Stronger Peso vs. BPO?

Tuesday, October 16, 2012 Unknown 6 Comments

It’s no longer a fight between Philippines and India, they said. It’s become a fight between Philippines and the peso.

But how could this be? How could Philippines’ own currency be the source of threat to one of its main drivers for economic growth? Irony seems to be at work here.

The Philippine BPO industry is the second dollar earning industry of the country, next to the OFW remittances. It is also one of the main propellers of the blossoming Philippine economy.

But the strengthening of peso threatens the Philippine BPO industry most especially that their main sources are from foreign investments.

Meanwhile, in India, their rupee is weakening, giving more strength to the dollar, thus more advantage for their degrading BPO industry. The depreciation of rupees means cheaper services and space rentals, compared to the strengthening peso, which indicates that salary rates and rental fees may rise.

Recruitment and migrations expert Lito Soriano said that the depreciation of India’s rupees is both an advantage and disadvantage to the Indians. Many Indian call centres will be forced to relocate back to India and Indians will have more confidence in competing with skilled manpower abroad since they can now offer cheaper rates.

Back to the peso, it doesn’t only affect the Philippine BPO industry, but also the families of OFWs who largely rely on the remittances from their family member/s abroad. Families will have to lessen their expenditures, and might even have to sacrifice educational plans, since the dollar is now only P41.75, a big leap from P55 last 2004.

The peso’s current status also affected the overseas recruitment, where skilled OFWs demand an increase in salary to offset the loss of value of the dollar.

But the call center industry of the country is still confident that they are competitive enough, even if the peso is threatening to cut their profit margin.

Benedict Hernandez, the president of the Contact Centre Association of Philippines (CCAP), said that they are carefully monitoring the exchange rate, but it is not yet a concern for most of the call centers right now.

A stronger peso usually threatens Philippine companies who export goods and services, but not for the call centre industry of the country. The quality of service that the Filipinos possess will ensure the country’s outsourcing industry to remain on top of the ladder for voice services.

CCAP Exec. Director Jojo Uligan said the recent peso appreciation is not alarming. But if the peso trades below 41 against the dollar, it will be disastrous for call centres. He said it’s okay to charge higher rates to new clients, but it’s difficult with the old and recent clients.

Also, the Bangko Sentral ng Pilipinas (BSP) shrugs off the concerns of how the appreciation of the peso could outweigh the Philippine BPO industry.

According to BSP Deputy Governor Diwa Guinigundo, most BPO firms do not rely on peso-dollar exchange rates to remain competitive. The BPO firms rely on their manpower’s skills, versatility and competitiveness.

The Philippines will remain as the most attractive location for outsourcing because the skills of the Filipinos allow companies to save on training costs.

In conclusion, the government still believes that the BPO industry will remain as one of the main drivers for propelling the economic growth of the country. It’s ironic, but feasible.

About the Author

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Publish on 10/16/2012
Jane is a freelance copywriter, with majority of her work focusing on the outsourcing industry.

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