The Philippines’s IT-BPM industry is undergoing a significant geographic decentralization, spreading economic growth far beyond the National Capital Region (NCR).
The IT and Business Process Association of the Philippines (IBPAP) confirms that a growing share of the sector’s expansion is concentrated in regional hubs like Cebu, Iloilo, Bacolod, Davao, Cagayan de Oro, and Clark. The Department of Information and Communications Technology’s (DICT) Digital Cities program further institutionalized this shift by classifying cities into Centers of Excellence, Next Wave Cities, and emerging New Wave Cities-providing investors and developers with a clear provincial growth roadmap.
In an email interview with the BusinessMirror, Sheila Lobien, Chief Executive Officer of Lobien Realty Group (LRG), says her firm tracks these provincial office destinations based on five key dimensions: talent demographics, peace and order, LGU governance quality, infrastructure, and digital connectivity.
Meanwhile, Mervyn Valenzuela, Vice President for Tenant Representation and Office at Prime Philippines, highlighted that the IT-BPM industry remains the primary growth driver for the office sector, expanding steadily by about 1 percent. However, he noted that this provincial momentum is uneven. ‘The IT-BPM sector’s growth outside Metro Manila is concentrated in established Tier 1 and Tier 2 cities, as security, infrastructure, and incentive gaps temper investor confidence in Tier 3 locations,’ Valenzuela explained.
LRG’s centers of excellence
LRG named Cebu City, Bacolod City, Cagayan de Oro City and Davao City as the the cities that have contributed to the growth of the IT-BPM.
Cebu City, according to Lobien, continues to expand beyond its original IT Park corridor into Mandaue, Mactan, and the South Road Properties (SRP). A large university base, a highly bilingual talent pool, and improving airport connectivity make it the most liquid office market in the Visayas. Notably, Lobien says vacancy rates in Cebu’s IT corridors remain materially tighter than those in Metro Manila.
Driven by a strong governance record, safety rankings, competitive labor costs, and a rapidly expanding PEZA-accredited office inventory, Lobien points out that Iloilo emerged as one of the country’s most compelling BPO markets. Further, she says the city’s consistent recognition by the DICT as a Center of Excellence reflects its robust fiber infrastructure, the high caliber of local university graduates, and an active local government that aggressively courts IT-BPM investments through business facilitation and incentive packages.
Consistently ranked among the top BPO destinations, Lobien mentions that Bacolod offers one of the country’s most favorable labor cost profiles, an abundance of English-proficient graduates, and a commendable peace-and-order record. It boasts an active BPO ecosystem anchored by several major multinational operators.
As the premier destination in Mindanao, Lobien mentions that Davao consistently ranks at the top of the DTI’s Cities and Municipalities Competitiveness Index (CMCI), driven by strong scores in economic dynamism, government efficiency, and resilience.
Next Wave cities with high investment potential
She underscores Clark Freeport as one of LRG’s highest-conviction provincial office markets. She says this is bolstered by its designation as an IT-BPO Center of Excellence, its proximity to the New Manila International Airport in Bulacan, and recent real estate data noting a massive 538,000 square meters of office supply in Pampanga-where a 17 percent vacancy rate has improved by 780 basis points year-on-year. ‘The convergence of NLEX, SCTEX, TPLEX, and the North-South Commuter Railway gives Clark the unique advantage of nationwide connectivity within a master-planned business environment,’ Lobien explains.
Other rising hubs
As one of the rising hubs, Lobien asserts that Cagayan de Oro (CDO) offers a large talent pool and improving digital infrastructure. Serving as northern Mindanao’s commercial hub, its lower occupancy costs relative to Davao make it an attractive secondary market for operators seeking provincial diversification
She notes that Lipa is quietly becoming one of the most compelling BPO real estate stories in Calabarzon. Situated at the intersection of the STAR Tollway and the forthcoming SLEX TR4, ‘Lipa offers proximity to Metro Manila without the capital’s high operational costs. Its young workforce, expanding tertiary education system, and strong manufacturing sector create a diversified economic environment that mitigates single-sector dependency,’ says Lobien.
Baguio, a mainstay in Next Wave City rankings, is uniquely positioned to benefit from IBPAP’s push into higher-value Knowledge Process Outsourcing (KPO) functions that match the city’s highly specialized talent profile.
LRG says provincial BPO office demand will continue to be driven by labor cost arbitrage, talent availability outside NCR, and infrastructure.