Is PHs BPO Losing Competitiveness?

MANILA, Philippines - The business process outsourcing, (BPO), the country's sunniest industry, is slowly waning its competitive edge to India largely due to the appreciation of the peso against the US dollar compared to India's rupee, which has been devalued by as much as 25 percent, an economist said.

Economist Raul V. Fabella issued this warning during the ''Competitive Currency Forum'' organized by the Philippine Exporters Confederation (PhilExport) on Friday as exporters tackled what they believed as the ''oppressive'' foreign exchange rate policy of the Bangko Sentral ng Pilipinas.

''The foreign exchange has a very important impact on our competitor India in the BPO space,'' Fabella said. India used to be the global hub of BPO firms after it was by the Philippines, which is now the clear leader especially in the voice business.

Fabella pointed out that India's Rupee has devalued by 25 percent from January 2011 level of 44.67 to the current level of 55.62 against the US dollar.

''The trajectory of the Indian rupee has been downwards,'' Fabella said noting the rupee is geared for further weakening.

The Philippine peso, however, has been appreciating and is now hovering at below P42 to the dollar. This situation would make India more competitive than the Philippines, he said.

''Our BPO may not be able to hit the glorious targets and. Coupled with our appreciating peso that may not happen because they will be squeezed considerably,'' he said.

In 2011, the Philippines' IT-BPO industry generated more than $11 billion in revenue and employed almost 640,000 Filipinos.

Under the industry's roadmap, by 2016 the BPO industry t is expected to grow to $25 billion in annual revenue and employ 1.3 million, according to an industry road map.

In addition, Dr. Emma V. Teodoro, trustee of the Information Technology, Products and Services sectors, warned that in six years, the BPO industry will no longer be as attractive if the peso appreciates by three percent more.

BPO contracts are negotiated in US dollar terms and most of the current contracts with their clients were based on the P43-P42 level to the dollar.

The BPO industry is not the only affected export sector. Export leaders found themselves helpless in stopping the continued appreciation of the Philippine peso to its strongest in five years when it hit P41.68 billion the US dollar in the open market last month.

''The problem is bigger than the exports,'' said Sergio R. Ortiz-Luis Jr., president of PhilExport.

In one of the dialogues with top government officials including the panning chief and members of the Monetary Board, the policy making body of the BSP, it was revealed that had it not for the BSP intervention in the foreign exchange market, the peso would have reached P38 to the dollar.

''The BSP has admitted it has been losing money buying and keeping excess dollars entering the country to stem the rapid appreciation of the peso. It the past couple of years alone, it has lost P107 billion,'' Ortiz-Luis said.

Ortiz-Luis suggested for the whole economy to truly benefit from the strong peso, the BSP continue to pay in advance the government's billions of dollars in indebtedness and further relax the limits on the dollar purchases of private banks to ease the piling up of dollar remittances and export proceeds in the open market which is driving the peso even stronger.

The country's exports are expected to grow between 8 to 10 percent in 2012 from last year, but with the peso getting stronger exporters are starting to recalculate their assumptions.


Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Mercy pleas for Indonesia death row inmates as families arrive
    Mercy pleas for Indonesia death row inmates as families arrive

    Families of foreign drug convicts set to be hauled before the firing squad in Indonesia issued desperate mercy pleas on Saturday, as France warned of "diplomatic consequences" if one of its nationals is executed. Consular officials and relatives were arriving at a town near Nusakambangan, the high-security prison island where Indonesian executions are carried out, and where all of the death row convicts are now congregated. The foreigners -- two from Australia, one each from Brazil, France …

  • United States seeks access to Philippine bases as part of Asia pivot
    United States seeks access to Philippine bases as part of Asia pivot

    The United States has asked for access to Philippine military bases in eight locations to rotate troops, aircraft, and ships as Washington shifts its forces to Asia and as China expands its military presence in the South China Sea. U.S. Defense Secretary Ash Carter, in a speech in Arizona, has outlined Washington's next phase in its Asia "pivot", deploying its most sophisticated destroyers, bombers and fighters to the region. The Asia "pivot" has already seen U.S. Marines rotating through the …

  • China's island-building to loom large at SE Asia summit
    China's island-building to loom large at SE Asia summit

    China's creation of new island footholds in contested seas will hover over a Southeast Asian summit that has become an annual test of the region's nerve in standing up to its massive neighbour. The South China Sea hot potato drops this year into Malaysia's lap as the rotating chair of the 10 member Association of Southeast Asian Nations (ASEAN) and host of Monday's meeting. ASEAN states Vietnam, the Philippines, Malaysia and Brunei claim parts of the strategic South China Sea, but Beijing …

  • Philippines, China trade accusations over sea threats

    MANILA, Philippines (AP) — The Philippines accused China of aggressive maneuvers against its reconnaissance plane and fishermen in disputed seas where Beijing has stepped up construction of artificial islands, but China reiterated its claim on the strategic waterways. …

  • Indonesia orders execution of Mary Jane, 9 others
    Indonesia orders execution of Mary Jane, 9 others

    Indonesia has ordered preparations for the execution of 10 drug convicts, including Filipina Mary Jane Veloso, as the Philippine government filed yesterday a second appeal for judicial review of the case to save the maid from death by firing squad. The Attorney General’s Office (AGO) of Indonesia released an official letter dated April 23, instructing prosecutors to prepare for the execution of 10 convicts, the Jakarta Post reported yesterday. The execution would be conducted after the …

  • Noy to visit Canada, Japan
    Noy to visit Canada, Japan

    President Aquino will embark on a state visit to Canada in May and Japan in June to meet with his counterparts and promote Philippine interests. Deputy presidential spokesperson Abigail Valte said Aquino accepted the invitation from Canadian Governor General David Johnston to make a state visit to Canada from May 7 to 9. Tied to this trip is the President’s one-day working visit to the United States to meet with potential investors and with the local Filipino community in Chicago, Valte …

  • Business groups back K to 12 program
    Business groups back K to 12 program

    The government’s K to 12 program adding two more years to basic education received support from various business groups yesterday. However, they urged relevant government agencies to deal with issues regarding the implementation of Republic Act 10533, the Enhanced Basic Education Act or K-12 Law. In a statement, business groups led by the Philippine Business for Education (PBEd) said RA 10533 is a milestone piece of legislation that intends to bring the Philippines up to par with the rest of …

  • Happiest nations: Phl ranks 90th
    Happiest nations: Phl ranks 90th

    Switzerland is the happiest country in the world, while the Philippines placed 90th, according to a global ranking of happiness unveiled in New York on Thursday. Switzerland was followed closely by Iceland, Denmark, Norway and Canada. The 2015 World Happiness Report is the third annual report seeking to quantify happiness as a means of influencing government policy. The United Nations published the first study in 2012. …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options