes per second to improve the Internet reception and quickness. The place has a relatively lower cost of living than nearby Cebu except for some scant food items whose prices have been driven by the excessive demand from tourism from overall in the region.
It is an ideal Rest and Recreation place, being a prime tourist destination and has a stream of qualified graduates coming from three universities: the Holy Name University, the University of Bohol and the BISU (Bohol Island State University).)
This has spurred the recent establishment of two BPO-oriented facilities. One is a 1.3-hectare land called Tagbilaran Uptown IT Hub fronting prime mall Island City Mall developed by proprietor Al Uy, whose first building can generate at least 3,000 in information-technology jobs.
The other is in the heart of the city built around a three-story building along the city’s main thoroughfare Carlos P. Garcia Avenue built by the Alturas Group of Cos.—the two providing the relevant office spaces. The only remaining concern is that the Philippine cities are not just competing among themselves to enthuse the investors to positively eyeball their territories but the country itself, the Philippines, is being challenged by robust newbie-nations with creative ideas.
Can we compete?
Dejaresco, a former banker, is a financial consultant, media practitioner and book author. He is a Life Member and Chairman of Broadcast Media of Finex. His views here are personal and do not necessarily reflect those of Finex. He could be reached via firstname.lastname@example.org.