The Philippine Export Zone Authority is looking at “allyshoring” or “friendshoring” to restore the Philippines as one of the top global outsourcing services destinations.
“We are banking on the improved perception of the Philippines as an investment destination of companies from the Western Hemisphere and attract them to re-engage with the Philippines,” said PEZA director-general Tereso Panga following a report that the Philippines slipped three spots in the recent survey by international management consulting firm Kearney.
Based on Kearney’s 2023 Global Services Location Index, the Philippines dropped three notches to 12th place out of 78 countries in terms of attractiveness as an offshore location of business services from 9th in 2021.
“I believe we still remain as a prime destination for the traditional IT-BPM [information technology-business process management] services where we are ranked in the top 10 among choice destination locations. This is in part due to the high English language proficiency of our workforce as well as the high quality of our IT Engineers,” Panga said.
Panga said the lowering of the Philippines’ GSLI ranking was due to “nearshoring” strategy by some US businesses. PEZA said this is temporary given that there is a renewal and strengthening of ties with the US under the Marcos administration.
He said “allyshoring” works for the Philippines even in manufacturing, especially when it concerns the American export producers which remain the country’s second biggest foreign investors in PEZA, next to Japanese.
This is bolstered by the increasing trade and investments between the two countries. In 2022, total electronics exports amounted to $49.1 billion, with the US being the top destination for Philippine exports.
Panga said most companies that transferred to Mexico and Columbia were basically targeting the Spanish speaking market in the United States, which is not really the Philippines’ core target.
The IT-Business Process Association of the Philippines also targets English-speaking countries like Australia and New Zealand as new markets given the country’s recent accession to the Regional Comprehensive Economic Partnership.
“This will complement our traditional market strengths in the US and EU for services exports,” Panga said.
The IT companies registered with PEZA directly employ around 1 million Filipinos.
PEZA said IT-BPM exports in 2022 reached $32.5 billion, slightly lower than the total OFW remittances last year of $36.1 billion.