Philippine BPOs Remain as top Office Space Clients
According to CBRE Philippines Inc., a renowned property consultant, the business process outsourcing (BPO) sector is still the main source for the demand of office space in the Philippines. Morgan McGilvray, Associate Director of CBRE Philippines Inc., said the total vacancy rate fell from 3.3 percent during this year’s first quarter to 2.45 percent. Over 400,000 sqm of new office space will be available for bidding within the year.
McGilvray added that he’s looking forward to 2016 because of the anticipated large volume of space that his clients can choose from. He added that demand for office space, particularly for BPO operations in the country, will not be slowing down anytime soon because firms are expanding and are working on establishing their second sites. John Corpus, Director of the global corporate services team of CBRE Philippines Inc., said companies are monitoring new stocks of offices that will be available in 2015 and 2016.
Rick Santos, chairman, founder, and CEO of CBRE Philippines Inc., highlighted that with the 700,000 sqm of leasable office space in the country this year, 80-90 percent is accounted for by the BPO sector. He added that in the coming years, nearly 500,000 sqm of office space will be available. Next year, bulk of new office spaces will be launched in Fort Bonifacio, while other mainstream BPO hubs such as Quezon City, Ortigas, Makati Central Business District, and Alabang are expected to be home to new offices.
The central business district with the least office space available is Quezon City, where only 0.07 percent is available for office take-up.
More Philippine Cities as ICT Hubs
The Information Technology and Business Process Association of the Philippines (IBPAP) is planning to add more locations to the list of Next Wave Cities. These areas will be developed into information communication technology (ICT) hubs in hopes of further promoting the country as a viable destination for information technology - business process management (IT-BPM) services. During a press conference at the 1st IT-BPM Quality Summit, IBPAP Chairman Danilo Sebastian Reyes said they are looking at adding more locations to the list which will be announced soon.
Next Wave Cities are identified as areas outside of Metro Manila that can either readily accommodate ICT functions, or be developed into ICT hubs. The IBPAP and the Department of Science and Technology use a set of metrics (workforce, connectivity infrastructure, etc.) to analyze if a location is qualified to be included in the list of Next Wave Cities for business process outsourcing operations.
The provinces included in the latest list are Metro Naga (Naga and Pili), Metro Rizal (Antipolo, Cainta, and Taytay), Baguio, Davao, Dumaguete, Iloilo, Lipa, Metro Bulacan (Baliuag, Calumpit, Malolos, Marilao, and Meycauayan), Metro Cavite (Bacoor, Dasmariñas, and Imus), and Metro Laguna (Calamba, Los Baños, and Sta. Rosa).
IBPAP is eager to attract more potential investors through the new list of ICT hubs. They want to maximize each location’s potential to reinforce the competitiveness of the country.
PH BPO Employee Count Reaches 1 Million
According to Jose Mari Mercado, President of the IT and Business Process Association Philippines (IBPAP), with the bullish performance of the local outsourcing industry in the last 10 years, it finally reached an employee count of one million.
The Philippines is known as the second strongest business process outsourcing (BPO) destination next to India. It is anticipated to earn $18 billion this year and the executive noted that they are still eyeing to hit 1.3 million employees in 2016.
He also recounted that during the early 1990s, the industry started from nothing, then emerged as the shining star of the Philippine economy with revenues amounting to $1.5 billion and employee count of 103,500 in 2004, and is now poised to increase earnings to $25 billion by 2016.
The industry also paved the way to improve the living conditions of a lot of Filipino people by providing well-paying opportunities. This has also presented an opportunity for a huge number of overseas Filipino workers to seek employment locally.
The industry body also pointed out that for every person directly hired by the industry, 2.5 support jobs are created.
The Philippines has been identified as the global leader for call center operations - even surpassing India. The country is also moving towards complex processes since Western organizations are also looking at the Philippines as an option for back office outsourcing.
The information technology and business process management (IT-BPM) industry of the Philippines is set to generate $25 billion in revenue and employ 1.3 million Filipinos by 2016. Amidst its bullish growth over the years, the sector is seen to tap a larger market base - specifically for high-valued processes.
According to Jose Mari Mercado, President and CEO of Information Technology and Business Process Association of the Philippines (IBPAP), there are still countless opportunities left untapped for the Philippines. Some of these segments include the finance and accounting functions as well as healthcare back office processes.
Last year, growth was said to have been driven by foreign investors who wanted to expand operations. In addition to that, the "captives" market, which is also known as in-house BPO units that specialized in the specific needs of clients, fuelled the growth of the segment.
PH IT-BPM industry set to hit 16% growth target
The industry body is hoping to hit the 16-percent growth target, which is equivalent to $18 billion this year from $15.5 billion last year. In line with that, employment reached 900,000 last year.
Meanwhile, the Philippine Institute for Development Studies said the Philippines could soon become the leader in the Asia-Pacific region for services because of its scalable workforce. In fact, PIDS Research Consultant Ramonette Serafica said the 10.4 million Filipinos make the Philippines a natural market for services.
PH now more attractive as back office outsourcing hub
According to a survey done by global management consultancy, A.T. Kearney among 50 other locations, the Philippines has become more attractive to foreign companies that are looking to outsource back office processes.
In the 2014 A.T. Kearney Global Services Location Index which ranked 51 countries, the Philippines climbed two spots to 7th place. Back in 2011, the country placed 9th out of 50 countries in the index. Ratings were based on remote services activity and state initiatives to promote the sector.
The survey also had 25 indicators that fall under three categories: financial appeal (40 %), quality of workforce (30%), and overall business environment (30%). These factors are based on previous surveys, questionnaires, and information gathered from clients in a span of five years.
The index added that the bearing of each ranking factor also depends on where companies are going to outsource because it is one of the reasons affecting the price points of outsourcing deals.
As for the Philippines’ position, improvements in the workforce segment and business environment helped balance its poor performance in one of the factors which is financial attractiveness.
Unemployment rate decrease due to job in the BPO sector
The business process outsourcing (BPO) sector of the Philippines is slowly reducing unemployment in the country. According to Pasig City Rep. Roman Romulo, nearly 22,000 nursing graduates were able to land well-paying medical coding and clinical service jobs in the sector.
Romulo said more and more organizations that are serving healthcare clients in the US are setting up operations in the country, and these organizations are hiring nurses for local employment. He added that they are hoping that this will decrease the unemployment rate among nurses.
Meanwhile, the IT and Business Processing Association of the Philippines (IBPAP) projected that by 2016, the sector will produce $27 billion in annual revenues and employ 1.3 million Filipinos.
Romulo, who is likewise the Chairman of the House Committee on Higher and Technical Education, said unemployment remains high among nurses because of the large volume of graduates every year. The Professional Regulatory Commission granted licenses to almost 22,222 board passers this year.
However, Romulo pointed out that the jobs in the BPO sector require aspiring candidates to have strong communication and analytical skills - and should be willing to work in shifts.
Outsourced IT Operations to be Brought Back In-house
A survey from IT research firm Computer Economics found that since economies are now more stable and mature, companies have been seen bringing back IT operations in-house.
Last year, IT outsourcing budgets averaged at 10.6 percent and even hit 11.9 percent back in 2012. But for this year, it only clocked in 10.2 percent.
Some of the IT processes that declined in outsourcing this year are help desk, desktop support, and application maintenance. However, data center, application development, database administration, network operations, and disaster recovery are in a slow and steady cycle.
According to John Longwell, President of research at Computer Economics, the ongoing economic recovery is the key contributor to the downward movement in outsourcing activity. He added that even if IT budgets are increasing, it is allotted to internal investments and not in outsourcing.
Moreover, the study pointed out that during the early stages of the recovery, organizations outsourced because they felt hiring full-time employees was risky. As economies gain stability, they are focusing on the improvements and manpower needed for them to progress.