Philippine BPO industry getting boost from surging dollar
The continued weakness of the Philippine peso against the US dollar is favorable to the country’s information technology and business process management (IT-BPM) sector, raising optimism further in an industry that is already projected to grow substantially over the next six years.
IT-BPM Process Association of the Philippines (IBPAP) president Jack Madrid said this on Wednesday when asked to comment on the peso’s continued slide and its effects on the almost $30-billion industry.
“Yes, the immediate effect will favor the Philippines but much of that depreciation is the result directly of the strength of the US dollar, which has also affected other currencies in [the Asia-Pacific] and other countries,” Madrid said, responding to inquiries from reporters.
In an earlier statement, Madrid said the lion’s share of their business was from North America, but that the demand for talent from their clients in the Asia-Pacific had been growing at a much higher rate.
“Our estimate is that 70 percent of our current business emanates from North America. And I believe that share will continue to be maintained,” Madrid said, specifying further that another estimated 15 percent come from the Asia-Pacific region.
Continued peso weakness
On Wednesday, the Philippine peso barely escaped a global currency rout as US dollar juggernaut powered on, appreciating by one centavo to close at 58.98:$1, although breaching the 59:$1 level at 59:02:$1 in afternoon trading.
Trading volume rose to $1.197 billion on Wednesday from $1.062 billion on Tuesday.
The local currency’s slight gain happened as the international drama turned focus on the Chinese renminbi following a defeat of the British pound.
ING Bank said “resistance to the US dollar strength is futile” and noted hints that monetary authorities were acquiescing to the weakness of their currencies.
“With no sign that the [United States Federal Reserve] is going to ease its hawkishness nor the US administration showing any concern with the strong dollar, current trends should extend,” the Dutch bank said.
The local business process outsourcing (BPO) industry is looking to create up to 1.1 million direct jobs in the next six years, 54 percent of which will be in the countryside.
The number of full-time employees in the sector is also seen growing to 2.5 million by 2028 from the 1.44 million recorded in 2021, according to the business group’s projection.
“The Philippine IT-BPM sector is at the cusp of a new and exciting era, and the future that awaits us is the brightest that it has ever been. By 2028, the industry may be able to contribute up to 8.5 percent to the country’s gross domestic product (GDP),” Madrid said in a statement.
The IBPAP is also looking to generate up to three million indirect jobs for allied sectors including retail, hospitality, infrastructure, transportation and real estate.
Similarly, the IBPAP said the IT-BPM sector also has the potential to nearly double its annual revenue, reaching $59 billion in 2028.
The IBPAP is set to turn over its six-year road map to the Philippine government today, Sept. 29, documenting its recommendations to the Marcos administration for the next six years.
This includes recommendations on policy and regulatory support, talent development, infrastructure development, as well as marketing and brand positioning.