Optimism fueled by countryside expansion, AI adoption
The Philippine Information Technology and Business Process Management (IT-BPM) sector is projected to outpace global industry growth in 2025, driven by the rise of Global Capability Centers (GCCs) and expanding operations in the countryside.
Rising demand for digital customer experience and wider adoption of artificial intelligence (AI) will primarily push this expansion, Jack Madrid, president of the IT and Business Process Association of the Philippines (IBPAP), said in a statement on Tuesday.
Earlier, in a press conference on Monday night, Madrid said the IT-BPM industry will grow 5 percent in terms of export revenues and 4 percent in workforce next year.
These projected growth rates surpass estimates of a 3 percent global increase in both revenue and employment.
By the end of 2025, the sector is forecast to reach $40 billion in export revenues and employ 1.9 million workers, up from $38 billion and 1.82 million employees in 2024, respectively.
“This stronger performance is driven by rising demand for digital customer experience, greater adoption of AI and analytics, the Philippines’ advantage amid client diversification away from India, and robust growth in the GCC market through both new investments and expansions,” Madrid said.
High-value GCCs
Madrid emphasized the strategic importance of expanding Global Capability Centers (GCCs), or company-owned in-house hubs that provide services such as HR, payroll and healthcare management.
“GCCs generate significantly higher revenue per employee and provide high-value, complex roles,” he said, noting that the Philippines currently hosts 150 GCCs employing around 250,000 professionals, particularly in banking, financial services, insurance and healthcare.
Major investors in GCCs include JP Morgan Chase, which alone employs 21,000 in the country, and HSBC.
In 2024, GCC revenues grew by 6 percent to reach $8 billion, from $7.55 billion in 2023.
India adds about 100 GCCs annually, which is why IBPAP is urging the Philippines to scale up its capabilities to tap into this high-growth opportunity.
Next growth frontier
IBPAP is also encouraging IT-BPM companies to expand beyond Metro Manila. The share of companies operating outside the capital increased from 25 percent pre-pandemic to 32 percent post-pandemic, with a target of 40 percent by 2028.
“Expanding to the countryside not only decentralizes growth but also helps decongest Metro Manila,” Madrid said.
Multinational interest
Madrid confirmed that IBPAP is receiving “numerous serious inquiries” from both existing and potential multinational companies looking to establish operations in the Philippines.
North America continues to be the primary market, accounting for 70 percent of the industry’s business. Madrid downplayed concerns about potential reshoring of US IT-BPM jobs, noting the complexity and specialization of work performed by Filipino talent.
“It’s difficult to relocate these jobs back to the US given their complexity and the talent gap. Demand continues to exceed supply,” he said.
Madrid pointed to opportunities to grow the Philippine presence in Australia and other English-speaking markets, capitalizing on the country’s strong language proficiency and domain expertise in financial services, healthcare, and banking.
Regulatory hurdles
Despite the positive outlook, the industry continues to face regulatory challenges. IBPAP COO Celeste Ilagan cited inconsistent local government unit (LGU) regulations, such as overlapping fees and unclear incentive guidelines, which conflict with the CREATE (Corporate Recovery and Tax Incentives for Enterprises) Act.
To address future workforce demands, IBPAP secured P740 million in funding for upskilling initiatives under the Enterprise-Based Education and Training (EBET) Framework, backed by the Technical Education and Skills Development Authority (TESDA) and the Department of Information and Communications Technology (DICT).
Training will commence in H2 2025, equipping thousands of Filipinos for high-value IT-BPM roles.
