Stephen L. Yu
Associate
SyCip Salazar Hernandez & Gatmaitan
406 Keppel Center, Cardinal Rosales Avenue cor. Samar Loop, Cebu Business Park,
Cebu City 6000, Philippines
Tel: (6332) 233-1212, 233-1213, 233-1950
Email: sshgcebu@syciplaw.com
www.syciplaw.com
One of the fastest-growing and dynamic industries in the Philippines today is the business process outsourcing (BPO) industry. Generally, no foreign ownership restrictions apply to BPO activities, but BPO companies are subject to minimum capitalization requirements if they are classified as “domestic market enterprises.”
In the Philippines, the BPO industry is principally comprised of contact centers, information technology outsourcing (ITO) enterprises, back office processing or knowledge process outsourcing (KPO), and the health care segment which includes data transcription.
While most outsourcing businesses have established themselves in the National Capital Region (comprised of major cities such as Makati, Taguig, Pasig and Quezon City), BPOs have begun to see the attractions of Cebu City, also known as the Philippines’ Queen City of the South. In fact, Cebu is in the top 10 of the Tholons list of preferred outsourcing destinations worldwide. Tholons, an advisory company on global outsourcing and investments, ranks cities based on several categories showing their outsourcing readiness, including quality, availability, and skills of workers in the BPO industry, operations cost, infrastructure readiness, and cost of living, among others.
Recently, one of the leading software development companies in Vietnam established its operations in Cebu through its Philippine subsidiary. Based on news sources as well as data obtained from the Cebu Educational Development Foundation for Information Technology (CEDF-IT), the contact center industry remains the biggest employment generator in the BPO industry in 2014, with a total headcount of 685,000 employees followed by 187,000 in the back office or KPO industry, 86,000 in the ITO, and 87,000 in the health care segment.
As of June 30, 2015, there are six IT parks and forty-six IT Zone buildings in Cebu, which are registered with the Philippine Economic Zone Authority or PEZA. The latter is the government agency mandated to administer an incentive regime for, and register, locators. As of May 31, 2015, there are at least 200 BPO companies operating in Cebu.
