Why more BPOs are setting up shop in Cebu

by Cathy Rose A. Garcia, ABS-CBNnews.com

Posted at Nov 07 2013 07:45 AM | Updated as of Nov 07 2013 04:07 PM

MANILA, Philippines - More business process outsourcing companies are flocking to Cebu, according to a report by CBRE Philippines.

In its Metro Cebu Marketview report, CBRE Philippines said many BPOs are seeing Metro Cebu as an alternative office destination.

While most BPOs typically set up their headquarters in Metro Manila, CBRE noted some new BPO entrants are now choosing Cebu as their headquarters and expanding from there.

"Primary cost considerations of BPOs are wages, rents and utilities, all of which Cebu has an advantage. Cebu is a strong alternative to Manila because of lower business operating costs," the report said.

In terms of wages, Cebu's minimum wage (non-agriculture) is between P282-P327, compared with P419-P456 in Metro Manila. Water and electricity rates are also lower in Cebu compared with Manila.

CBRE pointed out that Cebu Business Park has the cost advantage, with rental rates 20% lower than offices in Quezon City and 78% lower than offices in Makati.

"Moreover, rental rates are stable, which was kept at around the P400 to P600 per square meter per month level depending on the quality of space," it said.

CBRE said Metro Cebu's office market in the first half of 2013 has seen a supply surge, with the entry of 6 new office buildings and increased demand in the market.

"Developers remain confident in the market as constant demand from BPOs was observed," the report stated.

Most of the BPO offices are located in Cebu Business Park and Cebu IT Park, which have become known for their high-quality infrastructure.

In Cebu Business Park, 11,200 square meters of office space were added in the first half, and average asking lease rates jumped to P512 from P504 per square meter. CBRE noted the asking rate can go up to P750 per square meter depending on the facilities and amenities.

CBRE noted a growing number of BPO companies are locating in Cebu Business Park, although most BPOs are still in Cebu IT Park.

Among the prominent companies that have established operations in Cebu IT Park are JPMorgan, Aegis, Accenture, Teletech, IBM and Convergys.