ABOUT FIVE YEARS ago, Davao’s IT industry players–both from the private sector and the government–began to seriously promote the city as a destination for investments and outsourcing opportunities. That was when the term "Silicon Paddy" became a buzzword, and "Davao as the 3rd IT Hub" a slogan.
Ever since that time, we’ve had quite a number of new IT-related businesses that have been established, including a few small-scale domestic investments. However, we haven’t yet seen any significant foreign investments come in. Might there be something that we’ve overlooked?
We have the skilled manpower necessary for many new companies to establish themselves here. As I mentioned in my column last week, Manila-based call centers are heavily recruiting Dabawenyos, so there’s really no doubt that our talent pool is rich and promising. So where are these new IT companies?
Last 22-23 March, I accommodated a couple of top executives of Summersault Inc., a business process outsourcing (BPO) company based in Makati. This BPO company offers IT-enabled services to large corporations all over the world. Their services include automation and handling of back office transactions, outsourced medical billing, legal transcriptions, call center operations consulting services, among others. They were in Davao to take a look at how business is conducted in our fair city, and to assess the possibility of locating part of their operations south. Mr. Manolo Aquino, President of Summersault, indicated that instead of expanding their operations in Manila, it might be more feasible for them to set up an outfit in Cebu, Cagayan de Oro, or Davao.
I was able to arrange meetings for Summersault with DTI-Region XI, DTI-Davao City Field Office, the Sangguniang Panlungsod, as well as with Davao businessmen. The purpose of these intimate meetings was to show them the local flavor, so to speak.
Mr. Richard Eldridge, Chief Operating Officer of Summersault, in our meeting with government representatives, apprised us of the five factors that his company considers important to be present in an investment destination. Top of the list is people. Eldridge said that the availability of skilled and easily trainable staff is vital as his company’s operations rely heavily on quality manpower. Well, with over eleven thousand graduates per year (plus the thousands more from neighboring cities), I believe we can tick this one off with confidence.
Number two on Summersault’s list is the availability of facilities, and their attendant lease / rental rates. Considering the huge difference between Makati and Davao office space rental fees, one would think this item is a sure check mark. But it isn’t that simple. Do we have the necessary physical facilities in place? Are we truly ready for the myriad requirements of large IT companies? We can supply the people and the software systems, but can we address the more fundamental of their needs?
Take, for instance, electric power. Many will say that our light and power company is one of the best in the country, and this claim would have its basis. However, no one will be able to deny that outages, while rare, still do occur. BPO operations, due to the nature of the business, depend a great deal on uninterrupted power availability. Eldridge mentioned that, for a commercial building to effectively service an IT-enabled company, there should be an automatic generator in place–one that does not require human intervention to operate in case of a brownout, in other words. What if there were a blackout, one that would last more than a day? Would any of our existing commercial buildings be able to assure continuous power supply?
The Makati executives mentioned quite a few more provisions, and the more they said, the less confident I came to feel about the suitability of our city. However, it’s not too late yet. If our key players act very soon, Davao should be able to reach the minimum level of readiness to accept sizable IT investments.
Number three on the checklist is the availability–and reliability–of telco services. We have the major telephone companies and ISPs operating in Davao, and the suite of services that they are already offering are nearly identical to that offered in the nation’s capital. The rates, however, are slightly higher here. This is most likely due to the absence of more investments in telecommunications infrastructure.
The fourth item is local government incentives. This indicates the level of government support that the IT industry enjoys in a locality. I believe I can safely assume that the Summersault executives were fairly impressed by the positive attitude towards IT developments shown by the government representatives with whom they’ve met. Aquino said that, aside from providing tax incentives to incoming investments, it is important to IT investors to be confident in the local government unit. This means that the LGU is seen by the investors as being aware of their particular requirements and problems.
Last on the Summersault list, but just as essential as any of the preceding four items, is the existence of facilities for expatriates. The influx of large-scale IT investments invariably entails the entry of foreign nationals into the investment destination. And so Summersault is also concerned about schools for the children of expats, hotels, and other tourism-related establishments.
One definitely positive note was the lack of concern on the part of the Summersault representatives regarding safety. Apparently unfazed by the prevailing negative image of Davao City in the national media, the two executives came to our city to discuss business and displayed none of the usual apprehension over perceived security problems.
So are we ready for IT investments? Yes, if government, the private sector and academe join hands and hammer out a practical investment plan that will be able to take effect immediately.
And speaking of academe, that will be one of my topics in the coming weeks.
