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How Business Developments are Triggered by BPO environments

Posted on March 20, 2017

Growth and development through outsourcing

Business process outsourcing (BPO) industries have been providing over 1 million jobs in the Philippines, contributing to the growing economy of the country. Not only BPO industries are growing but also local businesses where a BPO operation is located.

According to David Leechiu, Chief Executive Officer of Leechiu Properties Consultants (LPC), about 2.5 times as many indirect employments are also present in a BPO environment.

Leechiu noted as much as 1,000 employments are generated during a BPO building construction alone, and BPO companies spend P25,000 to P35,000 per square meter (/sq.m). Usually, BPO companies will directly hire 300 to 1,000 full-time employees paying them P12,500 to P20,000 per employee every month.

In 2016, BPO sectors have 1.3 million full-time equivalent (FTE) estimated employees according to the Information Technology and Business Process Association of the Philippines (IBPAP).

In the BPO sector, the country currently has six centers of excellence – Metro Manila, Metro Cebu, Metro Clark, Metro Bacolod, Metro Davao, and Metro Iloilo. Whereas, the next ten wave cities are Baguio, Cagayan de Oro, Dagupan, Dasmariñas, Dumaguete, Lipa, Malolos, Naga, as well as Sta. Rosa in Laguna and Taytay, Rizal.

Outsourcing: The Ripple and Bandwagon Effect

BPO companies typically spend P300 to P700/sq.m. in renting spaces, depending on the location. “Most BPO companies will have 6.5/sq.m. per seat so a 1,000-seat operation would occupy 6,500 sq.m of space,” Leechiu noted. This indicates that monthly rental fees for a 1000-seat operation would range from P1.950 million to P4.550 million.

Other business establishments are also sprouting around a growing BPO company such as convenience stores, canteens, coffee shops, groceries, and many more. This is a proof that local businesses are supported by the expansion of the BPO industries. When one BPO company is built, other local business establishments are also built.

Aside from the ripple effect caused by BPO companies, there also has been a bandwagon effect in where BPO companies are located. Once a first locator of a BPO company move in a certain area, other BPO companies will immediately follow. As years will pass by, the first BPO company in the certain area will double in size and other companies will also follow.

While there are many business establishments which are positively affected by the BPO sector, the administration of President Rodrigo Duterte is not eager on relying too much on the sector as a growth driver. Hasty technology advancements may lead into the decline of the sector’s gross domestic product contribution. Budget and Management Secretary Benjamin Diokno also said that too much dependence on BPO must be avoided since it might change in the future.

Source: 

BPO ecosystem spurs business development,GMAnetwork.com

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