Bullish on BPOs, Megaworld continues expansion

February 20, 2017

Bullish on BPOs, Megaworld continues expansion

MEGAWORLD Corp. is staying on course its expansion plans; not even the propensity of Washington to adopt protectionist policies and the rise of artificial intelligence would give it a second thought on the outsourcing industry driving its business.

Perhaps the main challenge for the township developer is keeping up with the continued increase in demand for office spaces as well as retail areas and hotels, Senior Vice-President for Business Development and Leasing Jericho P. Go said in a media briefing in Iloilo City.

In the Iloilo Business Park, for instance, Megaworld has supposedly accelerated the delivery of office buildings catering to information technology and business process outsourcing (IT-BPO) locators by six months to a year.

“So, everything is moving forward — moving up in terms of building completion — because of high demand and the high demand is attributed to the highly skilled, trainable and the abundance of labor in Iloilo,” Mr. Go said.

At present, the 72-hectare township in Iloilo City hosts 15,000 workers in seven BPO companies leasing 45,000 square meters (sq.m.) across five buildings. Megaworld will have completed two new buildings by yearend and at least two more in the following three years.

The P35-billion development will accordingly have 100,000 sq.m. of leasable office spaces for IT-BPO and around 40,000 workers in that sector by 2020.

“The challenge right now is completing the buildings. So it’s hard to sign something when we can’t say that we can do it earlier,” Mr. Go said. “It is dependent on the speed at which we can complete and once we can complete, we are guaranteed of tenancy already — 100%.”

Iloilo Business Park will account for half the 200,000 sq.m. of office space inventory expected from the “Visayas BPO Triangle” drawn by Megaworld in 2016. The remainder will come from two other townships in Cebu and Bacolod.

Nationwide, the company is poised to have more than 1 million sq.m. of leasable office spaces by yearend. It already leased out the existing 850,000 sq.m. to 130 BPO locators and received commitment for around 80% of the upcoming inventory.

Mr. Go downplayed the impact of US President Donald J. Trump’s statements wherein he discouraged American companies from outsourcing jobs to emerging markets on the IT-BPO industry and subsequently to the property market.

“That should not negatively affect us. I’ll tell you why: when he became president-elect, Trump wanted to bring back manufacturing cars, producing steel, curing diseases, innovation. Where is BPO there?” Mr. Go said.

The executive noted that Americans usually take jobs in call centers after graduating from high school and leave after six months to look for higher-paying employment opportunities.

“So, the Philippines will take on the jobs they would not want and we will hire college graduates who will stay with the company for about two years and be content with their pay. Second, we will do the jobs they cannot do because of economies-of-scale problems,” Mr. Go said.

Besides, American companies only account for half Megaworld’s office leasing business.

“We are the least exposed to concentration risk and that’s our biggest advantage because we have 130 tenants,” Mr. Go said, while the revenue contribution of US companies hovers around 70% across the industry.

Mr. Go further cited the strengthening of the dollar as another reason for foreign firms to outsource jobs, as it makes Philippine labor cheaper.

Source: Business World

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