By MAX ESTAYO

Nomura Securities Co. Ltd. estimates that the business process outsourcing industry may pump in up to $9.72 billion into the economy in three years if sales grow as projected.

The economic effect would be 8.3 percent of gross domestic product, Japan’s leading securities and investment bank said in a recent report on the Philippines.

"We estimate the economic impact in the event the BPO industry’s sales increase to $12.2 billion, per the government’s projections," Yuichi Izumi, Nomura analyst said.

"According to our calculations, the economic effect of the industry through 2010 is $9.72 billion in total or 8.3 percent of 2006 nominal GDP," the analyst said.

Of the 8.3 percent, 4.8 percentage points will be the direct impact of the industry’s sales growth, and 2.1 percentage points from the inducement of production in other industries, Nomura said.

The remaining 1.4 percentage points will come from induced private consumption through increased employee compensation.

Nomura said the industries likely to benefit from the "knock-on" effect include financials, utilities, other business services, communications and real estate.

"If the BPO expands in line with the government’s forecast, we think the possibility of upside for economic growth in the Philippines will increase," Izumi said.

Nomura sees sustained growth in the five-percent range for the Philippines in the next two years, 5.7 percent in 2008 and 5.8 percent in 2009, supported by private and public spending.

It expects growth to come in at 5.6 percent this year, also on robust domestic demand.

However, Nomura said the industry is faced with the challenge of "retaining human resources amidst rapid development."

The government’s sales projection of $12.2 billion, which is nearly four times the $3.5 billion in 2006, is based on the number of BPO employees rising to 921,000 in 2010 from 237,000 last years.

"As the BPO industry takes off, we think it will become more steadily difficult to secure skilled labor. If the supply of labor does not meet growth in demand, the economic impact of the industry’s expansion might be curtailed," Izumi said.

A recent central bank study estimated the industry’s revenues at $2 billion in 2005, 50 percent more than the previous year. At P100 billion, the industry had a value added of 63 per centavo or P63 billion, approximating the estimate at the national income accounts.