IT-BPM Industry: Economic Driver of Cebu

A decade and a half ago, during the largest annual event outside Manila, Cebu Chamber of Commerce and Industry’s (CCCI) Cebu Business Month (CBM) 2005, with the theme ‘Cebu Gearing Up for Global Play’, the IT/BPM industry got strategically recognized as one of the twin-win economic drivers of Cebu. The other economic driver was the Tourism industry with the flagship countryside tourism promotion program, ”SuroySuroy Sugbo’ launched during the same CBM event.

The accompanying aggressive marketing and promotional campaigns, which included road shows in Bangalore and Hyderabad in India, Beijing and Shanghai in China, Hong Kong and Singapore, culminated in the holding of the country’s first IT/BPM international conference in June 2005 in Cebu.

Former President Gloria Macapagal Arroyo was guest of honor and keynote speaker, and the signature event attracted international speakers, delegates, and more importantly, industry investors who would later invest in the first IT economic zone outside Luzon, Asiatown IT Park which was later renamed Cebu IT Park (CITP), as well as in other areas of Cebu City.

So strong was the industry growth that after finishing a one-storey, 11,000 sq. meter building in 2005, high rise IT buildings started to sprout, resulting in a vibrant and dynamic IT Economic Zone.

The old Cebu Domestic Airport in 1989 (Photo by Mr. Fred Umabong)

Now transformed to Cebu IT Park(Photo by Mr. Art Balaga of Style Assembly Multimedia)

THE CONTACT CENTER CAPITAL OF THE WORLD SINCE 2010-PHILIPPINES: CEBU NEXT TO MANILA

The phenomenal growth of the IT/BPM industry in Cebu reached its tipping point in 2010. That year saw the conversion of a 50-hectare Cebu Business Park (CBP) into a much larger economic zone. This happened during the final years of former President Gloria Macapagal Arroyo (GMA) who, after seeing the Cebu IT Park as a great success formula, challenged the former president of Cebu Holdings, Inc. (CHI), Francis Monera, to produce another economic zone in Cebu.

It transpired that CHI’s Monera had already worked with PEZA’s Director General Lilia de Lima on an Economic Zone Certificate for CBP that only lacked a Presidential Proclamation. On the spot, GMA announced CBP as a much bigger economic zone. The Presidential Proclamation was followed by an all-time high construction boom in the following years, particularly in Cebu Business Park (see Photo 3 showing the transformation of the former Club Filipino de Cebu golf course into a full blown business and financial district).

The Former Club Filipino Golf Course

Now transformed to Cebu Business Park (Photo by Mr. Art Balagaof Style Assembly Multimedia)

A GRAPH REFLECTING THE BOOM IN THE CONSTRUCTION INDUSTRY AFTER 2010

Direct employment which was estimated at 1,200 in 2001 has exponentially grown to around 170,000 in 2019. The diversity of expertise offered by the outsourcing industry such as call center operations, IT outsourcing, shared services operations, research and development, engineering services, to banking/insurance services, and the health information management services has since widened and deepened in terms of complexity. Due to this the Philippines, particularly the cities of Manila and Cebu, were recognized as the “Contact Center Capital of the World”. As the country strengthened its position in the industry, it became imperative for major contact center companies to establish a location in the country with Cebu being a top choice due to the city’s considerable amount of English-speaking talent, as well as a neutral accent within the province.

In 2008 Cebu City was catapulted to No. 1 in the listing of the Top 50 Emerging Global Outsourcing Cities, and peaked at the No. 7 spot on the Global Outsourcing Destinations listing of 2016, with both recognitions granted by Tholons Digital Marketing Index - a full-service strategic advisory firm for global outsourcing advisory and investments.

On the 2017 list of Super Cities of the World, Cebu City’s position dipped to No. 12 after Tholon’s changed the criteria to incorporate the Innovation Ecosystem and Digital Transformation in their new list. On the 2019 list, Cebu City inched up to No.11.

Looking back, the Cebu Educational Development Foundation for IT (CEDFIT) was formed during the First Cebu IT Summit in March 2001. CEDFIT is a consortium of IT industry players and universities/colleges responsible for Cebu’s human resource development. It was transformed on May 22, 2017 into what is now popularly known as Cebu IT/BPM Organization (CIB.O) during the Transformation Summit, which is now a full-time industry association dedicated to sustain Cebu’s IT/BPM industry as it shifts towards providing higher value IT and IT-enabled services.

CIB.O BOARD OF TRUSTEES TOASTS CEDFIT’S TRACK RECORD OF SUCCESS, CIB.O’S PROSPECTS, AND CEBU’S IT/BPM INDUSTRY’S GROWTH AND PROSPERITY.

According to the Philippine Economic Zone Authority (PEZA), Cebu City is home to more than 300 IT/BPM locators, with an estimated 170,000 directly employed individuals as of December 2019, according to industry estimates. The income generated through direct employment is estimated at Php33.2 billion annually, with an additional Php53.0 billion from indirect employment. This brings the total income contributed by the outsourcing industry to about Php86.2 billion per year in the local economy of Cebu. The industry's advantage of offering pay grades above the minimum wage provides the new middle class in Cebu with greater disposable income. This means the industry not only channels money through its expenditures but also increases disposable income circulating within the province.

(L-R: CIB.O President Gregg Gabison, CIB.O Vice President Elena Palacios, CIB.O Trustee Anthony Noel, CIB.O Chairman Francis Monera, CIB.O Trustees Franklin Pasayloon, Edwin Paul and Jigger Escario, and CIB.O Managing Director Jun Sa-a)

THE DIVERSITY OF CEBU’S OUTSOURCING INDUSTRY

Cebu is home to most of the big outsourcing players present in Metro Manila such as Concentrix (formerly Convergys), Teleperformance, Accenture, Teletech, ePerformax, JPMorgan and Chase, IBM, Optum, Conduent ,QBE, Manulife, Results, Telstra, EXL, etc. Further, the city proudly boasts of some of its Cebu-based operations such as Lexmark R & D and Lexmark Shared Services, Lear’s Philippine Engineering and Technology Center, NEC, Qualfon, Dash Engineering, Inc., AZPIRED, NCR’s R & D, Mercedes-Benz Shared Services, Wipro, Bombardier, Author Solutions, Ameeratel, Alliance Software and FPT Software. Cebu City continued to capture some new players Amazon, Fujitsu, Dover Business Solutions, and Kuehne + Nagel.

FROM CEDFIT TO CEBU IT BPM.ORGANIZATION (CIB.O)

With the exponential growth of the IT/BPM industry of Cebu, making it one of the “twin-win” economic drivers earlier stated, industry and academe leaders decided to transform CEDFIT into a full time industry association. CEDFIT thus became Cebu IT BPM.Organization, or CIB.O.

This transformation was launched during the 2017 “Transformation Summit” - the main IT/BPM industry event of Cebu. Beyond the usual human resource development activities, CIB.O is now officially marketing the city to potential locators, ensuring that the needs of the IT/BPM companies are addressed as related to both local and national concerns. CIB.O continues to organize the annual industry event now called the “Transformation Summit” to gather industry, academe, government, support groups, and other stakeholders to sustain the growth of the industry

CIB.O Chairman Francis Monera addresses the audience at the 2017 Transformation Summit held at Marco Polo Cebu

CIB.O gets the Flare Award in 2018

CIB.O CONTINUES TO TRAILBLAZE AND EVOLVE

The great success of the IT/BPM industry in bringing jobs and business opportunities in Cebu City, has inspired other cities in the Philippines to convert their cities into IT/BPM Hubs; thus competition from within the country is heating up. But being the trailblazer, and blessed with our superb infrastructure- power/telco/international airport, the abundance of qualified talent and its strategic location, Cebu’s hold on the industry is deeply rooted. The highly collaborative IT/BPM ecosystem of Cebu, engineered by CIB.O, has always been a very crucial ingredient to its success.

The coming of Artificial Intelligence(AI), robotics, process automation, data analytics, higher value services, data security, and our K to 12 transition, are all becoming real challenges of the industry. Artificial Intelligence, robotics, and process automation may displace 30-50% of the BPM workers, but at the same time these developments create opportunities for higher value work requiring experience and more analytical skills. The higher value services that CIB.O and its members aspire to continue providing will require more skills, experience, and training for Cebu’s workforce. This, in turn, requires early exposure to computer aided education, augmented with online learnings. Cebu City has trained its senior high school teachers in the basics of Coding/ Programming in partnership with the Coders Guild of the Philippines, Cebu City School Board, Cebu City DepEd, DICT and CIB.O with the support of its members and the private sector.

The teachers started training the senior high students in five select public high schools in June 2019. The target was to initially train 200 students at the rate of 40 students per school but ended up with more than 500 students trained. These students will be for industry immersion starting in Nov 2020. The engagement of the students was surprisingly very good and some schools even finished the training in one semester, instead of the planned three semesters.

With this very positive response from the schools, CIB.O together with Cebu City School Board and Cebu City DepEd have decided to offer a more advanced Coding Training on introduction to Java Programming in April 2020. All this is designed to make Cebu City (in the very near future) the First City of Coders in the Philippines, with our partners. CIB.O is committed to improve the skills of our teachers and consequently the employable talents needed for the IT/BPM industry.

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