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Philippine BPO Sector Still an Economic Constant

Concerns about the Philippines’ business process outsourcing (BPO) industry slowing down under the governance of political outsiders—the Philippines’ President Rodrigo Duterte and the US’ President-Elect Donald Trump—have been shrugged off by economic experts. During a macroeconomic briefing by First Metro Investment Corp. on January 5, 2017, Bernardo Villegas from the University of Asia and the Pacific said that Philippine BPO industry is still an “area of certainty” despite strained US-Philippine relations in late 2016, and recent pronouncements of President-Elect Trump on bringing jobs back to the United States.

Villegas said that while Trump may be able to push investors to return manufacturing to the US, bringing back BPO services in America may be difficult as the differences in wages in services are much higher than wages in manufacturing. “If you take a look at some wages that people in New York have to pay for BPO services, it’s anywhere from eight to ten times what they pay in Manila or Iloilo or Dumaguete. There’s no way Trump can force American companies to relocate their service-oriented companies back to the US,” Villegas remarked. He added that outgoing president Barack Obama initially talked about bringing back jobs to America but nothing happened as these decisions are made by business leaders. Having BPO hubs in cities outside of Manila would also bolster the industry as cost propositions may be more attractive for international companies.

Similarly, Asian Development Bank (ADB) President Takehiko Nakao, said that the Philippines is expected to grow at a more solid rate in 2017, with BPO services as the main driver. He claimed that investors are paying attention to the Philippines again over concerns about rising wages in China and Japanese companies looking to the Philippines again as an alternative location for their factories and services. “If President Duterte can give confidence to foreign investors as well as domestic investors—that they can deliver investments in infrastructure like road and logistics, and they can promote the idea of leveling up of education for ordinary people, and if governance like corruption and control of drugs go well—I think confidence of investors will pick up and the Philippines can use its natural strength in human and natural resources for sustained growth.”

Mr. Nakao added that there should be no worry about the Philippine economy in terms of Trump's America-first policy as he is more focused on industries lost to Mexico under the North American Free Trade Agreement. One of the central lessons the US learned from the global financial crisis is that they had to “depend more on workers from abroad and BPOs to make industries more competitive.”

Flat Planet mirrors this optimism as the Philippines’ best asset is its growing English-speaking population and vast pool of experienced, high-value talent. Regardless of any government mandates, business leaders are inclined to pursue everything that will give their companies a global advantage in their own industries. As the Philippines is an excellent location to extend their businesses, the BPO industry has nothing to fear, and it can look forward to an immediate future marked by unwavering progress and prosperity.

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