BPO Firms Expanding To Provinces With More Workers – KMC Savills
Business process outsourcing (BPO) companies have started expanding to the provinces, according to real estate services provider KMC Savills, Inc.
Photo Insert: In Metro Manila, an average of 23% vacancy rate was seen in most business centers, with Alabang, Ortigas, and the bay area having the highest vacancy rates for the year.
In a panel discussion company officials said the key driver for the provincial expansion of BPO companies was the availability and affordability of labor in the area.
Michael McCullough, KMC Savills managing director and co-founder, said that with the recent demand for data centers, 35 data companies have been eyeing the Philippines as a location to build more facilities.
“It was led by the IT (information technology) and BPO market many [of which were] not in Metro Manila but in the provinces. They went where the labor went,” he said. McCullough said about 50% of IT graduates have already left Metro Manila for the provinces where their labor was more in demand.
“So, a lot of these companies want to set up in the provinces now,” he added.
Areas like Iloilo City, Davao City, Cebu City, and Clark Freeport Zone are now “hot spots” for BPO and IT companies setting up office locations and data centers, he said.
He also said that in Metro Manila, an average of 23% vacancy rate was seen in most business centers, with Alabang, Ortigas, and the bay area having the highest vacancy rates for the year.
McCullough described the vacancy number as “quite high” for a real estate market that never had more than a single-digit vacancy for the past 15 years. The company said that in the fourth quarter of 2022, Alabang had a vacancy rate of 35.5%, while the bay area had 30.3%, and Ortigas center had 30.3%.
Quezon City, Makati City, and Bonifacio Global City were reported to have vacancy rates of 18.5%, 15.7%, and 7.6%, respectively, in the final quarter of last year.
Randolf Ilawan, KMC Savills’ information and data manager, said that the BPO sector grew by 10.6% in 2022 from 9% in the previous year, with its contribution forecast to overtake remittances from overseas Filipino workers.
“Not only are we going to be reliant on our main export, the Filipino people, but we are going to be dependent on the BPO sector, especially when they’re going to expand to the province,” Ilawan said.
He said the BPO sector will be a key growth driver for the company in the coming years. “The BPO sector will be the biggest employer by the time 2028 comes, bigger than the government,” he added.