Philippines BPO Activity Sees Major Drop-off in 2017: Roundup

Among other roadblocks, investment pledges in the country’s BPO sector has been experiencing a 22% annual drop, according to Dutch financial services firm ING Bank.

Philippines bpo

BPO activity in the Philippines saw a notable decline in 2017, with a number of factors and events contributing to the downturn of this 23 billion-dollar industry.

The initial dip came after President Rodrigo Duterte showed hostility towards the US, which brings in around 70% of the industry’s turnover. Donald Trump’s victory and his protectionist rhetoric led to a further drop-off.

Investment pledges in the sector experienced a 22% annual drop, according to Dutch financial services firm ING Bank. Industry officials also concede that investment fell 31.3% year-on-year in the three months leading up to June.

Furthermore, the terrorism crisis in southern Philippines seems to be denting the country’s image of stability.

Despite the looming challenges, the country’s industry lobby group, Contact Center Association of the Philippines (CCAP), is still upbeat, with its analysts projecting the industry to reach US$40 billion by 2022.

There are reports that the call center industry added a total of 1.2 million square meters of office space last year, with analysts at Jones Lang LaSalle, an American professional services and investment management firm, claiming to have seen a sharp rise in property development for BPO operators.

For an industry with 1.15 million employees, BPO firms are expected to occupy 485,000 square meters of office space this year.

But the increasing trend of automating customer care services is posing a new threat to the industry. Artificial intelligence (AI) may “replace 40,000 to 50,000 “low-skilled” or process-driven BPO jobs in the next five years,” reported Reuters citing Rey Untal, President and Chief Executive Officer of the IT & Business Process Association of the Philippines (IBPAP).

Sign up for our Nearshore Americas newsletter: