Manila Market Intelligence May 14, 2020

May142020heroimage15361040

IT-BPM industry beats revenue growth target in 2019

NEWS

According to the Information Technology and Business Process Association of the Philippines (IBPAP), the sector’s revenues grew by 7.1% to USD26.3 billion in 2019. This is faster than its goal of 5.2%. Employment in the IT-BPM sector rose 5.8% to 1.3 million employees in 2019. IBPAP noted that the expansion is attributable to more jobs generated in areas outside Metro Manila, including Bacolod, Cebu, Davao, Iloilo, Laguna, and Pampanga, which covered more than 70% of full-time employee growth.

CLICK HERE TO VIEW ARTICLE

RESEARCH VIEW

Collier believes that the growth posted in 2019 is indicative of the office space absorption from the IT-BPM sector during the year. In 2019, office space deals from outsourcing firms reached 446,000 sq metres, while this is lower compared to 2018’s 686,000 sq metres, the 2019 figure is higher than take up recorded  in 2016 and 2017. In our opinion, the availability more PEZA-proclaimed office space within and outside Metro Manila will play an important role in sustaining the sector’s growth. More PEZA-space in key cities such as Cebu, Davao, Iloilo, Bacolod, and Pampanga should help entice occupiers including outsourcing firms to expand outside Metro Manila.

Most companies shelve expansion plans — survey 

NEWS

A survey conducted by the Employers Confederation of the Philippines (ECoP) showed that most companies have put on hold their expansion and investment plans due to the COVID-19 pandemic. Out of the 347 companies surveyed, about 24% said that they slowed down operations and had a skeleton workforce. 213 companies have also said that they have stopped hiring, while 31 firms said that they laid off workers. Meanwhile, 71% of companies have implemented flexible work arrangements while others have provided pro-rated 13th month pays. 

CLICK HERE TO VIEW ARTICLE

RESEARCH VIEW

Due to the COVID-19 pandemic, businesses have been planning for contingencies and rethinking their business continuity plans. A number of companies, for instance, have been taking a wait-and-see stance. This is resulting in higher office vacancy all over Metro Manila. In 2020, we see office vacancy rising to between 5.5% and 7% from 4.3% in 2019. Colliers believes that due to a softer demand, we are likely to post a 17% decline in office lease rates. Economists and credit rating firms have already ruled out the possibility of a V-shaped recovery and are now projecting a slower, U-shaped recovery. We are likely to see a rebound in the market starting Q1 2021. Data from Colliers International show that it took outsourcing firms some six to nine months after the global financial crisis before they started leasing new or additional office space.

InstaPaymoney transfers hit 8.8M during ECQ

NEWS

According to the Philippine Payments Management, Inc. (PPMI), InstaPay fund transfers processed in April 2020 reached 8,860,959, up by 32.18% from 6,703,885 transactions in March. The total value of the transactions was more than PHP53 billion (USD1.04 billion) with an average of PHP6,129 (USD120) per transaction. Carmelita Araneta, PPMI General Manager, noted that InstaPay transactions from March 17 to April 30, 2020, averaged at 263,588 per day, higher than the 200,158 daily average from January to March 16, 2020. The shift to electronic fund transfers may likely be due to the limited mobility of people. InstaPay was launched by the Bangko Sentral ng Pilipinas (BSP) in April 2018 in a bid to increase digital payment transactions.

CLICK HERE TO VIEW ARTICLE

RESEARCH VIEW

The rising popularity of electronic payments and e-wallets can partly be attributed to decrease in the mobility of consumers due to the lockdown. In our opinion, the pandemic is likely to cause a shift in consumer habits as consumers start to prefer online shopping over brick and mortar retail due to convenience and the minimized risk of infection. Colliers sees a more aggressive use of mobile payment post-lockdown as brick-and-mortar retailers ramp up shift to online selling.  

CLICK HERE TO VIEW PREVIOUS MARKET INTELLIGENCE REPORTS


Related Experts

Joey Bondoc

Senior Manager

Manila

Prior to joining Colliers in March 2016, Joey worked as a Research Manager for a research and consutancy firm where he handled business, political, and macroeconomic analysis. He took part in a number of consultancy projects with multilateral agencies and provided research support and policy recommendations to key government officials and top executives of MNCs in the Philippines.

View expert