The information technology-business process management (IT-BPM) industry is projected to exceed the baseline targets for both job creation and revenue in 2024, but acknowledges challenges in meeting the aggressive target under its roadmap.
Still, the Philippine IT-BPM sector expects to grow by 7 percent from 2023 levels and double than that of the global industry.
This, however, is slower than 10-percent compounded annual growth rate (CAGR) projected in its roadmap until 2028. The roadmap was released in 2022.
“I don’t consider this to be a setback. It is a reminder of how far we have come, but also how much more we can achieve. At our present trajectory we will achieve our baseline target by 2028,” said Jack Madrid, president and chief executive officer of the IT and Business Process Association of the Philippines (IBPAP), in his report at the 16th International IT-BPM Summit in Paranaque City yesterday.
“We will continue to aim to achieve our most aggressive targets. We have four more years. These numbers were established more than two years ago. But as we continue to push forward, we must acknowledge that the environment has changed,” Madrid added.
In his report, Madrid said the industry will achieve revenues of $38 billion and a workforce headcount of 1.82 million in 2024.
The industry will add 120,000 new jobs this year.
“These figures surpass the roadmap baseline targets but fall short of the sector’s most ambitious goals,” said Madrid.
Last year, revenues amounted to $35.5 billion. About 130,000 were added to the workforce, ending 2023 with 1.7 million headcount.
Madrid said there are new headwinds that require new interventions.
Foremost, he said, is the talent and skills gap which was identified by 21 percent of its members in a survey as the topmost concern.
“The talent gap is indeed a critical threat to our industry,” Madrid said.
He noted the growing demand for more advanced digital skills, such as data analytics programming, machine learning, an equally important in soft skill, such as critical thinking and problem solving, and even domain specific skills like in health care and banking.
“(Demand is) outpacing the current capabilities of our present workforce,” Madrid said.
Another challenge, he said, is the intensifying competition posed by countries such as South Africa, Colombia, Egypt, and Poland which are rapidly advancing their IT-BPM industries.
“(This is) putting pressure on the Philippines to innovate and maximize its strengths in language proficiency, cultural adaptability, and technical expertise to maintain its competitive edge,” Madrid said,
He said operating costs in the Philippines are higher than in some of the other IT-BPM destinations and the recent tax reforms added to that burden.
An ongoing concern is ease of doing business.
Madrid said the inconsistent implementation of policies and coordination among government agencies have begun to diminish the country’s attractiveness as an IT-BPM destination. “This has resulted in growing frustration among investors, underscoring the need for government action to address these issues,” he said.
Madrid urged the industry to strengthen its cybersecurity frameworks to safeguard sensitive data and protect its reputation to ensure client trust is maintained.
Madrid also highlighted the significant role emerging technologies such as Al are playing in driving the sector’s growth. According to the survey, many companies have started implementing Al solutions in areas such as customer service, data processing, and quality assurance. These innovations are already delivering notable gains in productivity, efficiency, and service quality.
However, Madrid acknowledged that barriers to full Al integration remain, including high implementation costs and a lack of skilled talent. He emphasized the need for the industry to equip its workforce with the necessary skills to fully capitalize on Al’s potential and sustain future growth.
In his concluding remarks, Madrid called on stakeholders from the government, industry, and academe to collaborate in addressing these challenges.
He expressed confidence in the sector’s ability to continue innovating and adapting to new opportunities.
Based on the IBPAP’s roadmap. the industry is targeting a CAGR of 10.4 percent in the next six years, with annual revenues seen reaching $59 billion by 2028.
This is nearly double the industry’s $29.49 billion annual revenue in 2021, a 10.6 percent growth from the previous year.
The roadmap also aims to create an additional 1.1 million jobs in six years, 54 percent of which will be in the countryside.
IBPAP said this would bring the sector’s total headcount to 2.5 million by 2028.
