Business Mirror

By Max V. de Leon
Reporter

FOUR Philippine cities made it to the Top 15 of the world’s most competitive business process outsourcing (BPO) destinations, according to the study of services globalization adviser NeoIT.

The 2006 Global City Competitiveness (GCC) report of the California-based firm had Manila ranked No. 9, while Cebu, Clark, and Davao were listed at No. 13, 14 and 15, respectively.

As expected, the list was dominated by Indian cities, with Delhi, Bangalore, Hyderabad, Mumbai, Pune, Chennai, and Kolkata taking the top seven spots in that order.

Ho Chi Minh City, Vietnam; Shanghai, China; Moscow, Russia, and Guangzhou, China complete the Top 15.

NeoIT used the generic or basic factors that include human capital, which carried a weight of 40 percent, cost of doing business, with 20 percent; business and living environment with 20 percent, risk factors with 10 percent, and infrastructure, also 10 percent, in coming up with this ranking.

What were not figured in on these ratings are the enterprise-specific factors. These include the language-proficiency requirements, which depends on the companies’ client-base; physical proximity to the head office, industry-specific BPO capability, and the enterprise’s own offshoring maturity (as a company that is just starting to globalize its services operations would tend to choose Tier 1 cities).

NeoIT noted that these generic and enterprise-specific factors are used by companies in shortlisting to about three or four cities the probable sites where they would outsource some of their services requirements.

“The decision after this point, more often than not, hinges on a subjective deep dive into the characteristics of the location. The management uses its discretion to arrive at the “one” location which has the perfect fit with its objectives,” said NeoIT.

The study said Manila is ideal for English voice-based activities and back-office processing activities like payroll and accounting. Manila was ranked among the best in terms of cost of doing business and moderately in human capital, environment and risk.

Although Manila’s infrastructure was noted as not having a competitive advantage, the area’s air connectivity with the rest of the world was taken positively. The report said Manila is a very popular offshoring location, especially for voice BPOs serving US clients.

“Because of the presence of the US Army in the Philippines up until a few years back, the people are well-versed with the American accent and culture.

Manila is also a shared services hub for many global corporations. The city has a good talent supply, thanks to a large number of universities in the region,” said the NeoIT report.

Offshoring today, the firm said, is no longer limited to the top cities in India, the Philippines, China, Poland, Hungary, Mexico and Malaysia as it is already making inroads into lesser-known, smaller cities in these countries. Fuelling this trend are the overheating of established locations and evolving client needs.

Considering these factors, NeoIT came up with a forward-looking assessment of the competitiveness of major cities and predicted their would-be ranking three to four years from now. In this future attractiveness ranking, Manila went down to No. 12, while Cebu and Clark went up to No. 3 and No. 5, respectively.

Bangalore, India and Budapest, Hungary would take the Top 2 spots and Delhi would drop to No. 6.

NeoIT said the overall attractiveness is contingent upon two kinds of parameters: the “extrinsics” such as infrastructure, business environment, and government support; and the “intrinsics” such as labor pool, inherent risks and costs of operation.