Growing KPO market to spur homebuilding outside Metro Manila

Philippine Daily Inquirer, 01-12-2013


Knowledge Process Outsourcing (KPO) is now an emerging sector that promises to provide long-term jobs for intellectual, analytical and knowledgeable people with pay scales much higher than that offered in the business process outsourcing sector.

Regarded as a one-step extension of BPO, a KPO will be dependent on the skills, domain knowledge and experience of the people carrying out the activity-experts providing, for example, information technology or information technology-enabled services, legal processes or research, intellectual property and patent-related services, Web development application, CAD/CAM applications, engineering services, business research and analytics, including clinical, publishing, or market research.


"In today's competitive environment, focus is concentrated on core specialization and outsource the rest of the activities. Not only costs are minimized and efficiencies improved but the total business improves because the focus shifts to the key growth areas of the company's business activity," said Melo Porciuncula, Capital Markets and Business Operations head of KMC MAG Group.

KMC MAG Group is a commercial and residential real estate services provider that furnishes knowledge process outsourcers their own offshore corporate services here; represents tenants wanting to locate not only in Metro Manila but in other major urban centers of the country; provides capital market support as well as extends residential real estate services.

"In a few years KPOS will give our doctors, engineers, MBAs, lawyers, biotechnologist, economist, statistician and architects reasons not to go out of the country while foreign representatives of these multinational firms to set up residence here. This will further spur housing boom," said Porciuncula whose firm is providing residential needs to its foreign clients with outsourcing facilities here.

"The Philippine government realizes the importance of the KPO industry in its ability to retain the country's many skilled graduates, as well as cultivate creative abilities of an artistically gifted population and has dedicated its full support. The government's efforts seem to be working as the country may likely attain investment grade status this year as its strong economic growth and better finances make it more attractive and less risky for those who would place their bets on the country," he said.

Credit-rating agencies

Currently, the world's top three credit rating agencies, namely Fitch Ratings, Moody's Investors Service and Standard and Poor's Ratings Services rated the Philippines as just a notch below investment grade.

Such current rating, as well as a possible upgrade, would mean that the cost of borrowing-especially from foreigners-would fall while at the same time, would be beneficial to big companies that borrow abroad.

"This is also good news for those locations far from Metro Manila as a strong peso would mean outsourcers are now moving out of city centers and into the provinces, where there are lower electricity, lower labor costs (which offsets the stronger peso). As result those highly skilled people living in the outskirts will no longer have to move far from their homes," Porciuncula said.

He sees Cavite and Laguna areas to benefit from the development happening at Filinvest Corporate City in Alabang as well as in Sta. Rosa City.

Regarded as the "Makati of the South," Sta. Rosa City is now home to several high-quality infrastructure and world-class IT BPO office campuses, high-end residential communities, industrial estates and lifestyle amenities.

Another fast developing area is Davao City, which was ranked first in a list of 10 "Next Wave Cities" for the BPO industry released by the Business Processing Association of the Philippines.


The report noted Davao City as No. 1 in terms of talent availability, infrastructure and cost as it has a workforce of 400,000 (about 13,000 new graduates are added every year), and the fact that nonagriculture minimum wage is P5,390 a month, 8 percent lower than Metro Cebu and 36 percent lower than Metro Manila.

Aside from Davao City, Porciuncula added Clark Freeport Zone as another attractive destination as it now enjoys three-way global connectivity, a link from fiber-optic cable network to satellite transmission system and microwave uplink services needed to set up an international call center.

Additionally, the freeport zone has a 116-MW power plant supplying the national grid and is currently working to have a switch for this plant that will ensure continuous and steady power supply (for the freeport zone) should the grid go down.

"Indeed, the Philippines is fast establishing itself as a leading destination in the global KPO market. Expect the property market to hit new highs in the coming years," he noted.