The US tariffs on imports from China could drive American companies to increase cost-cutting efforts, leading to greater reliance on outsourcing. This shift is expected to benefit the Philippine office market, particularly in the expanding virtual assistant and business process outsourcing (BPO) sectors, according to property consultancy Colliers Philippines.

Impact of Tariffs on Outsourcing

The recent tariffs imposed by the US government include a 25% tariff on imports from Canada and Mexico and a 20% tariff on Chinese goods. As a result, US businesses are likely to seek cost-efficient alternatives by outsourcing non-core functions such as customer service, IT, accounting, human resources, and virtual assistant services to countries like the Philippines.

The Philippines as a Top Outsourcing Destination

The Philippines continues to be a top outsourcing destination due to its highly skilled workforce and strong service-oriented culture. The country’s time-zone advantage enables round-the-clock operations for multinational firms, with Philippine-based virtual assistants and BPO companies supporting US business hours.

Office Space Demand and Future Growth

Despite a 57% decline in office transaction volume in 2024 due to uncertainties surrounding the US election, Colliers Philippines projects a 40% quarter-on-quarter increase in net office take-up. However, risks to the Philippine office market include geopolitical instability and sudden policy changes.

Ensuring Growth and Competitiveness

To maintain its position as a leading outsourcing hub, the Philippine government must enhance tax incentives, streamline regulations, and foster public-private partnerships. Upskilling the BPO and virtual assistant workforce will also play a critical role in sustaining growth and competitiveness.