HSBC expects both to continue supporting economy
Business process outsourcing (BPO) revenues could soon overtake remittances by overseas Filipinos given strong industry growth, an HSBC economist said on Wednesday.
“In terms of BPO, we think most likely over the next two years … it’s not happening right away,” said Joseph Incalcaterra, Asia economist for HSBC, in a briefing.
“[Outsourcing] … is of the soft investment [kind], that’s why its been so successful and you don’t have to worry about the infrastructure constraints,” he added.
“The beauty in BPO is that you can source it on to [other]places … it actually spurs the developments around that creates clusters. Ultimately, this is what improves the competitive landscape of the Philippines.”
BPO revenues expanded by 18 percent last year to $18.9 billion. Money sent home by overseas Filipino workers, meanwhile, grew by a slower 5.9 percent to $24.3 billion. Both are seen as major drivers of the economy, with the latter particularly spurring consumption.
Incalcaterra also pointed to the Philippines’ English-speaking advantage, noting that the country “looks great in terms of emerging markets’ perspective. Right training is here already.”
“I share the same optimism the government has with BPOs … that [the industry]will continue to drive economy in the next few years,” he added.
Based on the IT-BPO Roadmap, the industry is targeting annual revenue of $25 billion, which would mean 1.3 million direct jobs, by end of next year.
The sector is very much on track with its targets, Information Technology and Business Process Association of the Philippines officials have said, citing growth across segments —contact centers, gaming, software development and health information services.
Remittances, meanwhile, will continue to grow and supprt the economy, Incalcaterra said, adding that the US dollar’s current strength could spur inflows, particularly in the final months of the year ahead of the holidays.
“As long as you’re growing in peso terms, it’s good for consumption, and that’s what matters the most even if you see the official list coming down,” he said.
“Potentially, cash will continue to grow. If we still have a stock of 10 million Filipinos abroad, then the money will continue to come through. So it’s not a concern,” Incalcaterra added.
The central bank has said the BPO revenues could grow by 15 percent this year while OFW remittances could expand by 6 percent.