BPO Sector to Boost Office Space Demand in 2018

Despite a slow growth in leasing deals with business processing outsourcing (BPO) companies earlier this year, experts from real estate consultancy, Santos Knight Frank are seeing that the sector will boost the demand for office spaces in 2018.

"It's still the BPO that will take lead in terms of the office space take up," Kash Salvador, associate director for Investment and Capital Markets at Santos Knight Frank, stated in a press conference in Parañaque City.

Many BPO companies are looking into setting up centers in the country next year, particularly in health care and customer service, Santos Knight Frank chairman and CEO Rick Santos noted.

Santos stated that they are “seeing a lot of new captives, new BPOs coming in the Philippines."

The launch of Philippine Economic Zone Authority (PEZA) certificates for office buildings has turned around the drop in office space leases by the BPO industry.

"All of these BPO companies still need the space they need to grow. It's just that the amount for viable space they can go into has been limited because of the little slowdown in the release of PEZA certificates for the upcoming developments," Salvador stated.

He added that “Once the PEZA certificates become available then the building are completely filled. BPOs require PEZA spaces in order for them to fully enjoy the benefits"

Zero value-added tax benefit is given to locators in economic regions.

The current supply of leasable office space is around 4.5 million square meters. This is expected to grow by 946,782 square meters more in the coming year.

As per Salvador "About 60 to 70 percent of take up is still by BPO."

Coefficients Co Ltd, a local business process outsourcing company based in the center of Quezon Province, has built their own building. However, the company is still looking to expand. They have a Marikina-based partner, Marseri, who is also looking into expanding.

Santos stated that the country’s young workforce continues to be the main consideration of BPO companies to open more centers in the Philippines.

Santos noted that even the threat of artificial intelligence will not disrupt the booming growth of the demand for office spaces.

The Contact Center Association of the Philippines stated that they are doing a critical study on the probable effects of artificial intelligence on the millions of call center workers in the Philippines.

The department of Trade and Industry stated that the country must be ready in case the demand for workforce drops with the influx of artificial intelligence and other modern technologies.

As per Santos, “there will be some new technology that will need back office support.”

"With new technologies, new jobs will be created such as processors and IT (information technology) professionals. AI will be an opportunity to enhance the type of BPO here," he added.

The need for office space by the BPO sector will keep on expanding as new technologies will keep on increasing the demand for employment.

Santos noted that "With new technology developed, it would need more people."  For as long as the keep on moving up, they would need to outsource jobs.