New ICT department to spur growth of BPO, real estate

The business process outsourcing (BPO), commercial real estate, residential and retail sectors will benefit from a new law making the information superhighway even more accessible to more Filipinos.

The new law—signed by President Benigno Aquino III last week—creates the Department of Information and Communications Technology (DICT). Republic Act No. 10844 (or the Department of Information and Communications Technology Act of 2015) indicates that it is the state’s policy to “ensure universal access to quality, affordable, reliable and secure ICT services” and should “ensure the provision of a strategic, reliable, cost-efficient and citizen-centric information and communications technology infrastructure, systems and resources as instruments of good governance and global competitiveness.”

According to Colliers International, the new department “addresses the need for the Philippines to be at par with other Southeast Asian countries which have Cabinet-level departments for their ICT sector, especially with the country’s robust BPO industry and digitally savvy, predominantly young population. RA 10844 will support the further growth of the country’s BPO sector which primarily drives the demand for office space.”

Definitely to spur growth

Property analyst Enrique M. Soriano III, Ateneo program director for real estate, said “exciting times are ahead for the property sector. The ICT law will definitely spur growth in the BPO and commercial real estate sector as foreign players will train their radar on the Philippines as a solid investment destination.”

Soriano said the law “clearly articulates rules and standardized policies related to the ease of doing business in the outbound and overseas (O and O) industry. This will translate to growth in the property sector catering to BPO and knowledge process outsourcing tenants. Effectively, the ICT is a major component mandated under the Asean Economic Integration and thus, making the Philippines a destination compliant in global best practices.”

Response to growth vision

Claro dG. Cordero Jr., Jones Lang LaSalle Philippines’ associate director and head for Research, Consulting and Valuation, said the creation of the DICT responds to the growth vision of the Philippine BPO sector to: 1) develop an IT-enabled workforce; 2) enhance security and IT service management; and 3) create an enabling legal and regulatory framework that will foster the growth of the ICT and the BPO industry. The envisioned DICT will further foster the growth of the BPO sector as it will form a dedicated department to improve IT services and to promote digital literacy to develop more talents to service the industry.

“This will make the BPO sector more attractive to existing and new players, which will require more office developments and will enable more demand for other allied property segments (specifically, residential and retail sectors),” added Cordero.

Julius Guevara, director for research and advisory at Colliers International Philippines, said: “While the implementing rules and regulations are still being prepared, I think that the law really benefits the office property sector since it positively affects the BPO industry. The law seeks to expand ICT-related operations in underserved areas, and this may encourage BPOs to expand in areas where they do not have a presence. I think the most important effect of this law is the push to improve education in relation to the ICT industry, which will increase the manpower that is required for this industry to grow.

BPO operations

Colliers International said the law helps ensure the development of manpower with skills that are aligned with the BPO companies’ needs. It mandates the DICT to formulate policies, in coordination with the Department of Education, Commission on Higher Education, and Technical Education and Skills Development Authority, to develop and promote ICT in education that is responsive to the human resource needs of the sector.

Colliers International added that the DICT is also tasked to prescribe regulations for the establishment, operation and maintenance of ICT infrastructure in unserved and underserved areas. This could further raise the number of viable locations for BPO operations in the country, with sufficient ICT infrastructure being among the key prerequisites in attracting ICT-related investments.

The law also calls for the promotion of strategic partnerships between local and international ICT, research and development, educational and training institutions, to speed up industry growth and enhance competitiveness of Philippine workers, firms, and small and medium enterprises in the global markets for BPO.

Colliers International Philippines is optimistic that the law will help attract more foreign investors into the local outsourcing sector. The BPO industry has been growing by around 10 to 15 percent annually and is the main driver of office space demand in the country. The sector remains dynamic as its revenues are expected to outpace overseas Filipino workers’ remittances by 2017.