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Business process outsourcing (BPO) companies are expected to support the growth of the office space sector, with demand rising by 38 percent year-on-year in 2021.
Leechiu Property Consultants (LPC), said office property demand would likely reach 539,000 square meters (sq m) this year, up from 389,000 sqm in 2020.
It said the IT-business process management (IT-BPM) sector accounted for 42.4 percent of the new demand, representing about 229,000 sqm of new office space orders. This was up 18 percent from the 194,000 sqm that the sector took up last year.
LPC CEO David Leechiu said take-ups from IT-BPM firms would have been higher if not for mobility issues brought about by the reimposition of tighter lockdown protocols in the third quarter of 2021.
“Even at the height of the pandemic in 2020, IT-BPMs took up space. We foresee that they will remain a catalyst of the office segment for as long as outsourcing remains a viable solution for recovering firms in the West,” he said.
Emerging markets that serve as BPO hubs like the Philippines and India benefit from increased outsourcing activities in the aftermath of major crises. This was observed after the US-epicentered global financial crisis of 2007-2009, and the same thing is expected to happen as the global economy recuperates from the COVID-19 pandemic.
LPC estimated that in the fourth quarter, IT-BPM companies required 54,000 sqm of additional office space.
“We are pleased to be seeing new brands from among the captives looking to offshore and outsource to the country,” he said.
The local office space sector has about 15 million sqm, with the BPO industry representing about 8 million or 53 percent.
The government allowed BPOs to have 90 percent of their staff under work-from-home arrangements without losing their fiscal incentives.
LPC said that office take-up at yearend will surpass projections despite the peaks and dips in demand that characterized the 2021 office arena, LPC noted.
It said that aside from BPOs, online retail companies or e-commerce platforms continue driving growth and expand both office and industrial requirements.