The business process outsourcing (BPO) industry is expected to dislodge remittances as the country’s biggest source of foreign exchange inflows, outside merchandise exports, within five years.
Economist Felipe Medalla, a member of the Monetary Board of the Bangko Sentral ng Pilipinas, said the double-digit growth in dollar revenue generated by the BPO sector was likely to be sustained over the medium term.
This is on the back of the continuing expansion of the sector, with new players coming and existing BPO firms putting up more facilities.
Medalla said BPO revenues were expected to continue growing by about 20 percent within the next five years, especially with the improving business confidence in the country.
He said remittances would also continue to rise yearly but the pace of growth would likely remain at the current level of 5 percent.
“With BPO revenues likely to continue growing by around 20 percent and with remittances growing by only 5 percent, BPO industry will soon be a bigger source of foreign exchange,” Medalla said on Wednesday during the Philippine Business Conference held in Manila.
The BPO industry used to be composed mainly of call centers. The industry, however, has evolved over the years, expanding its coverage to include knowledge process outsourcing operations in the areas of accounting, animation, software development, legal and medical services.
The continued expansion of the BPO sector was attributed largely to the country’s huge English-speaking work force, which was able to serve the requirements of clients in the United States, Europe and other markets.
The BPO sector is expected to generate $16 billion in revenue this year, up from last year’s $11 billion.
It is also expected to employ about 926,000 people this year, up from about 777,000 last year.
The BPO sector has also helped boost the growth of other industries, particularly property development.
In the meantime, remittances from overseas Filipinos are seen to continue growing by around 5 percent over the medium term on the back of the continued deployment of Filipinos overseas and their rising incomes.
Remittances, which are projected to hit $22.5 billion this year, supported household consumption which, in turn, helped drive the growth of the Philippine economy.
There are at least 10 million Filipinos working overseas.