The recent weakening of the peso when it dipped early this month to a five-year low should prove a temporary benefit to the business-process outsourcing (BPO) sector. According to the Information Technology and Business Process Association of the Philippines (Ibpap), however, its long-term effects should be carefully monitored.
“What [the currency depreciation] has done so far is that it improved the value of the US dollar against the peso. Most of our business earn in dollars but spend in peso, so if you look at it from that perspective it’s beneficial in that sense.
The challenge is in the longer term [and] how can that be sustained. So I think that’s where we’re more afraid of because there are a lot of unknowns. What if what’s happening in China continues for two more weeks and it wreaks havoc on the stock market globally?” Ibpap President and CEO Jose Mari Mercado said at the sidelines of the Management Association of the Philippines General Membership Meeting early this week.
Mercado hinted that the Philippines could become an attractive destination for more investments from foreign companies looking to reduce costs amid the uncertainty in the global market.
“If, for example, a US company wants to reduce their costs, they send it offshore. So if you have a situation like this, it’s a bear market [and] business will slowdown. A lot of businesses may be thinking now, how do I reduce my costs? So it may actually be beneficial to us in that sense.”
Meanwhile, the industry is eyeing to secure its consultant partner to chart its six-year road map, the “growth” blueprint of the $18-billion industry, by September.
“We are going to issue the request for information next week so by September, we will have a short list of who will be our consultant partner; hopefully by that month, we’ll be done with the process,” Mercado said.
The information technology and business process management (IT-BPM) road map 2016 to 2022 will contain the growth assumptions and strategies, as well as employment forecasts of the industry, the country’s third largest net foreign-exchange earner, next only to tourism and overseas Filipino worker remittances.
The road map will also outline the needed interventions to scale up Filipino BPO services up the value chain, as well as government support to sustain the industry’s growth.
The IT-BPM industry was forecast in the road map to generate direct employment of 1.3 million and revenues up to $25 billion in 2016.
In 2014 the BPO industry employed 1.07 million Filipinos and gained $18 to 19 billion revenues or 6.2 percent of gross domestic product.
The contact center subsector is still the biggest contributor, with a share of $ 11 billion. The industry has also been notching a growth of 15 percent to 18 percent annually, said Mercado, a trend that is seen to be sustained.