Santos Knight Frank forecasts continuous BPO growth as companies ramp up office demand
The Business Process Outsourcing sector will continue to expand in the Philippines as firms provide a wider portfolio of non-voice services and capitalize on opportunities present in new growth areas outside Metro Manila, said Santos Knight Frank, the leading commercial real estate service provider in the Philippines.
In 2017, the IT-BPO sector occupied 3.8 million sqm or 80% of total prime office spaces in Metro Manila, according to the firm’s estimate. During the same year, the sector’s revenue was seen to have reached USD 24.5 billion with 1.25 million full-time employees across the country.
Amid the onset of artificial intelligence (AI) and automation, Santos Knight Frank predicts that the growth of the IT-BPO sector will remain healthy in the next three to five years as evidenced by transactions. IT-BPO companies will continue to grow within and outside of Metro Manila and provincial expansions in the next two to three years, which will be more evident as more office parks continue to be constructed by developers to bring new supply to the potential labor force in the provinces.
The firm believes that more third-party BPO providers will grow in the provinces amid the rental growth rent in Manila, while the global captive centers remain and continue to grow in Metro Manila. Beyond voice, the industry has also seen the growth of services such as animation, data analytics, legal research and analysis, game development and accounting, among others.
Joey Radovan, Vice Chairman and Head of Occupier Services & Commercial Agency, Santos Knight Frank says: “BPOs, shared services and offshoring companies see a bright future in the Philippines. A testament to this optimism is the recent deal Santos Knight Frank brokered between JP Morgan Chase & Co and Megaworld for a long-term lease of 70,000 sqm of office space in Bonifacio Global City. It is by far the largest single office lease transaction in Philippine real estate history in terms of value and size.”
The popular hubs outside of Metro Manila such as Cebu, Clark, Davao, Bacolod and Iloilo will continue to enjoy BPO expansions. The next wave of expansions in the next three to five years are seen to happen in the 80-kilometer corridor from Metro Manila going to North of Pampanga as new infrastructure projects connect the Bulacan and Pampanga cities making these places accessible to the BPO leadership based in Metro Manila.
Rick Santos, Chairman & CEO, Santos Knight Frank says: “The Philippines’
demographics is the ‘secret sauce’ of the BPO industry’s growth. Owing to a highly educated and English-speaking workforce spread across the country, it continues to be one of the most competitive BPO investment destinations globally. The average cost per employee in alternative destinations such as China and Mexico is fact twice as expensive as the Philippines
To be AI-ready, industry-wide efforts on upskilling have been ongoing. Mid- and high-level jobs account for 53% of BPO industry jobs in general, while these represent 85% in the voice sector.
Santos says: “AI presents a unique opportunity for the BPO sector in the Philippines. Not only will automation help make processes more efficient, but we also believe that through the upskilling efforts of the industry, the Filipino workforce will soon be at the best position to take on new roles and jobs generated as a result of AI.”
In general, Santos Knight Frank believes the BPO sector will continue to grow, driven by the country’s affordable rent, strong macroeconomic fundamentals and rise of the dollar.”