Next wave: knowledge outsourcing

By Rinnah B. Flores

KNOWLEDGE process outsourcing (KPO) will be the next level of growth for the outsourcing industry in Cebu, said an official of a global advisory firm.

Jonathan Luzuriaga of Tholons said, “KPO will serve as a competitive advantage of Cebu City over the other outsourcing destination cities in the country and even in other global cities.”

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KPO employs people with excellent knowledge and qualifications who can offer a higher quality of service.

KPO segments include research and analytics, engineering services, e-learning, animation, research and development, equity, financial, insurance research, paralegal content and services, medical content and services, biotech and pharmaceuticals.

“Cebu has untapped and low-cost resources, developing infrastructure and lower real estate cost, which makes it more enticing to the market,” added Luzuriaga.

Being dubbed as the information and communication technology (ICT) center of the Philippines for having more than 100 established BPO companies and having Asiatown IT park as an IT special economic zone (SEZ), Cebu City is now moving from what the industry considers a tier-II destination toward a tier-I status.

While business process outsourcing (BPO) requires bulk hiring to achieve target revenues, KPO companies only need smaller labor pools to generate revenues.

According to Luzuriaga, “KPO companies need only 50 employees to conduct operations but the quality of the services is more important than the number of employees.”

KPO supports high-end ICT services.

An example of a KPO service is those provided to the animation industry, which had estimated revenue of $105 million in 2007 with only 7,000 people employed.

Cebu City has to focus on developing its employability and business environment in order to have growth in the KPO sector.

Enhancing employability can be done by introducing specialized training courses and certifications, Luzuriaga said.

The business environment can also be improved by setting up an adequate public transport system, offering tax incentives, land allocation and government support, he added.