IT-BPO industry eyes new markets in Asia, Europe; sees slower growth in next 6 years

By: Jun Ebias, InterAksyon.com, October 27, 2016

MANILA – The country’s booming IT-BPO industry is confident growth would still be at more than 9 percent a year until 2022 despite recent pronouncements from President Rodrigo Duterte that his administration will “separate” from the United States, and forge strong ties with China, Japan, and other countries in Asia.

Reflecting the administration’s initiative, the sector is now doubling efforts to expand its market to include neighboring countries in the region particularly Japan, and Europe, said Danilo Sebastian Reyes, chairman of the IT-Business Process Association of the Philippines.

“We are expanding rather than pivoting towards Asia,” Reyes told reporters during the launching Thursday of the group’s roadmap for the next six years, which coincide with Duterte’s term in office. “In the global economy, Asia is becoming a powerhouse. For us, that’s an opportunity.”

US clients currently account for more than 70 percent of the local IT-BPO’s revenues, but this figure may go down by 2022 as the industry lures more clients from other countries, he said. Reyes didn’t say though by how much it would go down.

“What we would like to do is to increase the pie,” he said.

DICT Secretary Rodolfo Salalima allayed the concerns of the industry, especially after Duterte’s announcement of a new foreign policy pivoting towards China.

“To the BPO industry, the Philippine government envisions a developed nation that will be dubbed as a ‘world class ICT services provider’. Together, we will work on this. The Philippine government through the DICT shall continue what has been started with regard the BPO industry,” he told industry officials gathered at the launch of the sector’s strategy for growth over the next six years.

“Contracts that have been enforced and still existing shall be respected and will continue until their full implementation,” Salalima said.

Under the Roadmap 2022 which will be presented to Duterte in Malacanang, the industry forecasts revenues to nearly double to $38.9 billion in 2022 from an estimated $23 billion this year. It expects employment — with new jobs growing faster in areas outside of the National Capital Region — to reach 1.8 million six years from now, up from 1.3 million at the end of this year.

The group expects the industry’s revenue to rise 9.2 percent from 2016-2022, much slower than the 17 percent recorded in the last six years. Even with the slower growth forecast, the local industry will still rise faster than the global IT-BPO sector, which is expected to expand 6 percent until 2022.

The industry also expects the share of non-voice services to overall revenues to hit 40 percent in 2022 from 34 percent. Among the non-voice segments expected to grow over the next six years are health care, animation, and software.

During Duterte’s state visit to China last week, he announced his plans to separate from the US, and strengthen relations with China. His economic managers quickly explained that this doesn’t mean the country will break its diplomatic ties with Washington, as well as with the West. Rather the government simply wants to expand the country’s foreign alliances to include Japan, South Korea, and the rest of the Asean.

Malacañang has not yet set a definite schedule on when the President could meet with industry leaders.