(Bloomberg) -- A strong US dollar and rising American wages are helping Philippine call centers extend more than two decades of growth, placing the industry on course to become the nation’s top foreign exchange earner by 2026, according to industry executives.

The Philippine peso has weakened nearly 4% this year, and emerged as Asia’s worst performer since the start of the second quarter. That’s burnished the appeal of the Southeast Asian nation as a cost-effective destination for business process outsourcing.

“We are in the export industry and earn foreign exchange. From that point of view, it’s good to have a strong dollar,” Pushkar Misra, a director of the Contact Center Association of the Philippines, said in an interview on Thursday. The dollar is expected to strengthen further until year-end, he said. 

The industry’s growth means it’s about two years away from dislodging remittances from Filipinos overseas as the country’s main source of dollar, according to the association’s President Mickey Ocampo. The call center industry is on track to expand revenues by 9% this year to $32 billion, he said in the same interview. Remittances from overseas Filipinos reached $33.5 billion last year.

Rising wages in the US — the main customer for Philippine outsourcing firms — will sustain demand for the industry, according to Ocampo. That bodes well for the nation that’s targeting to grow its economy by at least 6% this year, as outsourcing accounts for around 8% of economic output.

“As the minimum wage rate gets higher in the US, it becomes more economical to outsource to the Philippines,” said Ocampo, who heads business development at outsourcing company Pilipinas Teleserv Inc. For instance, with a pay of $16 per hour, “you can get a full complement of people managing your services rather than paying for one person with a limited coverage,” he said. 

Call centers have played an increasingly important role in the country’s economy since the 1990s. They employed about 1.5 million in the Philippines last year, and the sector targets to add 1 million jobs by 2028.

Global companies like Accenture Plc and American Express Co. have been lured by cheaper wages, Filipinos’ cultural affinity with the West, and over a 100 million population that’s mostly fluent in English.

“The Philippines is a mature market that has grown in terms of size, complexity, and net additions. The value it can offer is pretty substantial,” said Misra, who heads the Asia Pacific operations for Bangalore-based Hinduja Global Solutions.

Investor interest in the Philippines remains robust, with Japanese companies planning to set up English support services in the Southeast Asian, Ocampo said. Talks are also ongoing with groups from Colombia, he added.

Call centers are, however, contending with the boom in artificial intelligence. While there haven’t been significant job losses, the industry is retraining workers for higher-skilled jobs in areas such as banking, finance, insurance and healthcare, according to both Ocampo and Misra.

Other challenges include rising cybersecurity threats and high power costs as well as talent shortage. The industry group is working with schools to integrate skills needed in the outsourcing industry in their curricula, Ocampo said.

--With assistance from Cliff Venzon.

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