BPO investments falling

by Roy Stephen C. Canivel, Inquirer, Sep 22, 2017

New investment pledges in the IT-BPM industry registered through various promotion agencies fell 34 percent in the second quarter from a year ago, continuing the decline in one of the country’s top dollar earners that the trade chief had partly attributed to the uncertainty in US policy.

Collecting the pledges registered through seven investment promotion agencies (IPAs), data from the Philippine Statistics Authority (PSA) showed that investment commitments in the business process outsourcing (BPO) sector totaled P4.9 billion in the April-to-June period in 2017, falling from P6.27 billion registered in the same months last year.

The latest figures of the Information Technology and Business Process Management (IT-BPM) industry showed the continued decline in investment pledges. The PSA earlier reported a 34-percent decrease in new pledges during the first quarter to P4.18 billion from P6.34 billion in the same three-month period in 2016.

“Perhaps [the IT-BPM firms] are just taking time in due diligence as well as a wait-and-see [approach] on the US policy for companies locating offshore,” Trade and Industry Secretary Ramon Lopez told the Inquirer.

Lopez added that there were still “anchor accounts expanding using innovative operating models,” noting that they were retooling the workforce of the IT-BPM industry, also known as the country’s top private sector employer, to use new technology such as systems enabled with artificial intelligence.

This is not the first time that pledges shrank in terms of their growth rate.

According to PSA data, the expansion rate of these pledges had been on a decline since the third quarter of 2016. In spite of a more than 35-percent increase in pledges during the second quarter of 2016, commitments still finished the full year with a 22.6-percent decline to P30.74 billion from the previous year that had P39.73 billion.

PSA data suggested that the “anchor accounts” were not enough to offset the drop in new investment commitments. The latest figures pointed to a 28-percent decrease in the first half of the year, reaching P9.08 billion from P12.61 billion in the first semester of 2016.

The seven IPAs are the Authority of the Freeport Area of Bataan (AFAB), Board of Investments (BOI), BOI-Autonomous Region of Muslim Mindanao (BOI-ARMM), Clark Development Corp., Cagayan Economic Zone Authority (Ceza), Philippine Economic Zone Authority (Peza) and Subic Bay Metropolitan Authority (SBMA).

Out of all these IPAs, Peza accounted for the biggest share in pledges or more than 93 percent of overall commitments in the first semester of this year. Pledges under Peza fell 30.9 percent in the first half of the year to P8.48 billion from P12.27 billion a year ago.