Southeast Asia’s Cebu City, Philippines, emerged No. 1 on the Top 50 Emerging Global Outsourcing Cities list, followed by the Chinese cities of Shanghai and Beijing respectively. The choice of the city has become more important than the choice of the country to set up an outsourcing center, according to a study by CyberMedia’s Global Services and investment advisory firm Tholons.

Cebu City currently hosts at least 17 BPO companies (Accenture, Convergys, eTelecare, Sykes Asia, PeopleSupport) and its strengths lie in key processes such as customer service, finance and accounting and HR services. The Filipino city received top ranking for its high literacy rate (97%), strong infrastructure and excellent quality of living which means better workers and lower staff turnover.

Six Indian cities are recognized as among the well-established Top 8 global outsourcing centers, namely Bangalore, Chennai, Delhi, Hyderabad, Mumbai and Pune. Ireland’s Dublin and Makati City from the Philippines are the other two destinations.

In addition, the study has identified the top 50 Emerging Cities for Western companies sourcing IT and BPO services, out of which 19 are from Asia (6 cities among the top 10) and 13 from Central and Eastern Europe.

China has emerged as a strong contender in offering product development, R&D and testing with Shenzhen ranked 10th, Dalian at 16th, Guangzhou at 23rd and Chengdu at 37th position.

Shanghai is already known as a mature destination for providing offerings such as F&A (finance and accounting), product development, R&D (research and development) and testing, and Guangzhou is known for engineering-services. Outsourcing services such as application development & maintenance and business analytics are now being offered from Shenzhen and Shanghai respectively.

Three of the above-mentioned six Chinese cities appear in the emerging top 10 while India is represented by  Kolkata (6th), Chandigarh (12th), Coimbatore (17th) and Jaipur (31st). The other Asian city in the top 10 is Ho Chi Minh City, Vietnam.

There are 5 newly-emerging outsourcing hotspots in Asia making their first appearance on the 2008 Top 50 list – Quezon City, Philippines (21st), India’s Jaipur (31st), Singapore (36th), China’s Chengdu (37th) and Mandaluyong in the Philippines (45th).

The study’s overall ranking was based on six general categories in providing location assessment; the scale and quality of workforce (including education), business catalyst, cost, infrastructure availability, risk profile and quality of life.

The study also lists the best cities for outsourcing specific functions. Companies will refer to Hyderabad and Chennai as prime locations for FAO and automotive engineering services respectively and Cebu City as a strong information systems outsourcing location.

“The concept of an individual location being a ‘one-stop-shop’ has given way to ‘smart, multi, selective sourcing’ models, wherein selected processes are outsourced only to the most appropriate destination,” Global Services editor Ed Nair said.