So you’ve decided you want to outsource part of your business processes to the Philippines, now the question is, where? According to Tholons (2014), Cebu made it into the list of top 100 Outsourcing Destinations, coming in at the eighth spot after more well-known BPO locations such as Manila and Mumbai. The Tholons rankings are based on a rigorous location screening framework and regarded by industry stakeholders as the best grading of global outsourcing hubs.
“Cebu has all the building blocks needed to rapidly grow as an outsourcing hub. Besides the policy environment and fiscal incentives, we have the required college-educated human resources and infrastructure, including advanced connectivity,” says House Assistant Majority Leader and Cebu Rep. Gerald Anthony Gullas Jr.
In this week’s blog post, we take a closer look at Cebu and why it’s becoming a haven for BPO companies today.
Scale of Quality Candidates Available
Over 10 universities generate graduates in most faculties including Engineering, Medical, Finance, IT, Social and other sciences. This offers a large pool of English speaking graduates and skilled resources which can be immediately absorbed by the flourishing BPO Cebu industry.
Cebu’s position as the region’s primary educational centre has spurred investor interest and has convinced a good number of IT and BPO companies to set up their offices in the city.
Lower Business Costs
The office space rent in Cebu is way less than what BPO companies would have to pay for a prime office building in Metro Manila, especially in major business districts such as Makati and Ortigas. As per CBRE (property consultant) estimates, office rents in Manila ranges from P430 to P1,300 compared to Cebu City where it is just from P350 to P750. The firm also shows that the cost of electricity is 11% higher and water 8% higher in Manila, as compared to Cebu City.
According to TechInAsia and SSO Cebu, Salaries in Cebu are 3 to 7% lower than Metro Manila. When we bring cost advantage into the picture, Cebu is the more reasonable choice for location. The cost of living in Cebu is also estimated to be about 30% less compared to the national capital regions. Because Manila is more urban than Cebu in terms of infrastructure, transportation and entertainment, the city demands a considerably higher cost of living and therefore a higher cost of labour. Cebu, although still a metropolis, it still retains some of its original provincial quality, making its cost of living and ultimately labour less expensive. Moreover, without the terrible traffic congestion and political intrigues that Manila can be known for, Cebu stands out as a less stressful environment for business operations.
Well-developed facilities and other infrastructure
IT Parks and Business Centres
The availability of high speed internet access and network connectivity is growing at a fast rate in Cebu. Local developers and major industry players such as SM, Megaworld and Ayala have built not just IT parks and business centers, but also mixed-use commercial developments, increasing the demand and supply of stable internet availability. Filinvest, along with other contractors and developers, have also invested in several housing developments and other ventures. Cebu Landmasters Inc., (CLM) will be expanding its capital expenditure and infusing $3 billion for numerous Cebu projects in the pipeline.
As Cebu City comes as the next best BPO outsourcing destination to Manila, the local government is taking every step possible to build the necessary environment to attract more businesses. Special economic zones, investment friendly environment and focus on creation of large talent pool along with sustainable infrastructural growth, are now a strategic and top priority plan for the local government.
Aside from fiscal incentives and the business-friendly environment and policies, it helps that Cebu has a well- developed international airport and seaport and some needed road infrastructure and transportation links.