Surge in Philippines Peso May Negatively Affect Its Outsourcing Business
January 24, 2013
When it comes to call center outsourcing, there are many nations around the world who boast some type of program to encourage foreign business into their call center business. In the last decade, however, it has been India and the Philippines that have taken the lion’s share of business from North American call centers.
Both locations have their selling points: India has a deep vein of technical talent suitable for help desks and tech support, and the Philippines offers agents who speak American English as well as Spanish. This leaves companies weighing all the pros and cons before they choose a destination for a call center or help desk business.
As of late, however, another major factor has raised its head: currency exchange. Recent months have seen a spike in value of the Philippines peso and a drop in India’s rupee.
The peso’s 6.5 percent gain to 40.622 per dollar in 12 months makes it Asia’s best performer, according to data compiled by Bloomberg, while the rupee’s seven percent slump to 53.83 is the region’s second-worst decline. Both currencies traded around 44 to 45 versus the dollar just two years ago.
What this means for U.S. companies is that it has become costlier to do business in the Philippines and less expensive to do business in India.
“The peso appreciation has become a significant cause for concern,” Benedict Hernandez, president of the Business Processing Association of the Philippines, or BPAP, told Bloomberg (News - Alert). “While our costs have always been higher than India, the disparity has widened simply because of the currency.”
The BPAP has noted that the peso’s gains represent a bigger business risk to the outsourcing industry other than factors including corruption, natural calamities and poor infrastructure. There is quite a bit at risk: the Philippines business process outsourcing industry employs 772,000 people and made up nearly six percent of gross domestic product last year.
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Edited by Brooke Neuman
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