Despite a slowdown in leasing arrangements with business processing outsourcing (BPO) firms early this year, the sector will continue to drive office space demand in 2018, real estate consultancy firm Santos Knight Frank said Wednesday.
"It's still the BPO that will take lead in terms of the office space take up," Kash Salvador, associate director for Investment and Capital Markets at Santos Knight Frank, said in a briefing in Parañaque City.
A lot of BPO companies are interested in setting up shop in the Philippines next year, particularly in customer service and health care, Santos Knight Frank chairman and CEO Rick Santos noted.
"We're seeing a lot of new captives, new BPOs coming in the Philippines," Santos said.
The decline in office space take up by the BPO sector earlier this year has turned around with the release of Philippine Economic Zone Authority (PEZA) certificates for office buildings.
"All of these BPO companies still need the space they need to grow. It's just that the amount for viable space they can go into has been limited because of the little slowdown in the release of PEZA certificates for the upcoming developments," Salvador noted.
"Once the PEZA certificates become available then the building are completely filled. BPOs require PEZA spaces in order for them to fully enjoy the benefits," he said.
Locators in economic zones are given a zero value-added tax privilege.
A total of 946,782 square meters of leasable office space are expected to boost the current supply of around 4.5 million sqm.
"About 60 to 70 percent of take up is still by BPO," Salvador said.
Santos said the country's young labor force remains a key consideration by BPO companies to set up in the Philippines.
Even the potential impact artificial intelligence in replacing jobs will not be enough to disrupt the demand for office space.
"I don't think it will affect the office market for the BPO," Santos noted.
The Contact Center Association of the Philippines said it is studying how artificial intelligence may affect the employment of millions of call center agents in the Philippines.
The Department of Trade and Industry said the Philippines must prepare in case the demand for manpower declines with the arrival of artificial intelligence and other technologies.
"There will be some new technology that will need back office support," Santos said.
"With new technologies, new jobs will be created such as processors and IT (information technology) professionals. AI will be an opportunity to enhance the type of BPO here," he said.
The demand for office space by the BPO sector will continue to expand as technological innovations will increase the demand for jobs.
"With new technology developed, it would need more people," Santos noted. "As long as we continue to move up, we need to outsource jobs," he said. — VDS, GMA News