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June 6, 2008

Davao City seen as emerging site

A recently concluded XMG Global Offshoring Leadership Study revealed that Davao City in the Mindanao Region of the Philippines will be a viable alternative offshoring site 3 years from now, reported the Philippines News Agency.

The study predicts that organizations that are formulating the technology and procedural solutions to integrate a large manpower base into their global delivery centers will be at the forefront of the offshoring and outsourcing industry as the labor arbitrage model continues.

This result is part of an ongoing study conducted between January to March 2008, which focuses on forecasting the global demand for offshoring and outsourcing services and the site optimization of emerging cities.

Among the emerging alternative offshoring cities cited in the study were Montevideo, Uruguay; Jakarta, Indonesia ; and Casablanca, Morocco.

Despite periods of turmoil in the Mindanao Region, outsourcing vendors and captives who participated in the study are very bullish about Davao City, primarily due to the area's larger population of untapped qualified resources compared to Cebu City in the Visayas Region north of Mindanao .

The study highlighted that competition in Cebu City is nearing saturation as the talent ramp-up continues. Among others, the study highlighted the population of Davao City as considerably higher than other Tier-2 offshoring cities globally.

In the Philippine context, Davao City's population is 71 per cent higher than Cebu City, 499 per cent larger than Olongapo-Subic City 333 per cent higher than Angeles-Clark City and 340 per cent larger than Baguio City.

The city's estimated workforce is twice of Cebu, 9 times of Subic and 7 times of Clark and 6 times of Baguio. This has not even taken to account the manpower pool at the nearby cities and provinces of Davao City .

According to the study, Davao City has various educational institutions annually yielding a higher number of IT and BPO qualified graduates than Subic, Clark and Baguio by 689 per cent, 278 per cent and 40 per cent respectively.

Telecom facilities, transportation networks and public transport systems are already in place in Davao City. However, XMG indicated there is a need to further improve and modernize these services; otherwise, business continuity and disaster recovery plans will go unfulfilled.

In addition, the existence of a public transport system in Davao City is noteworthy yet still needs improvement in order to expand locators recruitment reach and the transportation of people from various points in and out of the city.

Overall, the attractiveness of Davao City is greatly affected by the negative perception about the Mindanao region as a whole.

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