Davao City "Next Wave Cities" for the BPO industry

Davao City ranked first in a list of 10 "Next Wave Cities" for the BPO industry

A report by the Business Processing Association of the Philippines (BPAP) showed Davao City ranked first in a list of 10 "Next Wave Cities" for the BPO industry, followed by Sta. Rosa, Laguna.

Davao City was number one in terms of talent availability, infrastructure and cost. Davao has a workforce of 400,000 and about 13,000 new graduates are added every year. In 2010, its IT-BPO sector employed over 7,500 people and data shows it can grow to 26,000 full-time employees.

Another advantage of Davao is its low wages. The report noted the non-agriculture minimum wage in Davao is P5, 390 a month, 8% lower than Metro Cebu and 36% lower than in Metro Manila.

However, IT-BPO locators may face challenges, such as the lack of qualified talent for senior and management positions in the city, as well as the peace and order situation in Mindanao. But the looming power crisis in Mindanao may be the biggest challenge yet for companies.
"Davao needs to leverage its success by continuing to invest in talent and growing a niche in non-voice services," the report said.

At the same time, Sta. Rosa, Laguna was cited for its thriving economy boosted by investments in real estate, IT-BPO and manufacturing sectors. It was named "Makati of the South" because of its high-quality infrastructure and home to world-class IT BPO office campuses, high-end residential communities, industrial estates and lifestyle amenities.
The average monthly rental rate is around P400 per square meter and the minimum non-agricultural wage is P6, 556 a month. On the downside, the cost of power is similar to Metro Manila.

While Sta. Rosa is a rich source of talent, the report noted that English proficiency of workers is a concern because it is slightly lower than Metro Manila.
"While there is ample supply of entry-level professionals to service the voice-BPO sector, current IT-BPO locators like Convergys, TeleTech and KGB have experienced difficulties recruiting middle managers that live in and willing to work within the city. To address this issue, companies have had to relocate their own middle managers, especially during the start-up phase of operations," the report noted.

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