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Weak peso good for IT-BPM industry

CCAP assessment

Published

By Bernie Cahiles-Magkilat

 

The weak peso is working in favor of the IT-BPM industry as it improves profitability, narrows the competition gap with closest competitor India, according to the Contact Center Association of the Philippines (CCAP).

“Because we are an export industry, a weaker forex is generally good for us,” said CCAP Chairman Benedict Hernandez during its quarterly briefing.

Based on the IT-BPM Roadmap 2022, the industry is projecting total revenue to grow $38.9 billion by 2022 of which the contact center sector or the voice sector is expected to grow 8.2 percent to contribute $20.4 billion of total revenues.

“So far, it has been positive for us,” he said.

Hernandez, however, said that the industry has always been espousing for a stable foreign exchange rate to provide more predictability as against frequent fluctuations in the forex.

The peso has recently depreciated to R50.13 against the US dollar from R44 last year.  The depreciated peso will provide the industry a bit of cost advantage versus India, which Rupee has depreciated to 65-68 against the US dollar.

Jojo Uligan, CCAP President, also noted that while a weaker peso could add to their profitability, the additional peso yield from it will not necessarily go to the profit margin.

CCAP, which is servicing the voice sector although some companies are already providing end-to-end solutions, still accounts for two-thirds in terms of total industry employment and revenue generation.

In 2016, the contact sector employs 751,000 but is expected to grow its manpower to  1.2 million by 2022. Its revenue contribution is also expected to hit $20.4 billion in 2022 from $15 billion in 2016.

To sustain this growth, the group has been exerting efforts to diversify its markets. At present, the US accounts for 70 percent of total and the rest from Australia-New Zealand, Asia and Europe.

“The Asia Pacific region is growing significantly driven by Australia and New Zealand even as we found opportunities in Japan, Indonesia, and Thailand,” Hernandez said.

Despite a possible decline in the US share, Hernandez said it will still remain the biggest outsourcing and offshoring market global with 4 million contact jobs in the US market as of today.

The total global outsourcing and offshoring potential has been estimated at $1 trillion but only $150 billion have been tapped as of last year.

Another evolution of this industry is the impact of technology on jobs development.

Hernandez explained that technology is not going to displace jobs but rather it is playing a big factor in jobs development.

At present, 50 percent of jobs in the industry are considered simple tasks and the rest are moderate to complex. But the simple tasks are expected to be eliminated going down to 25 percent while the bulk of jobs are moderate and complex.

This does not mean, however, that the simple jobs will be eliminated. Technology will make it easier enabling agents to perform more complex tasks.

“This is what we call transforming the job, not eliminating the job. We will continue to train our people so they can concentrate on more value-added tasks,” he added.

Thus, the industry is also investing heavily in technology and training of people to ensure they can catch up the new technology.

According to Uligan a significant portion of its capital expenditure each year is spent for technology and training of people.

CCAP Director Tonichi Achurra-Parekh said they have continues training so people can just breeze into moderate to complex tasks.

To demonstrate its inclusiveness, CCAP has presented two employees with disabilities. There have been more women also employed in the industry, which does not discriminate in terms of gender, age and profession as long as they can perform. The industry is also present in 26 cities in the provinces providing 300,000 high value jobs.

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