News : Philippine Terrorism Spooks Investors in Vital Outsourcing Sector
Manila, Philippines, Oct 2, 2017 -- The business process outsourcing (BPO) industry in the Philippines -- a foreign exchange earner that includes call centers -- is facing a threat: investor confidence diminished by terrorism.
According to the latest official figures for approved foreign investments in information and communications (where BPO-related investments are recorded), there was a 34% year-on-year drop in the second quarter -- the fourth consecutive quarter of decline.
Philippine troops were mobilized in late May at the onset of the siege of Marawi in the southern Philippines by extremists linked to Islamic State.
....NOTE - content continues below this message
SPONSOR MESSAGE: INVITATION!
We invite you and your colleagues to take a couple of days out of your busy schedule to join us and the elite in the industry to listen to the NEXT GENERATION Contact Center & Customer Engagement Best Practices.
Rey Untal, president of the Information Technology and Business Process Association of the Philippines, said "security concerns" have spooked investors. "I will not minimize those concerns," he told reporters. "They are contributing to the headwinds that we are experiencing."
The BPO industry has become a pillar of the Philippine economy in the past decade, contributing significantly to its upturn. Foreign companies have benefited from a low-cost workforce with good English-language proficiency, tax breaks, and a relatively stable political and security environment. Last year, the Philippines accounted for 12.6% of the global outsourcing market, generating $23 billion in revenues and employing 1.3 million people. The sector's significance means that a slowdown could easily shave 0.2-0.3 percentage points from gross domestic product next year, Credit Suisse said on Sept. 15.
The setback to the BPO sector has been evident in office rentals. In Metropolitan Manila, where most BPO companies are located, the sector accounted for just 41% of new office leases from January to August compared to 65% last year, according to Leechiu Property Consultants. Megaworld, a unit of Alliance Global Group, and the country's largest BPO office provider, confirmed a decline in demand but did not provide figures.
Investors have been unnerved by developments in Mindanao, and some BPOs opted not to expand in 2017. "That's primarily because many of their clients perceived the country risk profile of the Philippines [to be] climbing," said Chief Executive David Leechiu.
Foreign investments in Philippine BPO sector have been in negative territory for four consecutive quarters. The initial dip came after President Rodrigo Duterte showed hostility toward the U.S., which accounts for around 70% of the Philippine BPO industry's turnover. Donald Trump's victory in the U.S. presidential election in November with his protectionist rhetoric led to a further downturn, and the terrorism crisis in the southern Philippines dented the country's image of stability.
Posted by Veronica Silva Cusi, news correspondent
Today's Tip of the Day - Increase Spending Where It's Visible
More Editorial From Information Technology and Business Process Association of the Philippines
About Information Technology and Business Process Association of the Philippines:
BPAP is the umbrella association for the IT-BPO and GIC (Global In-House Center) industry in the Philippines. BPAP serves as the one-stop information and advocacy gateway for the industry.
Published: Wednesday, October 4, 2017
Genesys® powers 25 billion of the world’s best customer experiences each year. Our success comes from connecting employee and customer conversations on any channel, every day. Over 10,000 companies in...
|Al Futtaim |
Al-Futtaim Established in the 1930s as a trading business, Al-Futtaim is one of the most progressive regional business houses headquartered in Dubai, United Arab Emirates. Al-Futtaim operates th...
|Intelenet Global Services|
Intelenet Global Services is an Information Technology Enabled Services (ITES) provider delivering contact center and business process outsourcing (BPO) services to global clients. The company provide...
We are an organization providing outsourcing services, management consulting, and technology with approximately 4000 employees; we have offices and operations in El Salvador, Colombia, Guatemala and N...