philippine location trends by cbre gcs, manila september 16, 2009

Philippine Location Trends

By CBRE GCS, Manila

September 16, 2009

CB Richard Ellis Labor Analytics Group|

A Snapshot – Philippine Economy

The slowdown in GDP reflected primarily the negative contributions from exports and gross capital formation and the significantly lower personal consumption expenditures (PCE) growth.

GDP Growth Rate

Data Source: National Statistical Coordination Board

-4%

-2%

0%

2%

4%

6%

8%

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96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09


A Snapshot – Philippine Economy

The continued downtrend in headline inflation was due mainly to lower food inflation from favorable supply conditions, particularly the sustained growth in agriculture, and lower global food prices. In addition, inflation in 2008 was triggered by the rise in fuel prices.

Inflation Rate

Data Source: National Statistics Office

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Key BPO Locations in the Philippines

First Tier Cities

Second & Third Tier Cities

Metro Manila*

CebuBacolod

Baguio

Iloilo

Davao

Urdaneta

Batangas, Laguna & Cavite

Legazpi

* Metro Manila Cities include Makati, Pasig, Taguig, Muntinlupa, Quezon, Mandaluyong,& Pasay

Dumaguete

Pampanga

Cagayan de Oro


Key BPO Locations in Philippines

Cities in Metro Manila, Cebu City and Baguio City, account for the majority of the BPO market. The BPO industry is made up mostly of contact centres and back office work. There is also increasing demand for Software, Engineering, Transcription and Animation.

Batangas City, Urdaneta City and Legazpi City are just some of the cities that make up the list as next BPO destinations due to considerably large talent available (nearly all can speak and understand conversational English. Almost all college and some high school graduates are very articulate in the English language). Another factor that makes these cities the right next destination is low cost for human resources, utilities, and real estate rentals.


Philippine’s BPO Market

The Philippines is now one of the top destinations for BPO services in the world, with a 15% market share.

The BPO industry earned a total of USD6.1 Billion in revenue the previous year.

Competitive Advantages

Challenges

Abundance and quality of talent and Filipinos’ strength in the English language

Cost competitiveness with Western and some Asian countries.

Filipinos have a strong positive view of the BPO industry

Philippines has various incentives in place to attract investors

Philippine government has given support and focus on development of the industry

Competitive search for qualified labor as some of the cities are attracting a lot of locators already

Some of the second and third tier cities will have lower talent pool with quicker saturation point

Development of Philippines’ BPO Market

Philippines15%

India37%

Canada27%

Central and Eastern EuropeChina

Other

5%

4%2%

5%

5%

Mexico

Ireland

Philippines15%

India37%

Canada27%

Central and Eastern EuropeChina

Other

5%

4%2%

5%

5%

Mexico

Ireland


Philippine’s BPO Market

The BPO industry has become a crucial component of the Philippine economy covering a wide field of specialized markets including transcription, animation, publishing, software development, etc.

20 cities have been identified as the Philippine’s key BPO hubs.

The 20 Designated Cites:

First Tier CitiesSecond /Third Tier

Cities

Makati Pasig Taguig Quezon Muntinlupa Mandaluyong Pasay Cebu Baguio Bacolod

Urdaneta Batangas Legazpi Cavite Laguna Pampanga Dumaguete Davao Iloilo Cagayan de Oro


Supply of Educated Talent in the Philippines

401 421 444

2,4362,604 2,654

-

500

1,000

1,500

2,000

2,500

3,000

2006 2007 2008

Thou

sand

s

University Graduates

New Enrolment

Talent Supply for Philippines’s BPO Industry

Source : Commission on Higher Education

Supply of Educated Talent

Talent supply of university graduates is promising – more than 400,000 students graduate yearly. This has been the average for the past three years and continues to increase.

BPO jobs are perceived as an attractive and stable longer-term career option.


Metro Manila is the capital of the Philippines, with close access to government offices

Good infrastructure Developed business environment Existing affordable, BPO-ready real estate Availability of labor with highest concentration of

universities/colleges

Rising costs in labor Traffic issues

STRENGTHS

WEAKNESSES

Population: 11,553,427 Number of graduates: 112,121 Population Growth : 1.99%

(avg) Unemployment Rate 7.5%

Close to 300 higher education institutions (universities / colleges / vocational schools)

Major schools: University of the Philippines, Ateneo de Manila University, University of Sto. Tomas, De La Salle University

Multinational banks – Citibank, HSBC, Deutsche Bank, JP Morgan Chase, etc.

Telecoms companies – Oracle, Motorola, Samsung, Ericsson, etc

IT - IBM, HP, etc Others – Nestle, Shell, Chevron, Procter & Gamble,

Colgate Palmolive, etc

COLLEGES & UNIVERSITIES

MAJOR OCCUPIERS

TIER I MARKETLABOR AVAILABILITY

Metro Manila


Close proximity to Metro Manila (travel time takes about 1hour)

Well-developed infrastructure and transportation system (international airport)

Former US air-force base with strong cultural and educational influences

Social infrastructure and good standard of living Clark Special Economic Zone in Pampanga is a PEZA-

accredited park (with several business incentives)

High attrition due to its proximity to Metro Manila

STRENGTHS

WEAKNESSES

Population: 2,645,395 Number of graduates: 7,218 Number of graduates from

neighboring provinces: 5,611 (Nueva Ecija)

3,547 (Tarlac)

15,778 (Bulacan)

34 higher education institutions (universities ./ colleagues / vocational schools)

Major schools include: University of the Philippines – Pampanga, Philippine Women’s University and Angeles University Foundation

Texas Instrument, Samsung, FedEx, Global Gateway Logistics

COLLEGES & UNIVERSITIES

MAJOR OCCUPIERS

TIER II MARKETLABOR AVAILABILITY

Pampanga

Contact Information

For more information, please contact:

Joey RadovanVice Chairman, CB Richard Ellis Philippines [email protected]

CB RICHARD ELLIS

CBRE Global Corporate Services

philippine location trends by cbre gcs, manila september 16, 2009

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