Takeover of automation in BPOs may take 10 years

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    The information technology-business process management (IT-BPM) sector has 10 years more before it is overtaken by automation, according to David Leechiu, chief executive officer of Leechiu Property Consultants (LPC).

    “It takes time to take meaningful impact. Companies will still take three to five years to completely embrace it. And it will really take time to adopt. In the meantime, overseas companies will continue sending jobs to the Philippines,” Leechiu said.

    At present, the IT-BPM sector remains one of the largest takers of office space in the country, though it is now eclipsed by the Philippine offshore gaming operators (POGO).

    Based on LPC’s monitoring, POGOs accounted for 386,000 square meters (sq.m.) or 34 percent of the total Philippine office take-up of 1 million sq.m., while IT-BPM cornered 355,000 sq.m. In Metro Manila, POGO take-up was at 375,000 sq.m., up 109 percent from the same period last year.

    Leechiu said of the 355,000-sq.m. take-up, 17 percent was registered as new office developments in Cebu and Clark.

    He noted that the recessionary environment in many major economies and the recent developments in the Middle East over the weekend would most likely accelerate the take-up rate of the IT-BPM industry in the next 12 months.

    Leechiu said IT-BPM and POGOs continue to contribute significantly to the national economy, with the IT-BPM industry accounting for $1.3 billion of the office annual rental income and POGOs contributing an estimated $219 million.

    POGOs however generate annually $8.3 billion in salaries, exceeding the IT-BPM industry’s $6.2 billion contribution.

    “The POGO Industry is also notable driver for the residential market which generates an annual housing rental income of $641 million,” Leechiu said.

    “POGOs have taken up substantial space in key Metro Manila business districts and other areas since they first established facilities in the country in 2016. Bay City accounts for 502,000 sq.m., or 36 percent of total POGO footprint in the country. It is followed by Makati City at 20 percent; Alabang, Cavite and Quezon City,” he added.

    The property sector as a whole continues to be healthy, according to LPC.

    Industrial locations highly accessible from Metro Manila like those in Cavite, Laguna, Batangas and Bulacan have risen in value driven by strong demand from the logistics market, it said.

    LPC added the warehouse occupancy rates in Metro Manila are now at the 98 percent level and are pushing prospective locators to put up new warehouse complexes in surrounding provinces that have become more easily accessible because of major infrastructure projects under the current administration’s “Build, Build, Build” program.

    “Once completed, warehouse lease rates along the Cavite-Laguna Expressway, for example, are projected to increase by 10 to 25 percent indicating strong demand. The new expressway will traverse the towns of Imus, General Trias, Dasmarinas, Silang, Binan and Carmona,” it said.

    According to LPC, the overall prospects of the real estate industry would continue to improve considering too the recent increases in foreign direct investments to the country.