According to a study done by the Information Technology and Business Process Association of the Philippines (IBPAP), the outsourcing sector is a crucial contributor to the continuous growth of the country’s services sectors and economy. In fact, last year, the outsourcing industry contributed $13 billion in revenues and produced 780,000 jobs.
Furthermore, IBPAP anticipates that the employment rate and revenues from the outsourcing sector will improve further as investors are planning to increase outsourcing operations outside the four key business process outsourcing (BPO) hubs of the Philippines.
Meanwhile, Metro Manila, Metro Cebu, Bacolod, and Metro Clark were recently dubbed by IBPAP as the "centers of excellence" or the best locations for information technology-business process management (IT-BPM).
IBPAP also collaborated with the Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO) in creating the "Next Wave Cities" or the key locations that have the potential for growth in the outsourcing segment.
by: Sarah Joson
The government is planning to spend P5 billion yearly in order for the IT offshore industry of the Philippines to reach its targets in the Information Technology Road Map (IT-RM) 2012-2016 and boost its contributions to the country’s gross domestic product (GDP).
According to DOST Secretary Mario G. Montejo, the funding will cover different objectives of the industry. He noted that several organizations will collaborate to identify and solve the challenges faced by the IT-BPO industry. These include 10 line agencies, several bureaus, and even the central bank.
One of the goals of the IT-RM is to build the local talent pool and reach 1.1 million candidates by training experienced workers and attracting new ones.
IT and Business Process Association of the Philippines (ITBPAP) Representative Jose Mari P. Mercado said they are getting the results they wanted as the government-sponsored training program will produce new graduates trained by professors from key universities and experts in the field.
Other key targets of the IT-RM are properly promoting the country as an ideal IT business process management (IT-BPM) destination and a GDP of eight percent by 2016.
Department of Science and Technology (DOST) Secretary Mario Go Montejo addressed the bullish information technology-business process management (IT-BPM) of the Philippines. He said the local government will continue to support and help in the development of the sector.
The Information and Communications Technology (ICTO), a sub-organization of DOST, recently joined forces with the Information Technology and Business Process Association of the Philippines (IBPAP) and TeamAsia and formed the strategic communications division for the IT-BPM Road Map 2012-2016.
In Montejo’s speech, read by ICTO Deputy Executive Director Monchito Ibrahim, he emphasized the role of the government in helping the sector grow as well as fostering an environment where it will be able to sustain its competitive edge. He added that the entire IT-BPM sector can grow to US$240-250 billion by 2016.
BPM is formerly known as business process outsourcing (BPO), an industry that provides countless opportunities for over half a million Filipinos.
According to Senior Executive Director of the Business Process Association of the Philippines (BPAP), Gillian Joyce G. Virata, the change from "outsourcing" to "management" was done to address the management aspect of the sector, rather than outsourcing.
The Information Technology and Business Process Association of the Philippines (IBPAP) and the Science and Technology department of the country released the latest ‘Next Wave’ Cities list. It included Baguio City, Davao City, Dumaguete City, Iloilo City, Lipa City, Metro Bulacan, Metro Cavite, Metro Laguna, Metro Naga, and Metro Rizal.
The so-called ‘Next Wave’ cities are identified to score well in terms of talent, infrastructure, cost, and business environment. These locations are also called Centers of Excellence. These do not receive government incentives but are highly regarded and promoted to investors.
Bacolod City is also dubbed as a Center of Excellence alongside Metro Manila, Metro Cebu, and Metro Clark.
Areas that are grouped as "metro" are said to have the appropriate talent and infrastructure. These include Baliuag, Calumpit, Malolos City, Marilao and Meycauayan City of Metro Bulacan. Bacoor City, Dasmariñas City, Cavite City and Imus City for Metro Cavite and for Metro Laguna, there’s Cabuyao City, Calamba City, Los Baños, Sta. Rosa City, and San Pablo City. There’s also Naga City and Pili of Metro Naga, and Antipolo City, Binangonan, Cainta, and Taytay for Metro Rizal.
IBPAP is also keeping an eye on Batangas City, Cagayan de Oro City, Dagupan City and Tagbilaran City as these are considered as emerging locations.
A number of local business process outsourcing (BPO) firms recently said some of their clients are planning to withdraw operations in Manila if the peso continues to rise.
According to the Information Technology and Business Process Association of the Philippines (IBPAP), majority of the organization’s members are seen deferring expansion plans or are moving their business to less expensive outsourcing hubs.
Moreover, Gillian Joyce Virata, Deputy Executive Director at IBPAP, said the PHP 41 to USD 1 exchange rate is tolerable for the outsourcing industry, but if the peso strengthens further, they will have no other choice but to opt for more economic allocations.
However, she said the local BPO industry will retain its goal in the industry roadmap for 2016 because the Philippines is still the leading destination for voice-based processes. Furthermore, the country is the second largest outsourcing hub for non-voice processes. The industry is projected to represent eight percent of the country’s gross domestic product by 2016 by contributing $25 billion in revenues and employment of 1.3 million Filipino workers.
A report from market intelligence firm IDC indicates that the business process outsourcing (BPO) sector could be valued at $209.4 billion in 2017 with a compound annual growth rate (CAGR) of 5.7 percent. Of that amount, $97.3 billion will be contributed by the growing US BPO market, which is predicted to post a slower CAGR of 4.3 percent.
According to Mukesh Dialani, Research Manager for worldwide BPO and engineering services at IDC, with the experience and data most providers have accrued over the years, they are now able to present clearer and more concise ideas and scenarios to probable customers. Clients are realizing the improvements and benefits that reformed BPOs can bring to their businesses.
IDC added that for voice-based processes, other channels and platforms are now being used by providers. For instance, there’s mobile customer care, remote agent delivery centers, and on-demand contact center services.
Even with the continuous rise of the peso, the Aquino government remains positive that the local information and communication technology (ICT) sector will be able to achieve $50 billion in revenues by 2016.
According to the deputy executive director of the Department of Science and Technology-Information and Communication Technology Office (DOST-ICTO), Monchito Ibrahim, the government has furnished the requirements needed by the ICT sector. He estimated that the information technology and business process outsourcing (IT-BPO) segment will contribute $25 billion and other ICT-sectors such as animation will deliver $25 billion by 2016.
Moreover, Ibrahim pointed out that the reliable and abundant transmission networks and cable landing stations provided by key telecommunications companies such as the Philippine Long Distance Telephone Co. (PLDT) and Ayala-led Globe Telecom Inc. are key factors for the sector’s growth.
Other influencers identified by Ibrahim are the special five-percent tax on gross income, other tax and duties exemptions, four to eight years income tax holiday, sales grants amounting to 30 percent of total sales and discounts on training costs.
Meanwhile, DOST noted that Metro Manila isn’t the only hub equipped for IT-BPO operations as Cebu and Davao have similar infrastructure as well.