ILOILO CITY ? An international business magazine has named the cities of Iloilo and Davao as two of the world?s new hotspots for business process outsourcing (BPO) investments.

BusinessWeek magazine said Iloilo and Davao were among the 31 cities that were being eyed by BPO investors due to economic and political pressures to outsource work to lower-cost cities, said an article posted on its website last May 2.

While widespread layoffs in Western countries, especially the United States, have afforded global outsourcing providers highly skilled workers to beef up their presence in the United States, many firms were still looking to invest in less costly cities in South America, Europe and Asia, according to the article.

BusinessWeek is a global source of business news with more than 4.8 million readers weekly in 140 countries.

The magazine cited a report released in February by KPMG, a global network of professional services firms, which said the two Philippine cities were rapidly emerging to compete with traditional BPO destinations, such as Bangalore, Chennai and Shanghai.

In its ?Exploring Global Frontiers? report, KPMG said that as traditional BPO locations rapidly approach saturation point, ?there was a sizable opportunity for these new and emerging locations to swallow up a large proportion of the new outsourcing work, which the credit crisis was apparently creating.?

Iloilo was cited for its large talent pool owing to a number of educational institutions and strong English skills of the population.

The report noted that Iloilo City was the educational hub in the Philippines? Western Visayas region with six universities, more than 30 colleges, and technical schools producing more than 17,000 students graduates annually.

It said the talent pool was suitable for voice-based operation of call centers due to populace?s diction and cultural similarities with the United States.

The city?s IT-BPO industry has also significantly grown. There are seven BPO firms in the city, with 2,600 employed in 2007-2008.

The IT-BPO services in the city include call centers, software development, medical and other data transcription, animation and digital content, and engineering design, according to the report.

Davao was also cited because of its English-speaking talent pool with many cultural ties to the United States owing to its large number of universities and colleges.

Some companies were setting up training centers in Davao, which were also being used to train the companies? employees from other operating centers in the country, the KPMG report said.