Manila has regained the second spot among the world’s top 100 ‘super cities’ for the outsourcing industry which is now being transformed by digital services.
The ranking based on the “Tholons Services Globalization Index 2018” was an improvement from Manila’s fourth place in 2017.
“Bangalore, Mumbai, Delhi and Hyderabad from India, and Manila from the Philippines continue to be in the top 5 of super cities. Manila has regained its 2nd position from last year’s when it slipped to 4th position,” says Tholons, a global strategic consulting, digital industrial innovation and investment advisory group.
Other Philippine cities in the prestigious list are Cebu City at 11th spot; Davao City, 75th; Sta. Rosa, 87th; Bacolod, 89th; and Iloilo, 92nd.
Real estate services and investment management company Colliers International Group Inc. says the improvement in Manila’s ranking should buoy its stature as a major outsourcing destination.
Tholons says the services globalization (outsourcing) industry has been shaken by the paradigm shift and big industry leaders are grappling to align their business model to the new world of enterprise digital innovation and transformation.
It says the industry has been knocked by digital forces. Robotics, artificial intelligence, social media, mobility, big data, block chain, digital supply chain, digital trust, as-a-service will continue to punch established players.
The cities covered by the Tholons survey were ranked based on talent skills and quality; business catalyst; cost; infrastructure; risk and quality of life; and digital innovation.
Colliers says Manila fares well in terms of talent as the country’s capital accounts for an estimated 70 percent of the estimated 1.3 million outsourcing employees in the Philippines.
Manila also continues to attract highly-skilled college graduates from other parts of the country. Aside from call centers, Colliers sees the aggressive entry of more knowledge process outsourcing companies in Manila that provide higher-value outsourcing services such as health information management, medical coding, legal transcription, and software engineering.
“The entry and expansion of technology firms such as Google, Amazon and Facebook is a 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,” it says.
In terms of cost, Manila remains as one of the most attractive office markets in Asia because of its relatively cheaper lease rates.
Manila also fares well in the digital and innovation category. “In our opinion, this can be attributed to a vibrant start-up community in Manila. A number of large Filipino companies and multinational corporations have invested in and mentored a number of start-ups that offer a wide range of mobile services including financial technology,” Colliers says.
“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 [or Trabaho] bill in Congress and delay in the approval of buildings applying for Philippine Economic Zone Authority accreditation, Philippine cities remain on the radar of large outsourcing locators,” says Dom Fredrick Andaya, Colliers International Philippines director for office services.
“Among the challenges in the near term is to sustain our lead against our Southeast Asian peers that are starting to catch up,” says Andaya.
Colliers says that in 2018, it expects Manila (National Capital Region) to have a net takeup of 1.06 million square meters (11.41 million sq ft), making it comparable to major office markets in the region such as Shenzhen, Shanghai and Beijing.
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, it says.
However, infrastructure and the quality of life categories continue to weigh down Manila’s ranking. “In our opinion, this is due to Manila’s poor showing in annual competitiveness surveys,” Colliers says.
According to the 2017 Global Competitiveness poll of the World Economic Forum, the Philippines ranked 90th out of 137 countries in terms of overall infrastructure.
Meanwhile, Manila ranks 137th among 231 cities in a quality of life survey by consultancy firm Mercer Global.
A bright spot for Manila is the implementation of the Ease of Doing Business Act, according to Colliers. The law should 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.
Colliers says Manila and other Philippine cities should aim to be part of the Top 25 Potential Digital Leaders list at par with highly successful cities such as New Yok, London, Singapore and Dubai.
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