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.

  • Phl, Japan sign P9.6-B ODA projects
    Phl, Japan sign P9.6-B ODA projects

    The Philippines and Japan have signed agreements for six official development assistance (ODA) projects amounting to 22.289 billion yen or around P9.6 billion. …

  • Commission to launch glossary of Pinoy meteorological terms
    Commission to launch glossary of Pinoy meteorological terms

    The Komisyon sa Wikang Filipino (KWF) will release a glossary of meteorological terms in Filipino to help the Filipino people better understand weather forecasts and instill disaster awareness among them. National Artist for Literature and KWF president Virgilio Almario said yesterday the KWF produced the glossary titled Patnubay sa Weder Forkast to simplify scientific terms used in the weather bulletins of the Philippine Atmospheric Geophysical and Astronomical Services Administration …

  • Divorce bill good scapegoat for couples – CBCP
    Divorce bill good scapegoat for couples – CBCP

    Contrary to what romance novel writers would want their readers to believe, there are no perfect marriages in the real world. This was according to Catholic Bishops’ Conference of the Philippines (CBCP) president Lingayen-Dagupan Archbishop Socrates Villegas. In a statement titled “CBCP Position Against the Divorce Bill and Against the Decriminalization of Adultery and Concubinage,” Villegas said that while it is not easy to make relationships last, learning how to work out differences – and …

  • DND holds off infra dev’t in Pag-Asa
    DND holds off infra dev’t in Pag-Asa

    The defense department is holding off repairs and other planned infrastructure projects on Pag-Asa Island, one of seven islets and two reefs occupied by Filipino troops in the disputed Spratly Islands. Earlier, Foreign Affairs Secretary Albert del Rosario pointed out that the maintenance and repair of facilities in Pag-Asa Island are not covered by the Declaration of Conduct (DOC) of parties involved in the West Philippine Sea territorial disputes. “Repair and maintenance is okay but before …

  • Blackout to hit 5 Aurora towns
    Blackout to hit 5 Aurora towns

    An 11-hour power outage will hit five towns in Aurora on Tuesday, the National Grid Corp. of the Philippines (NGCP) announced yesterday. The NGCP said Baler, Dingalan, San Luis, Ma. Aurora and Dipaculao would be affected by the blackout. The NGCP said parts of Nueva Ecija and Aurora were hit by a power interruption yesterday due to the tripping of the Cabanatuan-Baler 69kV line. …

  • Rules set for climate change programs
    Rules set for climate change programs

    The Department of Budget and Management (DBM) and the Climate Change Commission (CCC) have released the revised guidelines to track and monitor climate change adaptation programs of the government. “The government of the Philippines has demonstrated leadership and strong commitment in implementing a comprehensive reform agenda to respond to climate change,” read the joint memorandum circular published in The STAR yesterday. “With the goal of using the budget process to plan, prioritize and …

  • It’s time to move on– Speaker
    It’s time to move on– Speaker

    The nation can now move on as President Aquino has satisfactorily explained his side on the Mamasapano incident for which he even begged for understanding, lawmakers led by Speaker Feliciano Belmonte Jr. said yesterday. “It’s time to move on,” Belmonte said in reaction to Aquino’s pronouncements made before new police graduates at the Philippine National Police Academy (PNPA) last Thursday. The President has spoken far too much about what he knows and about his limited involvement in the …

  • ToyotaPH continues it’s strong sales in February
    ToyotaPH continues it’s strong sales in February

    Toyota Motor Philippines (TMP) sustains its strong sales in its February performance. Toyota’s strong performance last month was due to the  high demand of the Vios, with sales of 2,012 units and of course the rest of Toyota’s line up such as the Fortuner, Innova, Wigo, Hilux, Avanza and Corolla Altis. Toyota’s luxury brand, Lexus, recorded 60 units last month. …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options