The conditions in the Philippines are ideal for business investments. For one, we have a rich resource of talented people. Our wage rates give us a comparative advantage over other countries. Investments are pouring in to improve communications.
Moreover, although traffic and transportation issues continue to hound the country, there are other strong growth areas that start to flourish after years of being largely ignored. Best of all, our economy is growing, thereby opening doors for the 10 of the best business investment ideas for 2016.
1. Real Estate Company
In 2014, Cuervo Far East released its study on the property values in the west growth area in Alabang, Muntinlupa. The study cited rapid development and improved facilities and infrastructure as the key factors in the appreciation of property prices.
However, I can add the worsening traffic condition in Makati City, Taguig City, and EDSA as a key factor in the driving activity toward the south.
Back in 2009, real estate prices in Alabang subdivisions averaged Php 14,000 per square meter, except those in plush Ayala Alabang, which were pegged at Php 30,000 per square meter. True to the forecast of the study, the properties in Alabang have soared toward Php 65,000 per square meter.
A strong demand also exists despite the steep prices. Brokers have no problem matching potential buyers and sellers. From what I’ve seen so far, real estate remains a seller’s market. Property owners can dictate prices because the upside is up to Php 100,000 per square meter by 2019.
A real estate company with a focus toward the south would be a great business investment in the Philippines. I see development moving south in the next few years. The Sta. Rosa Laguna area is slowly coming up; the development in both the commercial and residential sectors is ongoing.
If they can improve the communication facilities there, and if the capacity of the schools in the area can be accelerated, increased investment can be attracted. Not all residential areas have Internet connectivity.
2. Business Process Outsourcing (BPO)
The new millennium ushered in the New Economy. The evolution of digital technology, the popularity of social media, global warming, and world events that tore down barriers and changed the course of history have made business unpredictable and volatile.
Business development strategies veer away from rigid structures and head toward flexible solutions. The challenge is to find a system that streamlines cost without compromising revenue. The best option is outsourcing, and the best destination is the Philippines.
We’ve been in a tight battle with India over the global market share in BPO, but the tide has shifted in favor of the Philippines. A key indicator here is commercial property development. According to property management consultant CBRE, 600,000 square meters of commercial property has been committed to back office outsourcing. The astonishing part is that back office only accounts for 30% of BPO receipts!
The BPO industry in the Philippines is estimated to grow at an average of 15% per annum over the next five years.
BPO can be capital intensive, and the bulk of the industry’s $ 15.5 billion receipts comes from the big companies, such as Convergys, Accenture, JP Morgan, 24/7 Philippines, and Telephilippines Inc. As a start-up, you may not have the scale to comply with lease requirements.
I suggest starting out with an off-site or home-based business model. Your initial objective should be to sign up clients for various services. Don’t be afraid of adopting a home-based model because many companies worldwide have been incorporating telecommuters into their workforce.
As the outsourcer, build up a network of talents for in-demand jobs, which include content marketing, website design, virtual assistance, blogging, and telemarketing.
Once your portfolio has grown, you will have the option to lease a facility and run operations from there.
3. Recruitment Services
Workforce remains our number one export. The Philippines is a rich resource for talent.
The Philippines has a literacy rate of 97.5%, and our proficiency rating in business English is supposedly higher than that of the United States of America!
However, as a proprietor of BPO services, I do not agree with the recruitment systems prevailing in the country. Here are my two observations:
- Too much focus on technical and fundamental competencies
- Too much focus on talent acquisition not right fit acquisition
I remember a story shared by one of my friends. He was walking through a food court one afternoon. Then, he was approached by a recruiter for BPO services. The recruiter asked him to apply to their company as a telemarketer for health care services. My friend asked the recruiter, “You do have an idea that I am over 40 years old right?” The recruiter then answered, “Yes sir. But that’s okay. No one will SEE you anyway.”
That wasn’t even the punchline. The punch line is that the recruiter represented one of the top BPO companies in the Philippines! If BPO companies continue down this road, we will lose our global standing in BPO.
I believe that there is a room for a new niche in recruitment services in the Philippines. One of the new branches of BPO is resource process outsourcing or RPO.
Unlike traditional recruitment practices, RPO focuses on right-fit qualifications. The principle behind RPO is to build a solid team that is committed to attaining a long-term sustainable success for the client. Companies here are too fearful of their own people.
Human resource departments are dictated upon by their fear of being unionized or infiltrated. The result is that even the best people are terminated because no one wants to regularize them. A business ideology like this is predicated on self-preservation and does not work for the best interest of clients.