Why BPO sector continues to drive PH property market

by Jon Carlos Rodriguez, ABS-CBNnews.com

Posted at Jan 09 2015 11:06 AM | Updated as of Jan 12 2015 05:06 PM

MANILA – The business process outsourcing (BPO) industry in the Philippines will continue to drive the growth of the country’s real estate market this year, according to a report by the Urban Land Institute (ULI) and PwC.

The Emerging Trends in Real Estate Asia Pacific 2015 report ranked Manila as eighth among Asia Pacific countries in investment and development prospects, higher than its neighbors Singapore, Taipei, and Bangkok.

“Strong economic growth and ongoing investment in the offshoring sector — both BPO and financial back office — continue to underpin Manila’s popularity,” the study said.

It added that growth in the BPO sector has created a multiplier effect that led to strong growth in the retail and housing sectors.

However, the study noted that Manila’s drop to eighth from last year’s fourth spot “reflects investors’ wariness of the possibility of capital outflows in the wake of impending interest rate rises in the US.”

Hans Sicat, the president of the Philippine Stock Exchange, believes the growth of the BPO industry can be sustained in the coming years due to the expanding services that BPO sites in the Philippines are able to offer to its foreign clients.

“The BPO sector is probably the most robust and really the sunrise industry of the country. If take a look at the trend, the continuing growth of the industry not just in terms of people but a broadening of the various skill sets being located here in the Philippines is a strong indicator that this is going to continue,” Sicat said during the launch of the ULI and PwC report on Thursday evening.

He said there has also been an increase not only in skills, but in the countries that the Philippines services.

“It’s not just the US market or the English-speaking market, it’s a wider range,” Sicat said.

“Whether it’s supporting multinationals or other individual companies across the globe, this industry is likely to continue,” he added.

Sicat also said the growth of the BPO industry will continue to positively affect the real estate sector as it creates demand for more office space and development.

Alexander Cabrera, chairman and senior partner at Isla Lipana, meanwhile, said the growth is also driven not just by multinational companies but by some local firms as well.

Cabrera said to sustain the growth, government should realign the educational system to offer courses and curriculum that specializes on training BPO agents.

Some BPO locators are starting to outsource “middle office functions” to the Philippines, which Security Bank executive vice president Eduardo Olbes said should be sustained to allow the industry to continue its expansion.

“You can expect that there will be some other countries somewhere down the road that will be cheaper than we are, and the question is, can we move up the value chain such that we are doing services that are very difficult for them to do. So far, indications are good,” Olbes said.

“The hope is that we can continue to develop in those middle office functions so that we can continue to sustain the growth in that space,” he added.