Manila reclaims spot

Manila reclaimed the second spot in the “Top 100 Super Cities” ranking for outsourcing, according to the Tholons Services Globalization Index (TSGI) 2018 report.

This was an improvement from last year, which saw Manila sliding to the fourth place under the same survey. It was in 2016 when the Tholons Services Globalization Index ranked Manila second as a global outsourcing destination.

The 2018 Super Cities list was topped by Bangalore.

Other Philippine cities that made it to the Top 100 Super Cities were Cebu, Iloilo, Bacolod, Davao and Santa Rosa in Laguna. The cities covered by the Tholons survey were assessed based on talent skills and quality; business catalyst; cost; infrastructure; risk and quality of life; and digital and innovation.

The Philippines meanwhile rose a notch to place second in the Top 50 Digital Nations, as reported by Tholons International, the leader in global outsourcing locations rankings.

Preferred destination

Colliers International Philippines pointed out that this improvement should buoy Manila’s stature as a major outsourcing destination. This development should raise these locations’ attractiveness as viable locations for business process outsourcing (BPO) and knowledge process outsourcing (KPO) firms outside Manila.

“The improved ranking only solidifies Manila’s stature as a preferred outsourcing destination. Despite the uncertainty brought about by the introduction of the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill in Congress and delay in the approval of buildings applying for Philippine Economic Zone Authority (Peza) accreditation, Philippine cities remain on the radar of large outsourcing locators,” Dom Fredrick Andaya, Colliers International Philippines director for office services, said in a statement.

“Among the challenges in the near term is to sustain our lead against our Southeast Asian peers that are starting to catch up,” Andaya added.

According to Colliers, the government’s ultimate objective is for Manila and other Philippine cities to be part of the report’s Top 25 Potential Digital Leaders list based on digital literacy rate, digital evolution, usage of AI and cloud computing, open innovation ecosystem and global digital competitiveness. To be included in the list will put the Philippines at par with highly successful cities such as New York, London, Singapore and Dubai.

Talent, office spaces

Meanwhile, Colliers said Manila continues to fare well in terms of talent as it accounts for roughly 70 percent of the estimated 1.3 million outsourcing employees in the country.

The aggressive entry of more KPO companies, it explained, is seen to provide higher-value outsourcing services, while the expansion of technology firms such as Google, Amazon and Facebook is also proof of the improving skill-set of Manila employees. However, this should be sustained by continuous upgrading of college curriculum and training provided to college students.

In terms of cost, Colliers noted that Manila remains one of the most attractive office markets in Asia due to its relatively cheaper lease rates.

Aside from cost considerations, the quality of office space in Manila has also been improving following the completion of new LEED- and WELL-certified towers, as well as the proliferation of flexible workspaces that cater to both start-ups and established multinational corporations (MNCs), it added.

Colliers pointed out that interestingly, Manila fared well in the digital and innovation category, which it attributed to a vibrant start-up community.

“A number of large Filipino companies and multinational corporations  have invested in and mentored a number of start-ups. We see this being complemented by the enactment of the Go Negosyo Act which encourages the establishment of micro-small and medium enterprises  as well the passage of the Innovation Act and bills that aim to ease start-up firms’ access to financing. In our opinion, the enactment of data privacy measures also buoyed Manila’s score in this category,” Colliers explained.

Infrastructure backbone

Colliers however noted the need for the Philippines to have an efficient infrastructure backbone, deemed to be a key factor that prospective outsourcing locators consider. Improvement of connectivity to airport and mass transit systems is crucial if the Philippines is to improve its infrastructure ranking.

As it is, the infrastructure and the quality of life categories, weighed down Manila’s ranking in the Tholons report. This, Colliers opined, was likely due to Manila’s poor showing in annual competitiveness surveys.

According to the 2018 Global Competitiveness Report of the World Economic Forum, the Philippines ranked 56th out of 140 countries. The same report, however, showed infrastructure as a weak point, as the country ranked only 92nd under this pillar. Manila likewise ranked 137th among 231 cities in a quality of life survey by consultancy firm Mercer Global.

Bright spots

Colliers noted that several measures are being implemented by the government and private developers to ensure that Manila’s ranking improves in future Tholons surveys.

A bright spot for Manila, Colliers said, is the implementation of the Ease of Doing Business Act. This law is seen to enable a streamlined business registration process for local and foreign locators and should play an important role in enticing outsourcing firms to operate in Manila.

Manila should likewise benefit from the government’s push to expand its annual infrastructure allotment to 6 to 7 percent of GDP from the previous 2.6 percent.