Davao emerges as next key IT-BPO site

MANILA, Philippines - Davao City is fast shaping up as the next destination for IT-BPO services outside Metro Manila. In the past six months alone, according to leading property consultant Jones Lang LaSalle (JLL), three well-known contact services companies have opened shop in the bustling Mindanao city.

Teleperformance, one of the world’s largest customer service and call-center firms, is setting up 2,400 seats while Convergys, one of the top three and the largest player in the Philippines,opened 1,000 seats. Ibex Global, an emerging player, also started operations in the city.

Davao City is the next frontier, as Metro Manila and Metro Cebu are already crowded and competition for talent is very stiff, said Andy Gomez, Project Leasing manager at JLL.

The firm is helping promote the city as an alternative site for BPOs and has been responsible for 80 percent of real-estate transactions of BPOs outside Metro Manila. It assisted Convergys, VXI and Ibex Global in choosing suitable facilities in Davao City.

Davao City has been named as a top-rated Next Wave City for more than three years now by the Information and Communications Technology Office. The ICT Office is the multi-sectoral body that identifies ICT hubs outside Metro Manila that can host BPO companies.

According to Bert Barriga, head of ICT Council of Davao, which is helping promote Davao as a BPO city, the metropolis meets the pre-requisites of BPOs: a talented workforce, excellent infrastructure, reasonable cost of doing business, generous incentives given to locators including those in economic zones, as well as peace and security conditions for which the city has been named as the world’s fourth safest by website, Numbeo.com, with a crime and safety indices better than financial districts in the rest of the country.

“Davao City is the only Asian city that has a comprehensive 911 system comparable with those in the US and Canada,” said Barriga. “It’s the only city in Asia that has an Intelligent Operations Center installed by IBM interfacing with the city’s Public Safety and Security Command Center.”

As of the latest count, Barriga said Davao City has more than 20,000 full-time employees in the BPO industry. Current locators Sutherland, Concentrix, VXI, SSI, and iCore have all grown their seat numbers. Local start-ups that include NextBPO, Sycore, Offsourcing. Leadgen and eSouthwave have also expanded operations.

“Availability of talent pool is the number one factor for BPOs to locate in a particular area,” he said. “The talent pool in Davao is as qualified as those in Manila and Cebu.”

Until recently, Davao City’s stock of office buildings were mostly built prior to the BPO era. Recently, property and retail giants SM Prime Holdings Inc., Ayala Land Inc. and Robinsons Land Corp. built BPO offices within their malls in the city, said Joan Tan, senior manager at JLL.

“Now that a few BPOs have set up offices in Davao, the industry’s perception of the city has changed,” she said. “They’ve discovered that it offers sound infrastructure as well as quality of life. It only takes less than an hour to get to the beach or drive up to the mountains from the city center. The cost of living is low and it also has spending power.”

As the trend for BPOs is to expand outside the traditional locations, Davao City is in the best position to capture more of these players, said Barriga.

“ICT Davao’s advocacy since 2005 has been to make the city the prime destination for globally competitive and cutting-edge ICT products and services,” he said.

 â€œThe multi-sectoral participation has presented a synergistic approach in addressing strategies for BPOs, heightening the interest and participation of BPO companies in locating in the city.”