Friday, March 07, 2008 Rise of peso against dollar to hurt outsourcing companies, tourism
A FOREIGN economist fears the continued appreciation of the peso against the dollar may affect the Philippines’ position as one of the leading destinations for business process outsourcing (BPO) companies in the world.
Nicholas Kwan, Standard Chartered Bank (Hong Kong) Ltd. regional head of research in Asia, said that apart from exporters and overseas workers, the strong peso can also hurt the tourism sector and the fast-growing BPO industry in the country.
Kwan said in an economic briefing last week that BPO firms involved in developing software and hardware products are among those that will be “badly hit” this year due to the strengthening of the local currency.
This, he said, is caused by the decline in worldwide demand for electronic products throughout the year.
“You can also expect that when times are tight, those who will survive will have to cut cost,” he said in an interview with reporters.
Kwan believes, though, that the recession in the United States—which has slowed down the growth momentum of the world economy—may be advantageous to the Philippines in attracting other offshore services, particularly small- and medium-size companies.
Kwan said apart from clients in the US and Europe, BPO firms in the Philippines may soon get offshore services from Japanese and Korean companies.
He cited the large pool of skilled Filipino workers, who are proficient in English.
He said the Philippines raked in offshore service generating revenues amounting to $2.1 billion in 2006, after India and China, and slightly ahead of Malaysia.
The country’s BPO industry is expected to earn around $12 billion and employ 900,000 people by the year 2010.
Kwan said what fuels the growth of outsourcing business in the Philippines is not the “low-value-added” call centers but more higher-end outsourcing, such as legal services, web design, medical transcription, software development, animation and shared services.
Although call centers still form the largest part of the sector, he said the country “has started leveraging its creative design talent pool, its large pool of lawyers, and its professionals in accounting and finance.” (MMM)
