A new chapter for Philippine BPO: The rise of in-house global capability centers
The Philippine IT and business process management (IT-BPM) sector has long been one of the country’s most important economic engines, anchoring office demand across Metro Manila and key provincial hubs for the better part of two decades.
The sector is broad and varied, covering everything from voice and customer support to shared services, back office, finance and accounting, and revenue cycle management.
Attractive destination
Call centers remain the backbone of the industry, accounting for more than half of total BPO employment in the country.
But within that broader mix, the Philippines is steadily becoming a more attractive destination for US-based companies looking to set up shared services operations of their own, and that shift is starting to show up clearly in the leasing pipeline.
According to our Q1 2026 Philippine Property Market Report, the active office leasing pipeline now stands at 227,000 sqm, split almost evenly between IT-BPM occupiers (114,000 sqm) and traditional tenants (113,000 sqm).
Within the IT-BPM segment, third party outsourcers continue to lead with 61 percent of pipeline activity, but global capability centers (GCCs) now account for a notable 39 percent. That is a meaningful shift, and one worth paying attention to.
Understanding the difference
So what exactly is a GCC, and why does the distinction matter?
A GCC is the in-house offshore arm of a multinational company, and it sits within the broader IT-BPM universe rather than apart from it.
Instead of contracting work out to a third party provider, the parent company sets up its own office in the Philippines and hires its own employees to handle functions such as finance, IT, analytics, engineering, human resources, and increasingly, research and development.
Third party outsourcers, by contrast, deliver similar in-house services such as shared services, back office, and revenue cycle management, but on behalf of external clients rather than a single parent company.
The implications for the office market are significant. While GCCs sign the same lease terms as other IT-BPM occupiers, including call centers, they tend to invest more in their fit-outs and hire for higher-value, more specialized roles.
They are not chasing the lowest cost per seat. They are building long-term capability hubs. That kind of tenant changes the conversation a landlord is having.
This is consistent with how leases are being structured across the pipeline. Five-year terms remain the dominant lease length in our pipeline sample at 71 percent, with 23 percent taking three-year terms and 6 percent committing to seven years or more. These are not tenants hedging their bets. They are planting flags.
A healthier market backdrop
The broader office numbers support this read.
Gross demand in Q1 2026 reached 234,000 sqm, with traditional occupiers contributing 143,000 sqm (61 percent) and IT-BPM firms contributing 79,000 sqm (34 percent).
Net demand jumped 77 percent year-on-year to 133,000 sqm, lifted in large part by a 62 percent drop in vacated space as Philippine offshore gaming operator (Pogo) related exits faded from the system. The market is finally absorbing rather than bleeding.
Locations of choice
Geography matters too. Makati City led Metro Manila with 76,800 sqm in Q1 transactions, equivalent to 54 percent of its 2025 total, with 63 percent of those deals concentrated along Ayala Avenue.
Bonifacio Global City (BGC) continues to run tight at 8 percent vacancy, while overall Metro Manila vacancy is held at 18 percent. For GCCs that prioritize prestige addresses, talent catchment, and quality stock, these are the locations of choice.
Of course, the picture is not without risk. The escalating energy crisis, tied to the Iran conflict and the closure of the Strait of Hormuz, introduces real downside pressure.
Pipeline visibility is healthy, but conversion is the variable to watch. The demand is there, but the question is whether requirements translate into actual transactions amid current uncertainties.
The next chapter
Still, the structural story is encouraging.
The growing GCC share tells us that multinationals are not just engaging Philippine talent through intermediaries anymore. They are setting up shop directly. They are committing capital, leadership, and time.
Outsourcing and offshoring to the Philippines continue to be a viable business strategy for American companies seeking increased efficiency in their operations, and the rising GCC share within the IT-BPM pipeline shows that more of them are now choosing to capture that efficiency directly, through their own offices and their own teams.
For developers, landlords, and policymakers, the message is clear. The IT-BPM sector that has carried Philippine offices for two decades is evolving into something more layered, more sophisticated, and potentially more resilient.
The next chapter of this story will be written by the full breadth of the industry, with GCCs taking an increasingly prominent role alongside the third-party outsourcers that built the foundation.
The author is the executive director of Commercial Leasing at Leechiu Property Consultants
