The Philippines’ BBB+ Grade and What It Means for BPOs
Recently, S&P has increased the Philippines’ investment grade to BBB+, two notches above the minimum rating.
This is the highest score the country has received since 2013. Local economic managers attributed the upgrade to policy priorities as well as key economic growth drivers such as the Business Process Outsourcing (BPO) sector.
The upgrade is expected to stimulate investment and generate new jobs across crucial growth sectors such as the services industry.
How will this impact the BPO sector which is expected (along with other factors) to transform the country into a trillion-dollar economy by 2032?
With sustained growth efforts and lower borrowing costs, the country will be able to fund more infrastructure as well as upgrade existing facilities. Along with the government’s current tax reform program and its ambitious infrastructure development initiatives, the country is poised to introduce more opportunities for domestic industries to thrive. Local BPOs, which accounted for at least $10.4 billion in foreign receipts, are expected to feel the impact of strong investment fundamentals. The S&P upgrade will no doubt encourage expansion and reinforce local outsourcing companies to innovate the products and services they are selling.
The resulting spike in investments will bolster job growth and supply the current business environment with quality talents. As spending for schools continues to pick up in light of the country’s transition to a K-12 system, such factors will support the country’s recent implementation of the Free College Education Law which is said to benefit 800,000 students enrolling in state universities and colleges this year. The rating upgrade can help in expanding the benefits of the law and capacitating a large labor force that’s capable of meeting global outsourcing standards.
The demand for office space remains robust, especially in the BPO sector where there is a dearth in local commercial real estate inventories. The government has already drafted plans for designated economic zones in strategic areas outside of Metro Manila. Iloilo City, for instance, has been earmarked for public projects to improve the area’s business attractiveness, with homegrown companies such as OneVirtual Solutions already feeling the effects of positive economic growth at the local level.
As the current business landscape continues to improve, BPO companies will become better equipped in delivering quality services to clients and maintaining the country’s current position as a sought-after market for outsourced services.
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