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PH Outsourcing Expands to Tier 2 Cities

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  • Posted: September 30, 2014

The growing BPO industry in the Philippines is spreading outside Metro Manila to help "decongest" the area, said international real estate firm KMC MAG Group.  It added that the burgeoning demand for prime space beyond the CBDs (central business districts) was mainly due to a desire for lower attrition rates by companies.

KMC MAG Group associate director Gerold Fernando reported to the media that many companies lose "thousands" of employees every month, and that moving the site closer where people live significantly cuts down on attrition.  Fernando added that attrition could probably be reduced by a tenth as the cost of living will drop.

The KMC MAG Group exec added that it's a "win-win situation for the company and for majority of the BPO workers" as it promotes "decongestion" of Metro Manila and helps uplift the economy of Next Wave Cities and increases middle income earners.

The so-called "Next Wave" cities around Manila are located in Clark, Bulacan, Cavite, Laguna, Pampanga, Iloilo, and Cagayan de Oro Bacolod.  The cities could be made even more attractive to BPO companies and investors, however, said KMC MAG managing director Michael McCullough.

While educational institutions and labor are available, the sites are still missing a "whole lot" of available office space.  McCullough, in an article published in Philippine Daily Inquirer, said:

"If you've been driving in the province you don't see a grade A office space just waiting to be leased.  You can't fly some Americans in and take them to a grassy patch of land and say "this will be your office, I promise it will look like this picture." They don't buy it.  They have to see something that exists and those are mostly always in Metro Manila, Metro Cebu, and Davao now."

That does not stop some BPO companies from taking the risk and building sites in the New Wave locations, which McCullough believes will attract the big fish should the pioneers succeed.