BPO sector stays resilient amid slowdown concerns

Cebu’s business process outsourcing (BPO) market has remained resilient amid concerns of BPO slowdown, as Cebu maintains a reliable and sizeable labor pool, helping keep it as among the top outsourcing cities despite its noted recent dip in overall ranking.

Dinbo Macaranas, senior research manager at Colliers Philippines, said Cebu will still bank on the quality of the labor force to keep the growth momentum in the office sector.

"Coupled with the upcoming supply of PEZA-proclaimed buildings in the business district, it is likely that demand will continue," he said in a recently released report on Cebu's office market.

The number of upcoming infrastructure projects will likely unlock the province’s potential.

Some of the notable projects include the Cebu-Cordova Link Expressway, Cebu Bus Rapid Transit, expansion of the Mactan International Airport and the building of the new Cebu International Port.

"In view of these developments in the Cebu office market, Colliers recommends that tenants look to Cebu Business Park and IT Park for its immediate requirements as this district is preferred by most employees given its proximity to residences and commercial establishments," Macaranas said.

Tenants are also adviser to keep an eye on other locations such as Mandaue, uptown and downtown, and Mactan given that planned infrastructure projects will improve access to these locations eventually.

"Developers, on the other hand, are encouraged to build new buildings, possibly within township projects that will activate the potential of new locations, maximizing the benefit of newer access roads," he noted.

The property consultancy firm also noted a continued strong demand from both BPOs and offshore gaming companies in Cebu for the office market.

This year, offshore gaming also emerged in Cebu as a key industry with over 25,000 sq m (269,000 sq ft) of office space closed during the first half of 2017, driven by a 10-floor takeup in Tower One Plaza Magellan.

Since the fourth quarter of 2016, the Philippine Amusement and Gaming Corp (PAGCOR) has been mandated to regulate Philippine Offshore Gaming Operators (POGOs).

PAGCOR has since issued 42 POGO licenses. This led to the proliferation of POGOs across submarkets in Metro Manila, and it is noteworthy that the demand has spilled over to provincial locations such as Cebu.

Consequently, total office takeup in first half 2017 has reached 69,000 sq m (743,000 sq ft) across Cebu.

The breakdown has BPOs at 57 percent, offshore gaming at 37 percent and non-BPOs at 6 percent.

Colliers expects overall demand to continue especially given that the Cebu Business Park and IT Park are established information technology zones.

Thus, it has the benefit of faster PEZA accreditation of buildings, which would foster continuous BPO growth.

Cebu has remained as a viable location for BPO locators, particularly for those looking outside Metro Manila.

According to the latest global outsourcing cities report published by Tholons, Cebu was pushed out of the top 10 from 8th to 12th place as a bigger weight was given on innovation in the determination of rankings.

Nonetheless, it appears that the dip hardly had an impact on the demand in Cebu.

A total of 39,000 sq m (420,000 sq ft) of office space was closed by BPO firms in Cebu for the first half of the year.

The highly-skilled labor force that the province offers has kept Cebu in the radar of KPO and BPO firms.

Key tenants closed this year include Real Page, We serv, and Ripe Concepts. —