By Catherine Elizamarie N. Pillas & Jonathan L. Mayuga
AT past 6 in the evening, P. Campos Street in Dasmariñas City, Cavite, is engulfed by a gray mist. There Susan (not her real name) stands almost every day for five days.
There, just outside the gates of a housing subdivision where she lives, Susan waits for a ride to work at a commercial center in Pala-Pala.
She works at iQor, a business-process outsourcing (BPO) company, which rents a huge space at SM Pala-Pala. It is the only BPO firm that operates in Dasmariñas City, a first-class city in terms of income classification and currently the largest in terms of area and population in the province of Cavite.
“It is easy to go to work for me now,” she told the BusinessMirror during the 10-minute ride to SM Pala-Pala. “Our office is nearby and I can afford to sleep longer.”
Susan said she previously worked for another BPO company in Ayala, Makati City.
“I spend at least six hours on the road every day to go to work and back home after our shift,” she said adding that she spends at least P100 a day for bus fare.
“If I am lucky, I get to sit on the bus.”
From the city’s center to Pala-Pala, it takes about 10 minutes to 15 minutes using public transportation. From elsewhere in the city, traffic notwithstanding, Pala-Pala is less than an hour away.
More often, when all the seats are taken, Susan has no choice but stand up and wait for other passengers to alight before she is able to sit down on the way to Ayala.
“It was really difficult,” she said. “Fortunately, iQor is here now.”
iQor
FLORIDA, United States-headquartered iQor started operation in Dasmariñas in the late 2014 and remains the only BPO company operating in the city. Early this year, it rented space at a shopping center adjacent to the building where its first offices were located.
The company’s branch in Dasmariñas maintains eight different but mostly US accounts, and employs about 5,000 employees—and growing. It is currently hiring more employees.
Employees of iQor are mainly from the city and other towns of Cavite and a few from as far as Laguna, Batangas and Metro Manila, such as Las Piñas City.
Early this month, iQor announced the opening of contact centers in Iloilo and in Bacolod, Negros Occidental.
The additional 150,000 square feet and more than 2,500 workstations will expand iQor’s service capacity for leading technology, telecommunications, retail and financial services brands, the Saint Petersburg, Florida-based iQor Inc. said on November 17.
According to iQor, it has 40,000 employees providing customer interaction and product support solutions in 18 countries.
The new centers in Iloilo (Iloilo Business Park, Iloilo City) and Bacolod provide further geographic diversity to iQor’s existing presence in Clark, Davao and Dasmariñas, bringing the total number of iQor employees in the Philippines to more than 16,000, the company said.
Susan hopes the independent foreign policy of President Duterte would not take its toll on the BPO-information-technology (IT) sector, as well as that of his counterpart in the US, President-elect Donald J. Trump.
Trump + Digong
SINCE the business-process management industry’s rise to become a pillar of economic growth, the government and the private sector have been striving to spread the industry’s reach toward less-developed corners of the country.
But with clouds of uncertainty hovering over the political landscape of the Philippines and the US, the public-private drive to spur BPO growth in the countryside has reached the start of a steep incline.
In the run-up to the US elections, Trump has bannered the pledge to “bring back” jobs to America. One of the ways suggested was to impose heavier taxes on American firms who outsource jobs.
“Unlike Clinton, Trump did not comprehensively outline his domestic and foreign policies,” according to a paper from Control Risks web site. “As a result, there is considerable uncertainty about which policies he will pursue in office and how aggressively he will do so.”
Following the business mogul’s victory, Socioeconomic Planning Secretary Ernesto M. Pernia commented that if Trump’s comments be made into policy, BPOs in the Philippines could suffer.
In the Philippines Duterte has not minced words in conveying his distaste at White House’s perceived ‘meddling’ in local affairs, especially on criticism of his bloody, anti-drug campaign.
The firebrand has lashed out against top US diplomats, and has, on more than one occasion, swore at the incumbent President Barack Obama.
No worries
DEVELOPMENTS in the diplomatic sphere have sent jitters in the local BPO industry, which has seen a meteoric rise in a matter of six to eight years and now provides employment for 1.15 million workers. The industry is also estimated to contribute every year 4 percent to 6 percent to the country’s GDP.
This is all the more significant as the industry aims to provide more jobs to Filipinos in rural areas, targeting to generate work in BPO hubs outside of Metro Manila to 500,000 Filipinos.
For the newly created Department of Information and Communications Technology (DICT), however, the rhetoric of both sides in the absence of any real policy discouraging the industry would not do any real damage to the prospects of the $22-billion BPO industry.
“[The US] doesn’t have a policy out on the outsourcing industry, unlike before when there was a bill that was introduced that got us worried,” Emmy Lou Delfin, DICT’s Next Wave Cities program manager, said in a phone interview. “We’re not really worried about the situation; every week there’s a potential inquiry from an American locator. It’s not really something to worry about.”
Diversifying services
ACCORDING to Delfin, even as the country sees no immediate danger in the interest of American companies to keep outsourcing their activities to the Philippines, the country has been diversifying its services to attract other countries such as Australia, Japan and Singapore, among others.
Information Technology and Business Process Association of the Philippines’s (IBPAP) Roadmap 2016 to 2022 indicates that 70 percent of the outsourcing work received by Philippines-based BPOs comes from the North American market, with the remaining 30 divided among the Middle East, Europe, Australia and East Asia and the Pacific
If one looks at the employment contribution, it’s evident the industry has provided a means of living to an increasing number of Filipino workers, and will continue to do so in the next six years, Delfin added.
The IBPAP, however, declined to comment on the prospects of the industry with President-elect Trump at the helm of the US government, and the past tirades of Duterte.
Even as the industry is keeping mum on the implications of increasingly antagonistic relations between the Philippines and the US, the BPO industry’s continued strength indicate that more and more Filipinos will rely on the sector for their livelihood under the Duterte administration.
BPO hubs
ACCORDING to the IBPAP’s 2016 to 2022 Roadmap crafted with Frost & Sullivan consultancy firm, 14 percent, or one in every seven jobs, of the country’s employment requirements will be fulfilled by the IT-BPM sector once 2022 comes around. The projection is based on Philippine labor-demand projections for 2016 to 2022.
Not only will the full-time employee (FTE) work force balloon from 1.15 million by end-2016 to 1.8 million by 2022, but a growing segment will come from the areas outside of Metro Manila as IBPAP and the DICT try to establish BPO hubs in the countryside.
This program, dubbed the “Next Wave Cities Program,” aims to spread the benefits of the booming BPO industry to less-developed areas, in pursuit of the past and present administration’s goal of “inclusive growth”.
“There continues to be a push as far as the IBPAP and as far as Roadmap 2022 is concerned. We’re pushing our expansion to the countryside, these cities, both in New Wave and emerging cities, are critical in terms of us achieving our goals,” IBPAP Board Chairman Sebastian L. Reyes said in a separate interview. “They will be the ones who will have the talent that will push the growth of services.”
Next wave
EVERY two years the government and the IBPAP release a list called Next Wave Cities. These are essentially cities that have gained high rankings on the four criteria of talent availability, infrastructure, cost of doing business and business environment and risk management.
These cities are also deemed ready to host BPOs. The ranking also identify centers of excellence and emerging cities.
Delfin said that, as of this year, Next Wave Cities have contributed 300,000 FTEs to the total work force.
Reyes said this push to spread growth is especially significant for recovering areas, such as Tacloban, which is now getting back to its feet after being ravaged by Supertyphoon Yolanda in 2013.
“In the Visayas, we’re looking at past hosts of BPO companies, which, hopefully once they recover, can host again in Tacloban and Palo, Leyte,” Reyes said. “These are showing potential.”
Aside from the calamity-struck Visayas region, new areas such as Balanga in Bataan have just welcomed GenPact Philippines, the local unit of New York-based business-processing management firm.
New areas that are expected to see growth in employment and increased economic activity due to the entry of BPOs are Puerto Princesa and Laoag.
The IT-BPM industry is eyeing total revenue to increase from an estimated $22.9 billion in 2016 to $38.9 billion by 2022.
Dasmariñas City
EARLY this year, the IBPAP named Dasmariñas City among 10 new areas on the growing list of locations that will support the growth of the IT-BPM sector outside Metro Manila.
The others are Baguio, Cagayan de Oro, Dagupan, Dasmariñas, Dumaguete, Lipa, Malolos, Naga, Santa Rosa in Laguna and Taytay in Rizal.
These areas emerged on top of 42 cities identified and evaluated by the IBPAP, the Department of Science and Technology-Information and Communications Technology Office (now called the DICT) and Leechiu Property Consultants (LPC) for their potentials based on factors such as talent pool, infrastructure, good business climate, and cost competitiveness.
Situated about 27 kilometers south of Manila, Dasmariñas is the largest component city and the 12th-largest city in the Philippines.
Dasmariñas has a population of 659,019, according to data from the Philippine Statistics Authority.
In an interview, Mayor Elpidio F. Barzaga Jr. told the BusinessMirror he is confident that more BPO companies would soon find Dasmariñas City among the most suitable places to do business.
After being picked as one of the 10 Next Wave Cities, Barzaga said he immediately wrote IBPAP, expressing his gratitude, with the promise to make the city an IT-BPO hub.
Strategic location
ACCORDING to Barzaga, Dasmariñas is strategically located as compared to other local government units (LGUs) in the province of Cavite.
Dasmariñas is very accessible, to Metro Manila, and other towns in Cavite all the way to Tagaytay City and Batangas, he added.
The city official said iQor told him the company has approximately 5,000 employees in Dasmariñas.
“They have very good prospects in the city.”
iQor, he added, is expanding, which only shows that Dasmariñas is providing a good investment climate.
According to Barzaga, he expects other companies to start scouting for office spaces in Dasmariñas in the coming months.
“So far, we only have iQor, which is expanding. But I expect IT-BPO companies to come in in the ensuing months,” he said.
Commercial, industrial
OVER the years, from an agriculture town, Dasmariñas has evolved into a commercial and industrial city.
It is currently one of the fastest growing LGUs in Cavite.
There are numerous commercial establishments, which include major shopping malls, fast-food restaurants, grocery and convenience stores, restaurants and other service-oriented businesses in Dasmariñas’s City Centre and central business district.
Meanwhile, industrial establishments are in the outskirts of the city.
It boasts of three industrial estates, namely: First Cavite Industrial Estate (FCIE) in Barangay Langkaan, Dasmariñas Technopark located in Barangay Paliparan I and NHA Industrial Park in Bagong Bayan.
There are over 300 factories and business establishments scattered in the different barangays.
According to Barzaga, Dasmariñas has a pool of talents with excellent English communication skills that fit the requirements of IT-BPO companies.
He said the city boasts of learning institutions, including college and universities that are highly competitive.
In fact, Dasmariñas is also called the “university city” of Cavite because it is the recipient of dispersal thrusts of several universities based in Metro Manila.
Dasmariñas is home to the De La Salle University (DLSU), which offers various social science and business courses. The institution also offers medical courses, operates and manages a hospital, the DLSU Medical Center.
Other university and college branches are from the Technological University of the Philippines, the Philippine Christian University, National College of Science and Technology, Emilio Aguinaldo College and Saint Paul College (Island Park branch).
Business-friendly
AS local chief executive of Dasmarinas, Barzaga said it has always been his policy to promote a business-friendly environment anchored on good governance.
“Our basic requirement, the policy of the city government from the time I became a mayor, we want Dasmariñas to be investment-friendly. We know the basic conditions,” he told the BusinessMirror. “For Dasmariñas to be an ideal place for investment, we have to solve the basic problems.”
According to Barzaga, transparency is a policy of the local government under his watch.
“We have to address the basic problems pertaining to peace and order, traffic and environment, garbage,” he said.
Transportation, Barzaga added, is not a problem because of its road networks leading to Manila, Laguna and Batangas.
To encourage IT-BPO companies in doing business in Dasmariñas, BPO companies like iQor are entitled to tax holiday, as well as other benefits provided to businesses located within the Philippine Economic Zone Authority Special Economiz Zones.
Barzaga bared that SM and Robinson requested the city government to issue an endorsement to have certain parts of their malls declared as Peza zones.
“If there are owners of buildings here [Dasmariñas] who would like to establish a BPO and who want to have an endorsement to be covered by the special law, the city government is willing to help,” he said.
Good governance
ACCORDING to Barzaga, he has a strict policy against corruption. Businessmen, he said, need only to pay permits and the taxes due to the local government to be able to put up shop in Dasmariñas.
Peace and order, he said, is not a problem as members of the Philippine National Police (PNP), through the Dasmariñas Police Station, are always on their toes.
“Our police are very visible,” he said. “Even our local traffic enforcers ensure a smooth flow of traffic.”
All intersections in the city, he added, have traffic lights installed by the city government.
Some areas, he said, even have closed-circuit television (CCTV) cameras to deter crime.
“In the next few months, we plan to put up more CCTV cameras,” he added.
Barzaga claims he is “hands on” when it comes to running the city to ensure the delivery of basic social services. Dasmariñas, he said, recently completed the construction of its own public hospital.
Next year, he added, the city targets to establish a university fully funded and managed by the city government.
High hopes
ACCORDING to Barzaga, Dasmariñas is a potential BPO hub in the Southern Tagalog region because of available infrastructure, such as roads and bridges.
He said the establishment of more IT-BPOs would boost employment opportunities not only for the city’s residents but also the other cities and towns near it.
Settling in the city is a breeze for employees of various companies in Dasmariñas, as the city boasts of 70 different residential subdivisions.
In fact, Barzaga said only about 20 percent of the city’s residents are native of Dasmariñas, with 80 percent coming from all over because of the employment opportunity offered by commerce and industry.
According to Barzaga, Dasmariñas is now among the fastest-growing economies in the region, more than half of the city’s 9-hectare land area is still undeveloped.
“We have the space. As a matter of fact, only about 50 percent of the city’s total land area of 9 hectares [is] developed,” he said. “We expect BPOs to be growing more and more.”
“The Philippines remains a terrific place to conduct business,” iQor CEO Hartmut Liebel was quoted in a statement as saying. “Government officials at all levels remain engaged and helpful, as we grow due to client demand and the service-oriented, tech-savvy talent we continue to find in labor markets across the Philippines.”
iQor, a global provider of BPO and product support services, today announced that it has expanded its service operations in the Philippines with the opening of Island Region.
“We’re excited to expand our operations in some of the fastest-growing regions of the Philippines,” Gary Praznik, iQor COO, was quoted in a statement as saying. “The labor force, infrastructure and economic development support in Iloilo and Bacolod are fantastic, and we are excited to create local jobs for local talent.”
The company is actively seeking to hire more than 2,000 qualified individuals to help support client growth in customer care, technical support, sales and collections.
Road-map goals
THE IT-BPM and global in-house center (GIC) industry in the Philippines has grown at an annual rate of 30 percent over a decade, faster than the growth of the global offshore services market, the IBPAP Roadmap 2016 to 2022 said.
Collectively, the industry provides services for a wide range of prominent Fortune 1000 firms in North America, Asia and the European Union. The Philippines’s share of the global IT-BPM and GIC market is estimated at approximately 9.5 percent.
As it has grown, the industry has diversified significantly in breadth, scale and maturity of services. An ambitious forecast embodied in an industry road map of revenues of $25 billion and 1.3 million direct employees by 2016 appears to be within reach.
Expansion into Next Wave Cities and towns has increased with 150,000 FTEs spread across Tier 2 and Tier 3 towns across the country, the IBAP report said.
The Philippine IT-BPM work force grew at an average of 21 percent annually between 2007 and 2011.
The rapid growth in employability across Next Wave Cities has increased the pool of talent supply in the Philippines, the report said.
In the O2P and BPAP surveys of 2009 and 2012, 92 percent of respondents (companies of different sizes and portfolio offerings) said they planned to increase their employee base; with most planning to increase by under 5 percent to as much as 50 percent.
The industry is projected to earn $25 billion in revenues and employ 1.3 million and 3.2 million Filipinos directly and indirectly by 2016. At this size, it could account for about 8 percent of Philippine GDP.
If these targets are reached, the Philippine IT-BPM and GIC industry will have consolidated over 10 percent of the global IT-BPM market. This share will be maintained at least until 2016, when global market is expected to be between $240 billion and $250 billion (Everest Global estimate as of 2012).