The Philippines' business process outsourcing industry — a sunshine sector — hopes to employ another million workers. (AFP)
The Philippines’ business process outsourcing industry — a sunshine sector — hopes to employ another million workers. (AFP)

by Raynan F. Javil

The Duterte administration has promised to decongest “Imperial Manila” and reduce its prominence in the country’s national life. In so doing, the government — led for the first time by someone from Mindanao — vowed to bring inclusive growth to the countryside.

While businesses may be prepared to bring their operations outside the capital, are these areas ready to support industry expansion, including the information technology-business process management (IT-BPM) sector, currently the Philippines’ sunshine industry?

That remains to be a work in progress.

But it doesn’t mean that the private sector and the government aren’t working together to enhance the capacity of cities and towns outside Manila.

If the government aims to decentralize the growth, infrastructure should follow, Chermaine B. Muro, director of Premier BPO, Inc., told BusinessWorld in an interview.

“Other provinces outside Manila should be ready to be able to serve what is needed by the BPO industry, especially the connectivity,” said the executive of Premier BPO, which offers back-office processing, financial services, information technology services, among others, to its customers.

Measuring capacities of towns, cities

To this end, IT-BPM has launched road map which serves as a “prescription” for cities across the country to assess their readiness for the sector’s expansion. The IT-BPAP (Business Process Association of the Philippines) listed the criteria the industry uses to measure these towns and cities: human capital, connectivity, and community development.

“We have been publishing what we call ‘The Next Wave City Report’ for how many years now, and what it does is it helps cities across the Philippines to look at on these measures, how are they and what can you actually to improve them,” IT-BPAP Executive Committee Chairman Benedict C. Hernandez said during the initial launch of the new road map 2022, which carried the theme, “Accelerate PH.”

Mr. Hernandez added that aside from “The Next Wave City Report,” the IT-BPAP also named the top 20 emerging cities to watch out for.

In its latest report published in April, IT-BPAP announced the following as the Top 10 Next Wave Cities:

  • Baguio City
  • Cagayan de Oro City
  • Dagupan City
  • Dasmariñas City
  • Dumaguete City
  • Lipa City
  • Malolos City
  • Naga City
  • Sta. Rosa City
  • Laguna; and
  • Taytay, Rizal

Moreover, the emerging cities seen to sustain the growth of the sector are:

  • Balanga City
  • Batangas City
  • Iriga City
  • Laoag City
  • Legazpi City
  • Puerto Princesa City
  • Roxas City
  • Tarlac City
  • Tuguegarao City
  • Zamboanga City

He said that the dialogues between the association and the government are under way to identify the key strengths and opportunities in an area to attract investments.

“I was involved in the last one… in Dipolog. So again looking at what’s available here, how’s the talent, how’s the infrastructure so that’s gonna keep going. So our goal is to keep promoting ten if not 20 cities,” Mr. Hernandez said.

He also expressed optimism that the IT-BPM sector is on track to meet the 1.3-million direct employment target under the 2012-2016 road map. As of 2015, the sector has directly employed some 1.2 million workers, according to its data.

Creating another million jobs

He also said that the Philippines’ IT-BPM is now about a tenth of the industry’s global size.

“Our ambition is to create another one million higher value direct jobs in IT-BPM over the next six years. There’s also an additional three to four indirect jobs created per direct job in our industry, according to research. So in total, we are looking at four to five million new jobs in the country,” Mr. Hernandez said on the new road map.

He also noted that during the past five years, the Philippine IT-BPM sector has been growing more than twice the global growth rate, and with this, the country can shift into high value services.

Part of the ambition of the industry is to diversify its services, Mr. Hernandez said, noting that the Philippines dominated the contact center industry since 2010.

Aside from contact centers, other services that have grown over the past years — and still has the potential to grow even more — are health care information, IT, and the global in-house center service, in which financial institutions establish a base in the country for mid-office operations of credit processing, among others, he said.

Mr. Hernandez noted that 300,000 jobs — roughly 30% of the industry’s total work force — were provided outside the capital and “part of focus of the new road map is how to continue to push more and more investment and job creation outside of Manila.”

Current technological trends present significant opportunities for the Philippines, he said.

Labor pool tricky outside Manila

One of the hurdles in the rapid expansion of the IT-BPM sector is the lack of qualified labor pool “that could actually work in an IT-BPO sector,” Premier BPO’s Ms. Muro also said.

Once you reach out and start expansion outside the capital, “the labor pool gets a little tricky,” Ms. Muro said.

In order to address this concern, Mr. Hernandez said that “the key is making sure human capital is able to get ready” as the landscape in the IT-BPM sector evolves through time.

Moreover, one of the reasons driving the expansion outside Manila, Ms. Muro said, is the cost of rent in the saturated central business districts in the capital.

She said that locating outside Manila is the trend right now for a BPO firm as it is the “cheaper way of expanding.”

BusinessWorld earlier reported that in Bonifacio Global City in Taguig City, rental rates are projected to increase to P1,163 per square meter (sqm) in 2020 from the P957 estimated for this year, CB Richard Ellis Philippines (CBRE) Philippines, Inc. said.

In a separate report, CBRE noted that monthly office rental rates in Metro Manila averaged P870.47 per sqm in the fourth quarter of 2015, up 2.54% from the previous quarter. These comprised rental rates in Makati, Fort Bonifacio, Ortigas, Quezon City, Alabang and the Bay Area.

New agency to help industry achieve milestones

Meanwhile, the IT-BPAP believes that the creation of the Department of Information and Communications Technology (DICT) “will help the industry achieve the new milestones as recommended” in the new road map.

Mr. Hernandez noted that the IT-BPAP was one of the first to call for the creation of the ICT department since the beginning.

Mr. Hernandez said that the DICT will particularly help them execute the provisions of the Anti-Cyber Crime Law and the Data Privacy Law – two laws seen to be critical in making the country more attractive in foreign investors.

Moreover the IT-BPAP said that it looks forward for a “strong partnership and collaboration” with the new administration.

The industry association further noted that “embracing digital trends presents a path for the Philippines to accelerate moving up to the higher value chain.”

“Disruption in technology can be considered a threat or can be embraced to take advantage of its opportunities,” IT-BPAP said.

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Raynan F. Javil (@rajavil on Twitter) covers several beats — including the House of Representatives and the Office of the Vice-President — for BusinessWorld.

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