Although contractions in office space absorption are to be expected, property consultancy Colliers believes demand from information technology–business process management (IT-BPM) companies will not slow down drastically anytime soon.
“More growth will come from this sector given planned expansions and the entry of new players. In the coming months, we will also observe whether hybrid work model is indeed feasible for the business process outsourcing (BPO) sector, and the increasing popularity of Tier 2 and 3 provincial locations as alternative sites for their operation, which in turn will spur countryside development,” Colliers in a report said.
In 2022, Colliers’ data showed both traditional and IT-BPM companies drove office demand in Metro Manila. Traditional companies captured the biggest slice of recorded office space transactions in 2022, having taken up approximately 302,000 square meters (sq.m.) or 50 percent, while IT-BPM companies were not far behind at approximately 256,000 sq.m., or 43 percent of total transactions in Metro Manila.
“Traditional and IT-BPM companies’ role in driving office space absorption is considerable, which is also expected in the years to come especially for BPO firms given the sector’s rosy outlook.
“Many players grew at an average of 10 percent in 2022 compared to 2021. This growth is projected to increase and continue in 2023,” Colliers said in the report.
Metro Manila continues to be the location of choice for BPO companies as bulk of recorded office space transactions came from Bonifacio Global City (BGC), followed by Ortigas Center and North Bonifacio, due to new account wins and organic growth. Majority of these IT-BPM companies that expanded are global in-house centers (GIC) with 63 percent of the total share
Colliers also noted the emergence and steady increase of office space demand from health information management services (HIMS) with 9 percent of the total IT-BPM transactions under the HIMS category in the fourth quarter. Moreover, out of the total IT-BPM expansions, HIMS accounted for 13 percent of it.
Knowledge process outsourcing (KPO) companies have the highest demand compared to BPOs and Voice companies, particularly in the third quarter. due to various expansions of GIHC companies.
The drop in transactions during the fourth quarter were mostly due to the concerns encountered by companies transitioning from the Philippine Economic Zone Authority to the Board of Investments.
Colliers also saw office-footprint contraction by key players in the IT-BPM industry in 2022 but which also sustained their headcount of full-time employees, a clear indication that hybrid work is being implemented by these outsourcers.
Colliers projects that rightsizing and hybrid work set-up will continue to influence office space take-up in the coming years.
