REVENUES from the business process outsourcing (BPO) sector are likely to outpace remittances from overseas Filipino workers (OFW) even amid the threat posed by US President Donald Trump’s protectionist stance, which could slow American BPO investments in the Philippines, ING Bank Manila said.
“We think both OFW remittances and the outsourcing sector will continue grow. But by 2018, revenues from the outsourcing sector will outstrip revenues from OFW remittances,” Joey Cuyegkeng, ING Bank Manila senior economist, said during a press conference on Wednesday on the bank’s global economic outlook.
Cuyegkeng said this was possible because BPO revenues are seen to grow at an average of 9 percent yearly toward 2022.
According to the 2022 Roadmap of the IT-Business Processing Association of the Philippines (iBPAP), the BPO sector is expected to generate $40 billion in revenues, 7.6 million direct and indirect jobs, 500,000 jobs outside of the National Capital Region, and cover 15 percent of the total global outsourcing market by the end of 2022.
OFW remittances may generate the projected $66.7 billion by 2022, but Cuyegkeng said the 9 percent growth of the BPO sector is double the pace of the projected 4 percent yearly growth in OFW remittances from 2017 to 2022.
“Revenues from the outsourcing industry will continue to grow. But it’s still wait and see on how the Trump administration will tackle this area…I think expansion programs will still be there, despite some saying they are cautious,” he said.
“We should expect a slowdown from double-digit growth in the past years. The [9 percent] growth will come from the expansion plans [of BPO firms]approved previously. Beyond that, I think they’ll reassess once the US administration comes up with their programs that can affect the sector,” Cuyegkeng said.
Cuyegkeng and ING Bank Asia Chief Economist Tim Condon said ING forecasts gross domestic product (GDP) growth of 6.6 percent for the Philippines for 2017, with first quarter growth at 6.2 percent and second quarter growth at 6.1 percent.
ING Bank expects the Philippines to maintain above 6 percent GDP growth driven by domestic consumption, contributions from OFW remittances and the BPO sector, and the accelerated infrastructure projects of the Duterte administration.
The Philippine Statistics Authority (PSA) said on Thursday that the Philippine economy grew by 6.8 percent in 2016, the fastest since 2013, with manufacturing, trade, and real estate activities as the main drivers of growth in the fourth quarter.