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Increasing operational costs affect BPO in PH

The increase of operational costs such rent, electricity and internet services in the Philippines may lead investors to turn to other countries in the near future according to Colliers International.

Dinbo Macaranas, Colliers senior market analyst, says that most of the operational costs in the Philippines are catching up to those in India. In fact, some are even more expensive. The top three of these costs are property rental, internet connection and electricity.

The world’s average internet speed is 6.3 Mbps. Philippines only has half of that with an average speed of approximately 3.5 Mbps. In terms of speed of internet connection, India and the Philippines are in the bottom among Asian-Pacific countries.

Not only is the internet connection in the Philippines slow, it’s also the third most expensive internet in the world.

“a month or two-months’ worth of internet fees in the Philippines is equivalent to a year’s fees in India,” Macaranas said.

Electricity is also one of the most expensive in the world. According to a study by the International Energy Consultants (IEC) in 2016, the Philippines rank as the third most expensive in the world.

The property rental in cities like Mumbai and New Delhi has is only slightly low compared to Makati City. This is causing some clients to rethink about investing in the Philippines.

These costs will most likely continue to rise as the stock market is not agreeing with the Philippines.

The Philippine index is losing ground for a sixth session after President Rodrigo Duterte released statements about the United States. The index dropped by 0.9%. A lot of companies that are loosing in the index are from the real estate sector. SM Prime Holdings is among the ones with the biggest lost. This can affect a lot factors in the economy, including operational costs especially in the BPO industry.

Several local government units in the Philippines are developing rural areas to ease the operational costs call centers have but there are other factors that the government should take a look into if they want the BPO industry to stay in the Philippines.


Sources:

Check out Malaya.com’s article about this. Read it here.

Read about the declining stocks on Malaymailonline.com. It’s here.

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