The Philippines’ BPO industry and its troubles with office space

Reading Time: 3 minutes
BPO workers in the Philippines face changing trends in office usage

Fuelled by the expanding business process outsourcing (BPO) industry, the building boom in the Philippines could leave the country with too much, too little, or just not the right office space.

By Ashley Boncimino

The country’s real estate industry hit a 20-year high in June, reflecting both the strong demand for BPO office space and increasing home ownership rates, according to property consultant CBRE Philippines. Remittances frm abroad have contributed to the upswing, but the solid engine behind the real estate trend is the steady demand for office space in central business districts. The Philippines contain some of Asia’s lowest annual office rental rates despite its massive and still growing BPO industry.

Yet the country walks a fine line between over and under-producing work and virtual office spaces due to eminent changes in workforce composition and fluctuating supply and demand.

In the past two decades, developers have had to wait more than a year to receive requests for pre-leases on new buildings, yet buildings in 2012 have been entirely pre-leased far before the building’s completion date. During the first quarter of 2012 alone, the average occupancy rate rose to 96 per cent in major business districts, while pre-leasing numbers reached 232,000 square meters of the 293,000 square meters of anticipated supply. Further, offices in the country’s central business districts have been claimed at faster and faster rates due to the combination of new BPOs opening and the expansion of established ones.

Demand for BPO space is expected to remain high for the next two years, though a 2012 report by the World Bank indicates the rush in demand and development of today could result in boosted vacancy rates due to the staggering and delayed supply responses in the country. According to the report, the rush to develop causes lags in production that result in demand shocks, slow price adjustments and market imperfections. The study also notes that despite the preference to maintain wealth in the form of property, condominium development may already have outpaced demand.

Yet another threat to the booming real estate industry – and even the internal workforce structure of BPO companies – remains to be seen. One of the country’s newest initiatives includes promoting the ‘Work abroad. Live here,’ concept. By encouraging individuals to participate in advanced, high-demand career programmes, the country hopes to attract both more and higher value clients to boost the industry’s growth. The Philippines has recognised the value in shifting from the country’s typical voice services (customer relationship management services) to non-voice services for sectors like accounting, medicine and engineering. If successful, the programme would focus on virtual workplaces rather than BPO call centres. The concept of virtual workers and workplaces allows companies to cut costs, cover more geographic area and increase productivity by eliminating central offices and allowing employees to work in separate offices located anywhere in the world. However, this shift in the Philippine workforce could not only translate to fewer BPO workers and thus reductions in BPO office space use, but could stimulate the need for different office structures entirely and render development for BPO spaces much less effective.

While the real estate market should remain positive in the foreseeable future, the impending changes to the Philippine workforce and the subsequent workplace requirements depend on global demand for BPO services from the country.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

Reading Time: 3 minutes

BPO workers in the Philippines face changing trends in office usage

Fuelled by the expanding business process outsourcing (BPO) industry, the building boom in the Philippines could leave the country with too much, too little, or just not the right office space.

Reading Time: 3 minutes

BPO workers in the Philippines face changing trends in office usage

Fuelled by the expanding business process outsourcing (BPO) industry, the building boom in the Philippines could leave the country with too much, too little, or just not the right office space.

By Ashley Boncimino

The country’s real estate industry hit a 20-year high in June, reflecting both the strong demand for BPO office space and increasing home ownership rates, according to property consultant CBRE Philippines. Remittances frm abroad have contributed to the upswing, but the solid engine behind the real estate trend is the steady demand for office space in central business districts. The Philippines contain some of Asia’s lowest annual office rental rates despite its massive and still growing BPO industry.

Yet the country walks a fine line between over and under-producing work and virtual office spaces due to eminent changes in workforce composition and fluctuating supply and demand.

In the past two decades, developers have had to wait more than a year to receive requests for pre-leases on new buildings, yet buildings in 2012 have been entirely pre-leased far before the building’s completion date. During the first quarter of 2012 alone, the average occupancy rate rose to 96 per cent in major business districts, while pre-leasing numbers reached 232,000 square meters of the 293,000 square meters of anticipated supply. Further, offices in the country’s central business districts have been claimed at faster and faster rates due to the combination of new BPOs opening and the expansion of established ones.

Demand for BPO space is expected to remain high for the next two years, though a 2012 report by the World Bank indicates the rush in demand and development of today could result in boosted vacancy rates due to the staggering and delayed supply responses in the country. According to the report, the rush to develop causes lags in production that result in demand shocks, slow price adjustments and market imperfections. The study also notes that despite the preference to maintain wealth in the form of property, condominium development may already have outpaced demand.

Yet another threat to the booming real estate industry – and even the internal workforce structure of BPO companies – remains to be seen. One of the country’s newest initiatives includes promoting the ‘Work abroad. Live here,’ concept. By encouraging individuals to participate in advanced, high-demand career programmes, the country hopes to attract both more and higher value clients to boost the industry’s growth. The Philippines has recognised the value in shifting from the country’s typical voice services (customer relationship management services) to non-voice services for sectors like accounting, medicine and engineering. If successful, the programme would focus on virtual workplaces rather than BPO call centres. The concept of virtual workers and workplaces allows companies to cut costs, cover more geographic area and increase productivity by eliminating central offices and allowing employees to work in separate offices located anywhere in the world. However, this shift in the Philippine workforce could not only translate to fewer BPO workers and thus reductions in BPO office space use, but could stimulate the need for different office structures entirely and render development for BPO spaces much less effective.

While the real estate market should remain positive in the foreseeable future, the impending changes to the Philippine workforce and the subsequent workplace requirements depend on global demand for BPO services from the country.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid