The Philippines is becoming a hotspot for Indian business process outsourcing (BPO) firms, thanks to its low-cost office rentals and expanding real estate market. According to global consultancy Santos Knight Frank, Metro Manila ranks as the third-cheapest city for prime office rents in the Asia-Pacific region, offering significant savings compared to Indian cities like Bangalore, Mumbai, and New Delhi.

Cost-Effective Office Solutions

In the third quarter of 2024, prime office rents in Metro Manila averaged $29.64 per square foot, making it a compelling alternative for BPOs looking to reduce operational costs. Morgan McGilvray, senior director of occupier strategy and solutions at Santos Knight Frank, highlighted the economic appeal: “The cost of office space is one of the main drivers for Indian BPOs expanding in the Philippines instead of India.”

Rapid Market Growth

Metro Manila’s office market has experienced substantial growth over the past decade, with office stock more than doubling from 3.3 million square meters in 2014 to 8.6 million square meters in 2024. This year alone, 260,000 square meters of new office space are expected to be completed, with an additional 275,000 square meters planned for 2025.

“This market has more than doubled over the last 10 years,” McGilvray emphasized. “You’re not going to see that growth in many other places globally.”

Repurposing Vacant POGO Spaces

The Philippine government’s restrictions on Philippine offshore gaming operators (POGOs) have opened opportunities for developers to repurpose vacated spaces for BPO operations. These spaces can be refurbished and tenant-ready in as little as one to two months, providing a quick and efficient solution for new entrants.

Varied Rental Options Across Districts

While Metro Manila offers cost advantages overall, rental prices vary by district. Makati City, a prime business hub, has the highest average rent at PHP 1,227 (US$21.22) per square meter, coupled with an 18.3% vacancy rate. Taguig follows closely at PHP 1,280 (US$22.02) per square meter with a 12.4% vacancy rate. For firms seeking more affordable options, Alabang offers rents at PHP 787 (US$13.54) per square meter but has a higher vacancy rate of 22.7%.

A Key Destination for Indian BPOs

The Philippines’ affordability, growing office infrastructure, and adaptability make it an attractive destination for Indian BPO firms seeking to expand beyond their home market. With its strategic repurposing of office spaces and competitive rental rates, the country is poised to strengthen its position as a global hub for outsourcing operations.

As McGilvray summarized, the Philippines’ unique growth trajectory and cost efficiency offer unmatched opportunities for companies looking to scale their operations in a dynamic market.