Cebu seen as leading BPO support provider

Cebu is projected to lead the world's Business Process Outsourcing (BPO) support capabilities if only it could sustain and further improve its labor force.

According to a computer and IT research company XMG Asia Pacific, Cebu has the capability to go beyond the BPOs or merely as a call center hub.

XMG Asia Pacific senior analyst Cesar Tolentino made this projection of Cebu as a legitimate IT hub in the Philippines, during the first day of the 3-day 2nd Cebu ICT Summit currently held at the Cebu provincial capitol social hall.

"Because Cebu's pool of IT skills is more on engineering and high technology capabilities, it can lead in positioning as a high-end IT investment hub, not just customer service based call centers," Tolentino said.

More backroom operations like accounting, human resource, and legal services will be locating in Cebu, if the province will be able to effectively highlight this capability in the international market place.

Because Cebu is known not only as the second best offshore seat in the Philippines, (next to Manila) for BPO companies, but for sustainable supply of highly skilled IT engineers, and software developers, the trend for investment in the province is projected to take on the higher ground, which is into more industry-specific sourcing BPO like engineering, design, publications/content development and research and development (R&D).

From pure customer service like call center investments, or the pure outsourcers, Cebu has slowly gained international interest from investors in its capability to host more of back sourced BPO or shared service centers.

Tolentino expressed optimism of Cebu's potential to attract multi-million dollar investments in the next evolutionary step to outsourcing, such as Contract Manufacturing Service (CMS) and high-powered technology-based outsourcing.

He mentioned that case of Tsuneishi Technical Services Philippines, and Tsuneishi Heavy Industries, wherein the company, which is partly owned by the Aboitiz Group, started in Cebu as shipbuilding firm, now it has progressed into a ship design facility.

Also, more multinational companies, which have existing operations in Cebu, have already followed in establishing technology-based or software development facilities in Cebu, like NEC Telecoms Software Philippines, Inc., Lexmark's Research and Development Corporation, and Fairchild Semiconductor.

The investment charm in Cebu in terms of luring BPO investments is expected to moving higher from companies that are Original Equipment Manufacturing (OEM) to contract manufacturing.

Some companies in Europe, he said are now scouting for good investment sites for back-office outsourcing that require highly skilled or technology-based manpower pool.

He said Cebu has the advantage to get this kind of investments, thereby urging the government and private sector players in Cebu to work together in positioning Cebu as a high-end IT investment destination, rather than focusing on customer service base of BPO investments.

The BPO services global market is expected to grow by at least 40 percent to US$2.4 billion by the end of 2006. While the IT services market is expected to grow by at least 36 percent to US$1.14 billion by the end of 2006.

This year's 2nd Cebu ICT Strategy Summit carried a theme dubbed "Defining the Tasks for a United Cebu."