So you’ve decided you want to outsource part of your business processes to the Philippines, now the question is, where?
According to Tholons (2021), Cebu is at made it into the list of the top 100 Outsourcing Destinations, coming in at the 52nd spot after more well-known BPO locations such as Manila and Mumbai.
The Tholons rankings are based on a rigorous location screening framework and are 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 blog post, we take a closer look at Cebu and why it’s becoming a haven for BPO companies today.
Reasons Why Cebu Is an Excellent Outsourcing Destination
The Philippines offers many benefits for businesses looking to outsource, including an English-speaking workforce, low labor costs, and a tropical climate.
But of all the locations in the Philippines, Cebu City is emerging as the top destination for outsourcing.
Cebu City is the country’s oldest settlement. It is one of the country’s most historical places and retains much of its Spanish heritage flavor. The city sees over two million tourists annually.
Cebu is a leading outsourcing site, with several businesses and multinational firms choosing to establish in the south of Luzon. As a result, it has climbed 52 places to sit at number 52 on Tholon’s supercities list.
Here are the reasons why companies should outsource to Cebu City:
Access and Proximity to major markets
Cebu is located in the heart of the Philippines and is close to the country’s capital, Manila. This makes it easy for companies to outsource to Cebu as it’s only a few hours away by plane.
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.
Cebu has one of the most highly-educated workforces in the Philippines. With more than 60 colleges and universities in the area, there is a large pool of talented, English-speaking graduates to choose from.
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 center 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
One of the main reasons why companies are choosing to outsource to Cebu is because it’s cost-effective. The cost of doing business in Cebu is much lower than in Manila, making it an attractive option for companies looking to save money on their outsourcing 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 is 8% higher in Manila, as compared to Cebu City.
According to TechInAsia and SSO Cebu, Salaries in Cebu are 3 to 7% lower than in 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 labor.
Cebu, although still a metropolis, still retains some of its original provincial quality, making its cost of living and ultimately labor 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.
Cebu has a well-developed infrastructure, with excellent telecommunications and transport links. This means that companies can easily outsource their processes to Cebu without worrying about the quality of infrastructure or logistics.
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, has 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.
Strong local government support
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, an investment-friendly environment, and a focus on the creation of a large talent pool along with sustainable infrastructural growth are now strategic and top priority plans for the local government.
We’ve talked about the reasons why Cebu is becoming a popular outsourcing destination for BPO companies. Cebu is cost-effective due to its lower business costs and has a robust infrastructure that is well-connected. The local government is also supportive of business growth, making it an attractive option for companies looking to outsource their processes.
Ultimately the ideal location depends on a variety of factors unique to your company. Do you think Cebu is a viable location for BPO?