The State of IT-BPO Industry in Cebu: 8 Must-Know Facts in 2020

Categories: Advice for doing Business in the Philippines, Advice for Start-Ups and Entrepreneurs, IT Recruitment Advice

In recent years, the Philippines has grown to become one of the world’s go-to outsourcing destinations and the most attractive inbound investment location for Information Technology-Business Process Outsourcing (IT-BPO) companies. The country holds a steady stance despite the depreciating Peso and the increased inflation rate.

In the Central Visayas region, Cebu’s IT-BPO industry is one of the province’s “sunshine” industries. It’s a practical location for BPO hub spots, specifically for those eyeing an urbanized city outside Metro Manila.

Let’s take a look at some must-know facts about the IT-BPO industry at the Queen City of the South.

1. 19%% hiring growth from January to May 2019 (Source)

The BPO sector is one of Cebu’s most prominent employment generators and one of the top industries that put up significant job ads. In early 2019, the BPO industry in Cebu saw a 19% hiring growth.

Most businesses that are recruiting for employees are in Cebu City, the provincial capital, where many regional headquarters of big organizations are located.

Cebu IT-BPM (Business Process Management) Organization (CIB.O) Managing Director Wilfredo Sa-a Jr said that at the end of 2018, Cebu’s BPO sector posted employment of about 160,000.

2. Ranked 11th place in Tholons’ 2018 Services Globalization index (Source)

A lot of companies have invested and expanded their BPO operations in other key cities in the Philippines outside of Metro Manila, namely Clark, Iloilo, and Cebu.

Cebu is labeled as one of the two cities in the Philippine Economic Zone Authority’s (PEZA) list of “Centers for Excellence.” This is awarded to cities that have a strong hold in certain industries and disciplines. In Cebu’s case, it remains to have a firm footing on the BPO industry, proving to be a leader in innovation, commitment, and services to the IT-BPO industry.

It took the 11th spot in Tholon’s 2018 Services Global index, which is an improvement from its 12th place the previous year. It landed ahead of Singapore, Seoul, and Tokyo.

The annual Tholons ranking classifies the top 100 “Super Cities” in the outsourcing industry and ranks them based on their ability to perform outsourced services, as well as on digital adoption and the innovation ecosystem.

3. Lower land development cost (Source)

Cebu is acknowledged as a premier investment destination outside the Philippines’ capital. National development players are encouraged to pursue the development of mixed-use projects in Metro Cebu, which merges the live-work-play lifestyle, for it offers better and more attractive value-proposition compared to stand-alone developments.

The property boom in the region also serves as an ideal alternative metro-paced business lifestyle at a lower cost than Metro Manila.

Property research and management firm Colliers International see BPO tenants in Cebu are switching towards these mixed-use communities since they provide a better living and working environment. They also see national developers obtaining large parcels of land in Cebu to be developed into master-planned townships.

4. Lower lease rates (Source)

Office rental in Metro Manila increased by an average of 12.5% year-on-year during 3Q of 2019. Taguig City has the highest rate at P1,249 per sq.m., followed by Makati at P1,235 per sq.m. Meanwhile, the average office rental rates in Cebu range from P400 to P1,100 per sq.m. for a fully fitted office space.

The growing outsourcing sector remains to be the biggest demand driver for office leasing in Cebu amid initial concerns of a downtrend. In 2018, a total of 58,000 square meters in office transactions were registered from January to June.

5. Less competition for the talent pool (Source)

Cebu has an excellent pool of talent thanks to the outstanding training of reputable universities in the region. The growing employment opportunities also attract skilled individuals from nearby provinces to move to Cebu City.

Moreover, CIB.O teamed up with the Cebu City Department of Education and the Department of Information and Communications Technology for the Learning English Application for Pinoys (LEAP) program. LEAP is a 40-hour, self-paced training program that was rolled out to 27 Cebu City senior high schools in August 2017 that aimed to improve the oral communication skills of SHS students.

With more and more multinational companies and IT-BPO firms seeking skilled employees, Cebu guarantees to deliver highly-skilled workers and it’s wise to partner with a recruitment firm with topnotch IT recruitment.

6. As of 4Q of 2018, at least 329 IT-BPO firms are operating within Cebu’s jurisdiction (Source)

BPO companies continue to fuel office demand in Cebu City. In the last quarter of 2018, around 329 IT-BPO firms are running within the city’s territory, employing roughly 130,000 people. Among the companies that operated in Cebu during the first half of 2018 are Convergys, Cresco Shared Services, and Wipro. These businesses mainly provide customer support, healthcare, and IT services.

7. Cebu City has a strong IT-BPO presence, accounting for 24 PEZA-accredited IT Centers and 4 IT Parks (Source)

Because of Cebu City’s strong foothold in the IT-BPO industry, it accounted for the largest-operating PEZA-accredited centers and parks in the Philippines, such as the Cebu Business Park (CBP) and Cebu IT Park (CITP). The two are the city’s primary business districts and the most attractive location for BPO office operations.

Cebu IT Park—Cebu Property Ventures and Development Corporation’s (CPVDC) flagship project—has also received global recognition as one of the top business process outsourcing (BPO) hubs.

PEZA-registered companies can benefit from both fiscal and non-fiscal incentives, which investors can enjoy.

8. Under the industry’s 2022 roadmap, IT-BPM is seen to generate $38.9 billion in revenue by the end of 2022, from a six-year revenue of $25 billion until 2016 (Source)

CIB.O managing director Wilfredo Sa-a Jr. said that the outsourcing workforce in the city increased due to the active implementation of expansion programs of existing businesses, as well as the launch of new players in the field.

Sa-a believes Cebu has been aggressive in enhancing its talent pool to encourage the industry’s growth prospects. He also added that the city’s topography has dramatically transformed in the last years, which was primarily driven by the IT-BPO industry.

Under the national roadmap, the industry is aiming for the employment of 1.8 million by 2022, and about 30% of it will be coming from BPO centers outside Metro Manila. The highly-skilled workforce Cebu has kept it in the vicinity of Knowledge Process Outsourcing (KPO) and BPO firms.

Summing It Up

Cebu City’s skyline is definitely one to watch out for if things continue to go well. Soon, there could be new developments and other cyber parks on the horizon.

With its growing IT-BPO, KPO, IT-BPM, and other outsourcing industries, you’ll want to reach out to a recruitment firm in Cebu to help fill your business with highly-skilled workers and top talents from the city’s outstanding pool of workers.

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Lawrence Barrett