BPOs seen needing less office space

MANILA, Philippines—Local property developers may find themselves faced with less robust demand from the business process outsourcing (BPO) firms as they strive to make more efficient use of their existing office space.

The trend toward improving workspace efficiency among BPO firms is driven mainly by the need to rein in costs amid lingering uncertainly over the extent and duration of the global financial crisis, Accenture director for Southeast Asian facilities and services Michael Ramos said.

Accenture is one of the largest BPO companies in the country with 15,000 employees working out of different locations in and around Metro Manila.

According to Ramos, the cost of BPO facilities account for approximately one-third of the general and administrative expenses incurred by companies like Accenture.

Because of this, it is in the company’s best interest “to make these resources work harder for us,” he said, referring to the office space that houses a firm’s workforce.

At present, Accenture’s facilities occupy about 120,000 square meters of office space in various locations.

Because of advancements in workspace management systems, he said it was possible for Accenture’s local unit to raise its head count by as much as 50 percent “without expanding its footprint.”

Ramos made this comment in yesterday’s forum on the architecture, engineering and construction industry and its effects on the local BPO sector.

According to Ramos, the trend for Accenture in particular—and most BPO firms in general—is to maximize the use of their present office spaces. This is also made possible, in part, by technological advances in communications that allow some employees to work productively from remote locations.

He said the market for office space had matured in favor of the BPO industry. Locators are now able to negotiate with landlords for more flexible leases that also allow rental rate renegotiations starting on the second or third year of the lease, compared to the standard practice of having fixed five-year leases in the past.

“Some BPO firms even just rent office furniture now,” he said, stressing that the practice allowed companies to reduce fixed costs.

His observations jibe with the view of real estate brokerage firm CB Richard Ellis (CBRE), which said last month that demand from the BPO industry was moderating.

Many who made decisions to expand or invest in office spaces have either postponed or deferred their decisions, said CBRE official Trent Frankum. The deferment of BPO clients’ decisions, he said, was related to the uncertainties brought about by the global economic crisis.

Nonetheless, he pointed out that there would still be demand growth from the sector which accounts for over 80 percent of the office-space demand.

In 2008, only half of the 360,000-square-meter space projected in the year before was made available as several projects were postponed or deferred due to sluggish demand. This caused office rental rates in Metro Manila to decline by 5 percent in the first quarter of 2009. –Daxim Lucas, Philippine Daily Inquirer