KPOs’ entry boosts Cebu’s image as major outsource hub

THE entry of technology locators here proves that Cebu can handle higher value outsourcing operations, strengthening its reputation as a major outsourcing hub in the country.

That is according to a Colliers International Philippines official in a statement which proves that Cebu is also attracting its share of knowledge process outsourcing companies, although it has remained an attractive site for business process outsourcing (BPO) firms and providers of customer care support.

“As of the first six months of the year, we also recorded knowledge process outsourcing (KPO) companies taking up space and this shows that providers of higher-value outsourcing services will likely cover a greater share to total office space absorption over the next 12 to 24 months,” said Dom Fredrick Andaya, Colliers International Philippines director for office services in a statement.

Among these KPO firms are Accenture, Shearwater Health, Cresco Share Services, Convergys, Wipro, and Teledirect.

Moving forward, Colliers advised that fostering an innovative environment for technology start-ups would play a critical role in Cebu’s goal of attracting more outsourcing locators and generating more jobs by 2022.

Factors
This are just among the factors of Cebu strengthening its bid as a major outsourcing hub and not just an alternative to Manila for foreign outsourcing companies.

Primary hub
With its slight improvement in the 2018 Tholons list of super cities for outsourcing, Cebu will continue to attract investors, according to property management and research firm Colliers International Philippines.

“Cebu is no longer just an alternative location for outsourcing firms outside Manila. Over the past few years, we have seen how Cebu has developed on its own as a primary outsourcing hub,” said Andaya in a statement.

In the 2018 Tholons list, Cebu moved up a notch to 11th place from 12th place in 2017 in the list of super cities for outsourcing.

While it is still quite far from its previous spot within the top ten, Colliers believes that this improvement indicates that Cebu remains to be a preferred hub for outsourcing destinations and that efforts to enhance the city’s business environment are already bearing fruit.

Among the factors considered by Tholons are talent skills and quality; business catalyst; cost; infrastructure; risk and quality of life; and digital innovation.

Infrastructure
According to Andaya, the push for public infrastructure in Cebu is also a good indication for the city’s prospects in outsourcing.

“We project a greater influx of outsourcing investments following the completion of the second terminal of Mactan-Cebu International Airport (MCIA), continued upgrading of college graduates’ skills, and further improvement of business registration process which should entice more firms to set up shop within the city,” he added.

Big ticket projects
Aside from the MCIA Terminal 2, other expected big ticket infrastructure projects in Cebu include the Cebu-Cordova Link Expressway, the Metro Cebu Expressway, the Bus Rapid Transit (BRT) project, as well as other inter-island bridges.

With this expected investors coming into Cebu, Colliers, in its latest report, said that the demand for office space is also seen to increase.

As of the second quarter of 2018, Metro Cebu’s office stock reached 1.01 million square meters while vacancy was at 8.9 percent.

“Colliers sees Cebu’s office stock reaching 1.04 million square meters before end-2018. This is more than double Metro Cebu’s office stock in 2011. We see office vacancy hovering between 8 percent and 9 percent by the end of the year,” the report said.

Cheaper office rentals
Another reason why Cebu is attractive to investors is its relatively cheaper office rental rates.

Data culled from Colliers International Philippines research showed that in the first half of 2018, the average office rents in Cebu is at $10.5 per square meter per month. It is one of the cheapest in Asia.

Manila is at $19.2 per square meters per month.

Most expensive rents
The most expensive in the list is Hong Kong which is at $106.4 per square meter per month.

Other areas in the list are Tokyo ($79.4); Beijing ($58.7); Shanghai ($55), Singapore ($54.8); and Seoul ($44).

Areas in the cheaper end of the list include Hyderabad ($9.9); Bangalore ($17.6), Chengdu ($18.6); and Jakarta ($20.9).

Colliers also cited that Cebu should benefit from the implementation of the recently enacted Ease of Doing Business law. A simplified business registration and licensing system plays an important role in attracting new businesses.