Philippine Outsourcing Continues To Grow Despite Rise of Local Currency

On October 15, 2012, in Outsourcing, by Business Development Group
The BPO sector is one of the nation’s key drivers of economic growth. In 2011, the BPO sector generated about $11 billion and employed 640,000 Filipinos. The Aquino administration has set targets of $25 billion in revenues and 1.3 million jobs by the end of President Aquino’s term by 2016.

The BPO sector is one of the nation’s key drivers of economic growth. In 2011, the BPO sector generated about $11 billion and employed 640,000 Filipinos. The Aquino administration has set targets of $25 billion in revenues and 1.3 million jobs by the end of President Aquino’s term by 2016.

According to the Banko Sentral Ng Pilipinas (BSP), the Philippine Business Process Outsourcing (BPO) industry will remain vibrant and continue to grow despite the continued appreciation of the local currency against the U.S. dollar.

The Philippine Peso has strengthened, hitting a four-year high of P41.57 to $1 this month. This rise of the local currency has raised concerns among economists on the effect this will have on the Philippine outsourcing industry.

The BPO sector is one of the nation’s key drivers of economic growth. In 2011, the BPO sector generated about $11 billion and employed 640,000 Filipinos. The Aquino administration has set targets of $25 billion in revenues and 1.3 million jobs by the end of President Aquino’s term by 2016.

Related Article: BPO sector seen growing despite strong peso

The Business Processing Association of the Philippines (BPAP), under its Roadmap 2016, has established targets for the Philippine outsourcing industry: a compounded annual growth rate of 20% to hit the earnings forecast of $25 billion by 2016, or about 10% of the P256 billion global IT-BPO market share.

Related Article: IT Outsourcing to Double Market Share by 2016

With the current rise of the Philippine Peso, however, some economists fear these targets will not be reached. A strong-performing peso would mean high costs for foreign businesses. In one aspect, salaries become more expensive whenever the Philippine peso appreciates against the dollar and this could affect the country’s competitiveness in the global outsourcing market.

Related Article: BPO sector unfazed by continued peso rise

However, the BSP is unconcerned about the possible effects of the Peso’s continued appreciation to the country’s sunshine industry. According to BSP Deputy Governor Diwa Guinigundo, most BPO companies are not dependent on the peso-dollar exchange rates to stay globally competitive; stating, “They rely mainly on the skill and versatility of their manpower.”

Related Article: BSP: Stronger peso poses no threat to BPOs

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