Business process outsourcing (BPO) firms are increasingly expanding beyond Metro Manila into key provincial cities as rising costs, congestion, and limited office space in the capital reshape the country’s office market as well as commercial real estate landscape, according to property consultancy Colliers Philippines.

In a report titled “BPO boom shifts to the provinces, redrawing the Philippines’ economic map,” Colliers Philippines manager Ronald Cadapan said the decentralization of the industry is unlocking new growth corridors across Luzon, Visayas, and Mindanao while positioning regional cities as the next frontier for office development.

“The Philippine BPO sector is undergoing a major shift as office demand expands beyond Metro Manila into key provincial cities—driven by rising costs, congestion, and limited Philippine Economic Zone Authority (PEZA) space in the capital,” read the report, published on Friday, July 3.

Colliers Philippines said BPO activity in the provinces surged to near parity with Metro Manila in 2025, with just an eight-percent difference in BPO-leased office space between the two, reflecting what it described as “a decisive shift in location strategy.”

The property consultancy said the trend goes beyond cost-cutting, as outsourcing firms are increasingly seeking more sustainable operating locations while Metro Manila faces rising rental costs, labor expenses, worsening congestion, and limited availability of PEZA-accredited office space.

Among the provincial markets benefiting from the shift are Metro Cebu, Clark Freeport Zone, Iloilo, Bacolod, and Davao, which Colliers Philippines said offer deep and expanding talent pools, stronger employee retention, as well as lower attrition rates supported by established universities plus a steady pipeline of graduates.

“This shift reframes the narrative: provincial expansion is no longer simply about savings—it is about building more resilient and efficient operations,” the report said.

Government support has also helped accelerate the movement of BPO firms outside Metro Manila through PEZA-accredited developments, fiscal incentives, as well as continued investments in infrastructure, including fiber connectivity and transport networks, according to Colliers Philippines.

Colliers Philippines said developments in major secondary hubs are closing the gap with Metro Manila in terms of building standards, connectivity, and reliability, making large-scale operations increasingly feasible.

The report added that many BPO firms are adopting a hub-and-spoke operating model by maintaining a central office in Metro Manila while establishing satellite operations in provincial locations to improve operational flexibility, reduce concentration risk, strengthen business continuity, as well as access a wider labor pool.

The setup also complements hybrid work arrangements by allowing companies to locate operations closer to where employees live, Colliers Philippines said.

Beyond the office sector, the property consultancy said the decentralization of BPO operations is helping decongest Metro Manila while bringing high-quality jobs to regional cities, supporting more balanced economic development and reducing migration pressures on the capital.

Colliers Philippines acknowledged that some provincial markets still face challenges, including limited grade A office supply, power and infrastructure reliability concerns, as well as constraints in scaling up large operations. However, it said these gaps are gradually being addressed through continued public- and private-sector investments.

“For developers and investors, the message is clear: the next wave of opportunity lies outside Metro Manila,” the report said.

Colliers Philippines added that delivering flexible workspaces, reliable infrastructure, and competitive lease terms, alongside sustained policy support, will be critical to sustaining the decentralization of the country’s BPO sector.