Industry group says IT-BPM sector to benefit from weak peso

MANILA, Philippines — A depreciating peso offers more bang for the buck for Information Technology and Business Process Management (IT-BPM) companies in the Philippines, an industry group said. 

In a virtual news briefing on Wednesday, the Information Technology and Business Process Association of the Philippines (IBPAP), the umbrella organization of IT-BPM firms in the country, said a weak peso would allow these companies to reduce the amount of dollars they send to their local offices to fund operations, resulting in “cost optimization” for their businesses here.

“At immediate level, it would favor cost competitiveness of the Philippines IT-BPM players,” said Jack Madrid, president and chief executive officer of IBPAP. 

IBPAP reckoned 70% of their members are headquartered in North America.

This month, the peso has sunk to record-lows as the US dollar continues its rampage across currency markets in the region. That strength of the greenback mostly comes from the US Federal Reserve’s aggressive rate hikes that are meant to cool down red-hot inflation in the world’s largest economy.

For this year, the Bangko Sentral ng Pilipinas forecasts BPO earnings to grow 9% year-on-year, slightly lower compared to the 9.4% annual uptick recorded in 2021. In 2023, annual growth of BPO earnings is projected to slow to 5%.

As it is, IBPAP is projecting significant growth for the industry in the coming years, especially having projected annual revenues to hit $59 billion by 2028. 

President Ferdinand “Bongbong” Marcos Jr. has been vocal in attracting investments to this industry, wooing American investors in his recent visit to New York City. For the entire 6-year term of the nascent administration, IBPAP is targeting to create 1.1 million jobs, 54% of which will come from IT-BPM businesses propped up in the countryside. IBPAP reckoned that this will push employment within the industry to 2.5 million by end of Marcos Jr.’s term. 

The industry recently scored a huge policy victory as the national government granted their call to allow flexible work schemes for their workforce, one which Madrid called a “breakthrough”. Earlier this year, the Duterte administration sought to end work-from-home arrangements for the industry, in line with their calls to reopen the economy to 2019 levels.

READ: IBPAP welcomes transfer of IT firms registration to BOI

“This is a breakthrough, we’re living in a new era of work. This is critical development,” Madrid said.