Growth in Philippines outsourcing finally overtakes expat overseas remittances

Booming BPO sector offsets declining remittances

Evidence from the Philippines suggests that remittances from overseas workers in continuing to decline and the the economy will become increasingly reliant on plugging the gap through the growing outsourcing business.

A business process outsourcing office in Cainta, Rizal, Philippines

The Philippines is second only to China with remittances sent home by overseas workers at $28B in 2014 but with economies in the West and Russia still experiencing slow growth the percentage of GDP from remittances continues to be in decline as a proportion of the Philippine GDP.  Last years growth in remittances of 5.9% was the lowest in 5 years.

While the US demand for overseas workers seems to be on the decline, the Far East and Asia is seeing a significant growth (up 5% in the past 3 years) which is partly offsetting the loss from western economies.  The long term outlook would be worrying were it not for the booming BPO outsourcing business.  For the first time 2015 is expected to see BPO revenues exceeded that of remittances from Filipino overseas workers.

BPO revenues are expected to top $25B within 2 years, and this could be the driver for a growing stay at home working population and an emerging middle class with spending power.  After all who would want to leave the paradise islands unless forced to!

Can there be a better time to invest in the Philippines?  I think not!