BPO sector still upbeat amid fears of decline

Unlike what had been earlier predicted, Cebu's business process outsourcing (BPO) sector has remained robust as transactions picked up in the first half of the year, Colliers Philippines said.

In its report furnished to journalists, the international realtor said Cebu has weathered the uncertainties in the industry predicted early this year.

"Similar to Metro Manila, there were initial concerns that office space demand from outsourcing firms in Metro Cebu will slow down this year," Colliers said.

The uncertainties were brought about by the shift to greater economic nationalism in the United States, led by the anti-outsourcing stance of the present administration; the perceived decline in the peace and order situation in the Philippine; and delay in the proclamation of Philippine Economic Zone Authority (PEZA) buildings, which enables tenants to apply for tax and non-tax incentives.

"But the Metro Cebu outsourcing sector, which includes call centers and knowledge process outsourcing (KPO) companies that provide higher-value services such as medical coding, legal transcription, software engineering, and finance and accounting remains robust," the Canadian real estate agency said.

For the first half, Colliers recorded about 58,000 sq m in office transactions.

BPOs and KPOs accounted for a combined 74 percent of the total.

Among the large BPO and KPO companies that occupied space in Cebu in first half are Shearwater Health, Cresco Shared Services, Convergys, Wipro, and Teledirect. They primarily provide healthcare, information technology (IT), and customer support services.

Traditional and non-outsourcing firms covered about 12 percent of total transactions from January to June with remittance centers, insurance companies and educational services occupying space.

Offshore gaming, meanwhile, accounted for the remaining 14 percent of transactions.

Colliers believes that offshore gaming has the potential to become a major plank of the Cebu office market. "With a more conducive local regulatory environment, we expect offshore gaming to become a major contributor to office space take up in Cebu."

Colliers believes that firms that provide English as a secondary language (ESL) services will be a major contributor to office space demand in Cebu moving forward.

Among the ESL centers already operating in Cebu are QQ English, TOMAS English Training Center, Access E-Talk Plus, Nexseed and Winkey Online English Academy.

"In our opinion, the expansion of these companies as well as the entry of new players bodes well for office space expansion moving forward. A mix of existing and new ESL providers is reportedly considering new office space due to be completed over the next 12 to 18 months in major business parks such as Cebu IT Park and Cebu Business Park," Colliers said.