The peso’s rise is hitting call centers in the Philippines, handicapping the global leader in the lucrative business as it combats a challenge from top rival India, industry officials said Wednesday.

Forty percent of the members of the Business Processing Association of the Philippines had cancelled expansion plans and an equal number reported losing business to other destinations, the industry group said.

Nearly half disclosed in a group survey that they were having trouble meeting revenue targets because of the strong peso, it said in a statement.

The association said the local currency had become uncompetitive compared to the rupee in India, the Philippines’ main rival for outsourced business services.

“The combination of an appreciating peso and a depreciating Indian rupee has provided India with a meaningful cost advantage,” the statement said.

The Philippine peso has strengthened by about seven percent from about 43.90 to the US dollar on January 2 to about 41.05 at the close of last week.

Industry President Benedict Hernandez said Philippines-based call centers must be able to operate “within acceptable market prices”, but added: “That’s becoming increasingly difficult as the peso continues to appreciate.”

The Philippines overtook India as the world leader in call centers in revenue terms in 2009 and in manpower terms in 2010, according to industry figures.

Manila is also making strides in other outsourced businesses like medical and legal transcription, accounting, software writing and animation.

Earlier this year the association had forecast that call center revenues would rise to $8.4 billion this year with 493,000 people employed.