Local government units (LGUs) were urged to develop business-friendly environments to attract investments from the fast-growing business process outsourcing (BPO) industry.

Local government units (LGUs) were urged to develop business-friendly environments to attract investments from the fast-growing business process outsourcing (BPO) industry.

During the 2008 Local Government Code Anniversary Conference held Wednesday in Makati City, local officials were told that they should adopt policies that would make them attractive to BPO investments.

LGUs were also encouraged to follow the measures done by the Bacolod City government in supporting the BPO sector. Bacolod City passed an ordinance endorsing accreditation of Philippine Economic Zone Authority (PEZA) sites, and promoted Bacolod as ICT hub by participation in conferences and trade shows and by using website and brochures.

“LGUs sometime have to see themselves as business planner, catalyzer, and enabler instead of being just enforcer,” said Bacolod City councilor and Bacolod-Negros Occidental Federation for Information and Communications Technology  chair Jacelle Batapa-Sigue.

SUNSHINE INDUSTRY Considered one of the sunshine industries—along with mining, agri-business and tourism—that can be tapped by local government units, the BPO industry has employed around 300,000 workers and has estimated revenue of US$ 4.9 billion in 2007.

Dan Reyes, president of Sitel and of the Business Process Association of  the Philippines, said that among the advantages of the country  in attracting BPO investments are the Filipinos’ English-speaking ability, their cultural affinity to the United States, competitive labor, real estate and telecommunication costs. The Philippines was chosen by the United Kingdom National Offshoring Destination (NOA) as the outsourcing destination for 2007.

All sectors of the IT-BPO industry have shown double-digit average growth in the past three years. (See table below).Contact centers, which generated a total of US$3.6 billion in 2007, grew by an average of 52% during the past three years.

The BPAP, which is the umbrella organization of outsourcing firms,  estimates that the BPO industry will generate US$13 billion and employ a million full-time employees by 2010. 
Reyes said that the economic slowdown in the United States could be an opportunity for the Philippines. “Companies will cut cost and will continue to outsource.”

SUPPORT FROM LGUS 
Commissioner Monchito Ibrahim of the Commission on Information and Communication Technology (CICT),  said although the BPO industry bloomed with very little help from the government, LGUs should support first movers by addressing the companies’ need for infrastructure, security and human resources.

Ibrahim cited the case of Baguio City when BPO firm Sitel moved in 2004. Ibrahim noted that the local government of Baguio adopted incentives to information and communication technology firms and installed police stations near the BPO site.

The presence of BPO firms in the provinces, Ibrahim said, allow LGUs to boost their local economies, give workers the opportunity to work even without leaving their home and develop other support businesses. He added that BPOs presence in the provinces allows the company to access abundant talent in the provinces, manage costs due to lower wage rates and rental rates and an opportunity to explore the Philippines.

Local policies that are supportive of the BPO industry, said Ibrahim, could spur the growth of BPO industry outside established hubs like Metro Manila and Cebu.

A BPAP inventory showed that around 80 percent of the workers in the BPO industry are based in the National Capital Region. (See table below)

The concentration of BPO firms in Metro Manila, says Teletech senior vice president Maulik Parekh, has resulted in high attrition and wage inflation that are “atrocious” to the companies. 
“We are avoiding another Bangalore in the making,” said Parekh referring to too much concentration of BPO companies in one of India’s outsourcing hubs. Parekh noted that in Makati alone, there are around 50 BPO firms situated in five blocks.

NOT SECURED 
David Leechiu, country head of a global property consulting firm Jones Lang La Salle Leechiu (JLL), said some BPO companies are hesitant in establishing their presence outside outsourcing hubs because they want to make sure first that these provinces and cities have the needed infrastructure, talent pool and good business environment.

“BPOs want or need to expand outside Metro Manila but need to feel secure about their decision,” Leechiu said. LGUs, Leechiu said, should ensure that there are accessible services, 24/7, and secured transport, housing facilities, restaurants and commercial centers for workers and support services for the companies.

“In many provinces, workers have difficulty of access to the office because of the quality of roads,” he said. “Support infrastructure is important because lack of it results in vulnerability to damage.”

RECOMMENDATIONS FOR LGUS 
Apart from ensuring the availability of infrastructure and support services, LGUs, said Leechiu, should also develop labor tracer program and database of graduates working in the industry so they can determine the actual number of qualified workers. He added that LGUs should also encourage growth of training programs for call centers, accounting, engineering and editing agents.

He added that LGUs should strive for continued education of the community and information dissemination about the industry. In previous interview with abs-cbnNEWS.com/Newsbreak, BPAP director for talent development Ma. Jamea Garcia said that some parents do not want their children to join the industry because of security and health concerns and the perception that “a call center job is just answering telephone calls.”

Leechiu added that LGUs should also allow the establishment of more IT parks and should not feel bad about the incentives granted to companies situated in PEZA sites. Companies that choose to locate on PEZA sites can avail themselves of incentives like income tax holidays. - abs-cbnNews.com/Newsbreak