By Melissa Luz T. Lopez,
THE PHILIPPINES will remain a viable location for the outsourcing industry despite slower growth in revenues expected over the coming years, a global bank said, with its “adaptable” labor force continuing to attract foreign companies.
ING Business Shared Services, the services hub of ING Bank, said the Philippines will likely remain a market of choice among foreign firms for business process outsourcing (BPO), even as revenue growth for the sector cools.
The global bank said that revenue growth from the BPO industry could fall below 10% this year, and will likely “slow further” in the years ahead as investment pledges declined by 22% from the same period in 2016.
ING Bank senior economist Jose Mario I. Cuyegkeng said increased competition from other Asian economies, alongside on-shoring initiatives by US companies, could be affecting BPO investment. Security concerns and uncertainty in terms of fiscal incentives are likewise depressing investor appetites.
Still, the global bank said the Philippines remains an ideal site for “captive offshoring,” where foreign firms set up a subsidiary here and employ Filipinos to provide services.
“The trend for captive shared services centers is to move more knowledge and skill-based operations to countries where labor is not only available, but also adaptable. So the Philippines continues to be a good location for many global companies,” Hans B. Sicat, incoming country manager for ING Bank, was quoted as saying in a statement.
Mr. Sicat assumes the top post next month as incumbent country head Consuelo D. Garcia retires.
BPO receipts totaled $11 billion during the first half, which helped offset the impact of greater capital goods imports and kept the country’s current account at a narrow deficit.
BPO revenue and remittances from overseas Filipino workers are considered structural inflows and help support domestic consumption — a key growth driver for the Philippine economy.