Cebu remains to be the largest and most practical choice for knowledge process outsourcing (KPO) firms looking for viable locations outside Manila due to its diverse and skilled labor pool, according to Colliers International.
KPO companies offer higher value outsourcing services such as medical transcription (health information management), software engineering, and finance and accounting.
In Cebu, “dominant driver is still labor pool,” Joey Bondoc, Research Manager of Colliers International said.
The share of KPO employees to Cebu’s outsourcing workforce has grown from a mere 10% in 2008 to nearly 30% in 2015, the Colliers report cited.
“We see Cebu’s shift to higher value outsourcing being sustained by an ample supply of graduates with relevant college degrees. Of the estimated 30,000 graduates that Cebu churns out each year, about a quarter have Business degrees while a combined 35% have Engineering, IT and Math, and Medical degrees,” Colliers reported.
“The curriculum must be in line with what the industry needs. This is the reason why we see ICT councils spearheading training of faculty members and undergraduates,” Bondoc noted.
Aside from its labor pool, the report mentioned that KPO companies opened shops in Metro Cebu due to the presence of adequate infrastructure, redundant internet connection and a high level of urbanization driven by the development of several townships and public infrastructure projects.
Metro Manila-based KPO firms were also noted to have established operations in Cebu given the need to have a redundant site that would back-up their Metro Manila operations.
The influx of KPO firms has propped up office space demand within the Cebu Business Park and Cebu I.T. Park.
KPO firms in Cebu
Accenture Philippines’ four facilities in Cebu (Pioneer House, Cybergate, ebloc2 and ebloc 3) currently employ 5,000 people. The company said it will hire at least a thousand more employees this year that can handle SAP, Java, and analytic programming, among others.
In May 2015, Hanoi-headquartered FPT Software opened its first office in the country in Ebloc 3 of the Cebu IT Park. The company initially hired 62 software engineers but it hopes to employ around 2,000 people by 2020. FPT Software officials said that establishing operations in Cebu is an integral part of the company’s ASEAN expansion strategy.
Health information management (HIM) firm Medcor also opened a site in Cebu and initially hired nurses to expand its clinical software development capabilities. The company is looking at expanding operations in the city.
Other major KPOs that occupied a significant amount of office space over the past 18 months include Synchrony, which leased four floors in ACC Tower; Cardo Engineering, which took a single floor in ACC Tower; Google, which leased about 8,600 sq m of office space in Ebloc 4; and Catapult International, which leased some 1,500 sq m in Norkis Cyberpark. Other KPOs that took large cuts in the previous years include JP Morgan, Fluor Daniel, and Dash Engineering.
Boosting Cebu’s image as a major KPO destination
The completion of key infrastructure projects in Metro Cebu such as the light rail transit (LRT), Bus Rapid Transit (BRT), Metro Cebu Expressway, Cebu subway, Cebu-Cordova bridge, and the Mactan-Cebu International Airport expansion should boost Cebu’s competitiveness amid an increasing competition from ASEAN neighbors Hanoi, Ho Chi Minh City, Kuala Lumpur, Penang, and Bangkok.
The completion of the USD300 million casino-resort proposed by Udenna Corporation should also make Metro Cebu a premier destination for leisure. This should enhance the city’s image as an enticing location for foreign KPO executives.
National and local developers are responding positively to the anticipated spike in office space demand that is partly attributable to the expansion of KPO companies. From 2017 to 2019, at least some 300,000 sq m of office space is expected to go online. Upcoming projects include Philam Life Center Cebu, Central Bloc BPO Towers 1 and 2, GT Time Square, and Cebu Exchange.
According to Bondoc, aside from Cebu, several other Philippine cities are capable of shifting to KPO, including Clark, Davao, Iloilo, Sta. Rosa (Laguna), and Bacolod.
“Bacolod is a key hub for health information management while Iloilo is being groomed as prime location of game development services,” he added.
-CRV
