Slide in BPO ranking a wake up call

CEBU, Philippines - Although the recent survey of consulting firm A.T. Kearney placed the Philippine further down in terms of BPO (Business Process Outsourcing) attractiveness ranking, the Cebu BPO industry though seems unfazed deems the news as a wake up call.

“Every BPO consulting company has their own rating criteria. I do not know what objective these are. However, this is a wakeup call,” said Cebu Business Club (CBC) president Dondi Joseph.

Cebu is banking on its robust growth to the dynamic BPO sector, following the proclamation of another consulting firm Tholons putting Cebu in the 8th place as an “emerged BPO” destination in the world.

According to Joseph, with or without the ranking pronouncements, Cebu has to address issues that already affect its attractiveness to investors, especially BPO capitalists.

“Cebu does have major issues that affect our attractiveness to BPO. These are traffic, bandwidth, peace and order, flooding, power, water, quality of graduates, the lack of ease in opening businesses here, and others,” Joseph said.

According to Joseph, Cebu has a lot of competition. “Let’s not be complacent. We have competition. Let’s solve our problems,” Joseph said.

For his part, Cebu Educational Development Foundation for Information Technology (Cedfit) executive director Jun Sa-a said the A.T. Kearney report is heavily based in financial attractiveness, which covers 40 percent of the ranking criteria.

Sa-a said the different criteria set by A.T. Kearney explained why Vietnam has overtaken the Philippines.

“But in terms of volume of revenue of the industry, Vietnam is still very behind us. But they are our challenger,” Sa-a said.

Sa-a echoed Joseph’s reaction saying Cebu should not be complacent, and should continue to improve since everybody is trying their best to be on top.

“We are in a very tough global competition,” Sa-a said.

In a report, the Philippines dropped two rungs on the list of countries most attractive for offshore business activities.

The A.T. Kearny’s Global Services bared that the reasons for the drop is generally on the “fallout from the financial crisis shook up the rankings, as once-expensive countries moved up.”

The Philippines was at seventh place in the firm’s 2009 ranking, now held by Thailand, which also dropped three rungs. The Philippines’ ninth place in the current ranking was previously assigned to Jordan, which plunged 13 rungs to 22.

While a sluggish recovery continues to create the kind of pressure for economies that drive business outsourcing, an increasingly complex global economic environment has led to major changes in the ranking of the most attractive offshoring destinations,” the Chicago, Illinois-based A.T. Kearney said in an earlier report.

India, China and Malaysia remained in the top three spots—positions they’ve occupied since the inaugural Global Services Location Index in 2003. A.T. Kearney cited a combination of human resources and low cost as reasons for this consistent ranking.

With Vietnam rising two notches at eighth place, it has overtaken the Philippines; while Chile dropped to the 10th place, having dropped also two rungs in the ranking.

Vietnam was given strong scores in terms of financial attractiveness (3.27), people skills and availability (1.19) and business environment (1.24) for a total score of 5.69, which is just 0.04 point ahead of the Philippines’ overall score of 5.65.

India, the leader, was given a total score of 7.01, while Chile, the 10th, 5.52.Even in terms of financial attractiveness, Vietnam outpaced the Philippines and the other 48 countries included in the ranking with an overall score of 8.17.

A.T. Kearney gave more weight to financial attractiveness, citing that “financial factors constitute 40 percent of the total weight in the Index…because cost advantage is typically the primary driver behind location decisions.” (FREEMAN)