Economic managers warn against over-reliance on BPO industry

By Melissa Luz T. Lopez, Reporter, Businessworld, July 07, 2016

THE NEW government’s economic managers warned against being too reliant on the business process outsourcing (BPO) industry, as advances in technology could take the place of workers, thereby reducing the segment’s contribution to the economy.

“We should not be too reliant on BPO. It might change — not immediately, but in the future,” Budget Secretary Benjamin E. Diokno said during a briefing on Wednesday.

BPO is helping maintain the current account at a surplus, alongside overseas worker remittances and tourism.

Economists expect BPO receipts to exceed those of remittances in the next few years. In a report released in March, Moody’s Analytics called the Philippines the “call center capital of the world,” with BPOs leading the strong growth in the country’s service sector.

However, members of the inter-agency Development Budget Coordination Committee said they are keeping a close watch on developments in artificial intelligence research abroad, which may do away with the need for call centers.

“You might get some time in the not so distant future, in five to seven years, where a robot can answer your question,” Finance Secretary Carlos G. Dominguez III said.

“There are certain developments happening quite quickly abroad. We have to plan and not just rely on current technology.”

Socioeconomic Planning Secretary Ernesto M. Pernia said a shift in BPO services with the advent of new technology may affect some aspects of the domestic industry, but expects outsourcing to remain robust.

“In the short term, (artificial intelligence) is likely to curtail some jobs but over the longer run… it’s going to demand even more manpower in different areas,” Mr. Pernia said.

“I think outsourcing will continue to grow because it’s more efficient to outsource security guards, janitors, electricians. It applies to government offices as well.”

In March 2015, Information Technology and Business Process Association of the Philippines Chairman Danilo Sebastian L. Reyes said the sector likely posted 16% growth in 2014 to between $18.1 billion and $18.4 billion in total revenue.

Bangko Sentral ng Pilipinas Deputy Governor Diwa C. Guinigundo said authorities still expect the BPO industry to remain “a very important driver” of economic growth, with the central bank expecting a 15% increase in BPO receipts this year.
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