The weak peso augurs well for the country’s service-oriented IT-business process management (ITBPM) industry with some global companies have already expressed keen interest on expanding in the Philippines as the depreciating local currency helps in making their operations cost competitive.
IT & Business Process Association of the Philippines (IBPAP) President and CEO Jack Madrid said at a virtual press conference for the 14th International Innovation Summit (IIS) cited cost optimization of investors as important consideration in growing their business. IBPAP launched the Roadmap 2023-2028, which aims to generate $59 billion in annual revenues by 2028 at annual growth rate of 10.4 percent. Last year, the domestic industry revenues jumped 10.6 percent to $29.49 billion compared to 2020.
The peso has now depreciated by P7.991 from the P50.999 finish at the last trading day of last year. The Philippine peso closed P58.98 against the greenback on Wednesday, Sept. 28.
“At the base level certainly the depreciation of the peso would appear to be in favor of that cost of optimization for the Philippines relative to other destinations,” said Madrid.
But Madrid also hastened to add that predicting and projecting the volatile foreign exchange rate situation since the recent strength of the US dollar also affects other currencies where many of those currencies are also the currencies of other emerging ITBPM locations.
“So, we have to analyze it in that light,” he said. “At the immediate level, it would appear that this would favor the cost competitiveness of Philippine ITBPM players, but it is not the only factor,” he cautioned.
Although the weak peso will favor the Philippines in the immediate term, Madrid added that the experience of the past two years really highlighted the more critical component of talent, the quality of talent and the employability of talent as an investment consideration.
Already, Madrid said there are more than a handful of investors who have been actively considering the Philippines in the past months. In fact, he said, the IBPAP office has been busy entertaining and responding to investor interests for the whole year.
“This has resulted in our being quite bullish about our near and medium term prospects. So there's absolutely no shortage of interest in providing and offshoring work to the Philippines,” he said.
But, he also said that competition has also gotten fiercer because of pent up demand for offshoring and nearshoring work. While cost is an important factor, Madrid reiterated that talent is another investment criteria for the Philippines.
“Suffice to say that the pent up demand from global companies in the Philippines for their global services, and operations are evidence enough that they are more than capable of investing in the country,” he said.