By Bong Galarpe
Cebu, like the rest of the archipelago, may be looking at a lower GDP growth following natural disasters that rocked central Philippines in recent months. But the growing number of well-paid employees of business process outsourcing firms will continue to drive local economic growth in 2014.
The BPO industry in the country employs some 800,000 employees contributing $11 billion to the Philippine economy. Cebu has a share of at least 100,000 employees as BPO continue to consider this central Philippine metropolis as an alternative to Metro Manila.
Cost-effective
CBRE Philippines, in its recent Cebu Market view report, noted that Metro Cebu remained an attractive office destination because of “cost-effective operational factors” such as office rental, and also the presence of untapped, high-quality workforce.
“The growing BPO industry has also positively impacted the retail sector, with the improved purchasing power of locals. Increasing tourist arrivals have also stimulated retail growth, with the trend seen to be unabated as more retail spaces are set to be completed and offered by both national and regional developers,” CBRE explained.
The manufacturing sector also posted a 10.3 percent in the first half of 2013, dominated by light industries such as shipbuilding, IT and IT-related services; and exports in furniture, semiconductors, electrical and electronic equipment.
Spending power
The Philippine economy has traditionally been driven by household consumption expenditures, which accounts for as much as 70 percent of the total GDP. Remittances from overseas Filipino workers (OFW) have propped up domestic consumption and the Philippine economy in the past, but in recent years OFW contributions have been tapering with just 2.7 percent growth in the second quarter of 2013.
Spending generated by BPO workers, on the other hand, has expanded by double-digit rates on the back of the 15-20 percent growth of the BPO sector.
It is estimated that gross income earned by BPO workers totaled close to P300 billion in 2012, roughly four percent of the total household consumption expenditures of more than P7.80 trillion annually in the Philippines.
In a report released in September, Nielsen Philippines Outcall also noted the significant purchasing power surge of the BPO employees.
According to Nielsen Philippines, the BPO sector has been collecting a cumulative annual compensation of P250 billion, which empowers call center workers to sustain a more-affluent lifestyle than the average Filipino.
Affluent lifestyle
“Being well paid than most Filipinos, BPO employees are formidable members of the growing middle-class population of the country,” said Nielsen Philippines. “The spending habits of BPO employees reflect an affluence that is more than the general population, spurring consumer spending.”
Possession of spending power occurs when a person breaks out of poverty and the surge in spending power begins when salary increases.
In view of higher incomes, BPO consumer spending evolved in varied consumption lifestyles and purchasing habits – that means twice as much to spend on junk food or soda, on cars, and electronic gadgets, to name a few.
BPO yuppies like to have a good time, too, as Nielsen reported that as high as 76 percent of call center employees consume alcoholic drinks, compared to just 40 percent of the other members of the working class.
ASEAN 2015
Is this development sustainable economically as the country enters the Asean Economic Community in 2015? How will this impact on Cebu?
With such visible affluent lifestyle, fresh college graduates – including nursing, medical technology, engineering, IT, mass communication, hotel and restaurant management, accounting, psychology, and education – continue to seek a career in the BPO industry.
A center of higher education in central Philippines, Cebu will continue to provide the educated, digital-savvy professionals needed to grow the BPO industry.
The challenge lies in improving the quality of our graduates as the Philippines looks forward to maintain its competitive edge over its neighboring countries when the ASEAN becomes an integrated economic bloc in 2015.
(Bong Galarpe is a senior writer at PRworks Inc. He is a former AFP correspondent in Cebu and a former sports editor of Sun.Star Cebu)
Related stories
What products do BPO workers buy? (Rappler)
BPO companies turning to Cebu (GMA News Online)
Let the queen do the job (Cebu BPO Industry blog)
