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IT-BPM industry reaps the rewards; Now to gear up for new technology

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By Gillian M. Cortez
Reporter

ONE of the fastest-rising sectors in the Philippines, the information technology and business process management (IT-BPM) industry has reaped the rewards of growing demand for IT and other services. With business process outsourcing (BPO) thriving, the industry has also provided jobs to many Filipinos as the population transitions to become more technologically-savvy.

According to a 2018 study by the Department of Labor and Employment’s Bureau of Local Employment (BLE), the current workforce in the IT-BPM industry is 1.23 million strong and generates about $25 billion to the economy. The industry hopes to increase employment to 1.8 million in the next three years.

The Information Technology and Business Process Association of the Philippines (IBPAP), in its Philippine IT-BPM Roadmap 2022, estimates that in the next three years, the industry will grow by up to 7.8 million direct and indirect jobs. It also projects that 73% of jobs generated in the IT-BPM sector will be mid to high-value jobs.

Despite showing signs of not dying down any time soon, the BPO industry and its employees are facing pressure from automation. The Philippines is viewed as having a long way to go in improving worker skills and being ready for technological disruption.

The International Labor Organization’s (ILO) 2016 report, “The Future of Jobs at Risk of Automation” from its “ASEAN in Transformation” series, views the BPO sector in the Philippines as having the highest proportion of workers at high risk of automation in the services industry at 89%.




In the 2017 A.T. Kearney Global Services Location Index, the management consulting firm reported that around 1 million BPO jobs in the Philippines could be at risk in the next five years if automation spreads in the industries that employ BPO services. While automation will cancel out jobs, it will create new positions that call for more highly-skilled workers. The challenge is that these new jobs don’t always end up being taken by those who have lost work.

For workers in these industries, while the boom in automation is ideal when it complements workers and eases their day-to-day tasks, that isn’t always the case. Technological advances during past Industrial Revolutions suggest that workers are often on the losing end.

“Ideally, automation is great if it will help workers lessen tasks but historically, it was never pro-worker. There will be job losses somewhere,” BPO Industry Employees Network (BIEN) President Mylene Cabalona said in an interview with BusinessWorld.

“Once automation pushes through, a big percentage of workers will lose jobs and I don’t know how the government will address it… this is going to have a huge impact in the economy of the Philippines,” Ms. Cabalona added.

For now, she said that there are few worrying signs of automation-driven disruption but she believes there should be an initiative by the government to safeguard workers who are at risk to lose jobs from advances in automation. The government should consider this because the IT-BPM industry is one of the industries that generates the largest tax.

The Philippines is rated a little below the middle tier of The Economist Intelligence Unit’s (EIU) Technological Readiness Ranking published last year. In EIU’s forecast period of 2018 to 2022, the Philippines scored 5.5 and ranked #55 out of 82 countries featured in the list. The country rose from its previous ranking of #60 in the period of 2013 to 2017. In the same Technological Readiness Ranking, Australia, Singapore, and Sweden were at joint number one with scores of 9.71875. Placing last was Angola, which had a score of 1.5625.

ILO’s Charles Bodwell, the Enterprises Development Specialist under ILO’s Decent Work Technical Support Team, said the key is evolving faster than other countries vulnerable to automation.

“Will the Philippines evolve as fast as its competitors? I think it remains to be seen. There could be (job) replacement or complementation by technology (but) the more repetitive, and the more easily (work is) able to be put in an expert system of some sort, the more probable it’s going to be replaced,” he said in an interview with BusinessWorld.

IBPAP Board Trustee Jonathan D. de Luzuriaga said in an interview with BusinessWorld that the IT-BPM industry’s transition to automation will not be as sudden and swift as most expect. The adjustment will happen slowly, providing leeway for employers and employees to prepare.

“I think the transition is going to be slow. it’s not going to have a very huge adverse effect that we can’t plan for,” said Mr. De Luzuriaga, who is also president of the Philippine Software Industry Association (PSIA) . He noted that many services offered in the BPO industry are candidates for automation or digitization by artificial intelligence, especially in the customer service segment.

“We’re saying more than 60% of that will be a candidate for disruption… We have a workforce of about 1.3 million Filipinos that are already accustomed to servicing other geographical units. (We’re) very fluent when it comes to speaking the language of digital (and) communication is obviously not a huge impediment…The important thing right now is to really look farther into the future ad think what type of jobs will be required in order to participate in this digital journey,” he said.

LinkedIn Talent and Learning Solutions Vice President Feon Ang said in an e-mail correspondence with BusinessWorld: “While there have been worries that automation will affect as many as 43,000 low-skill workers from 2016-2022, it is seen as also growing demand for middle to high-skilled talent, with as much as 697,000 openings seen in that same six-year period.”

On the other hand, BLE Director Dominique R. Tutay noted that while technological skills will be in demand in the industry, other higher-order traits such as communication skill and critical thinking will also be in focus. She said in a text message to BusinessWorld: “The industry hopes to increase employment to 1.8 million by 2022, mostly high-value jobs requiring higher-level skills related to technology, Artificial intelligence, critical and analytical thinking, interpersonal communication, and leadership.”

Acumen Strategic Consulting, Inc. Managing Director Pauline G. Fermin told BusinessWorld in an interview that the outlook for artificial intelligence and the BPO sector is not all that threatening if both the academe and the companies prepare adequately.

“I really don’t think that we will ever lose opportunities for jobs in our population… I don’t see the need to panic that jobs for future generations will go away. What is critical is for them to prepare themselves and acquire the skills necessary for future jobs…either in school or in the workforce,” she said.

IT-BPM Consultant Jomari P. Mercado also underlined the necessity of readiness in the BPO to face the sudden spike of disruptive trends.

“I think the challenge now is how we ensure that we have an industry that helps the talent pool upskill themselves so they are ready when these opportunities come to them… It’s not digitizing per se but it’s being able to adjust to the offerings we have to our existing client base so we address the ones that will be take over by robotics or AI,” he told BusinessWorld in an interview.

According to LinkedIn’s “Emerging Jobs Report: Philippines,” while automation will be responsible for some loss of jobs in the BPO industry, it will also enable new opportunities to flourish considering there will be time for workers to adapt to digital. The report said, “Automation is the opportunity to upskill workers and will give Filipinos working in the BPO industry a competitive advantage.”

While artificial intelligence will take over routine and repetitive tasks, employees of IT-BPM companies will still need “human skills” such as interaction and communication skills in dealing with customers and clients. These skills are also known as 21st century skills or soft skills, which are traits still not easily automated. In its “Global Talent Trends” report, LinkedIn said soft skills that will be much more in demand despite the age of digitization are creativity, persuasion, collaboration, adaptability, and time management.

IT jobs portal ICTjob.ph CEO Fred Tshidimba said that there should be emphasis on upskilling or reskilling since learning how to work around newer types of demands will keep workers from being at high risk for losing their jobs.

“It’s going to open a lot of new kinds of services that we can develop around automated services. Services that can create something new… people want to develop higher skills. Today, if you’re not learning, you’re going to be at risk but if you’re always constantly learning and making your skills better, there’s no way you’ll be out of a job,” he said in an interview with BusinessWorld.

For the IT portion of the IT-BPM industry, those who deal with coding have an advantage since code is the backbone of developing new technology. As lower-skilled job options in the BPO sector become more endangered, occupations that entail IT skills will not only be easily upskilled but also have more choice in the job market amid technological disruption.

“Automation, this is actually developed by people in the IT industry so you would have to develop some tools that would automate or robots that would process information for you, the more you would need humans to code for you. It’s one of the sectors that would have the highest demand and the highest growth,” Mr. Tshidimba said.

On the side of the BPO labor force, Ms. Cabalona said the government needs to play a role in safeguarding workers who will potentially lose jobs in the event artificial intelligence takes over large swathes of the industry. She added, “The government should have an interest so they can cushion the mass job losses since most who are affected are in the low-skilled frontline and customer service (part of BPO).”

Meanwhile, the government has exerted efforts to anticipate the effects of automation on employment. The Technical Education and Skills Development Authority (TESDA) already mentioned its plans in surveying companies in industries that are more likely to be pressured by automation threats, in which IT-BPM is one of their priority sectors to study. The workplace skills survey, which is to be conducted within this year, will enable the government and private sector to determine which skills will be needed in the boom of the Fourth Industrial Revolution.

“There are changes in technology for industries like artificial intelligence or, as people say, augmented intelligence since there should still be a people factor… Because of the Fourth Industrial Revolution we’re trying to come up with the skills survey,” said TESDA Director General for Policy and Planning Rosanna A. Urdaneta to BusinessWorld through an interview.

Mr. Bodwell said that even with people trying to anticipate the future of the BPO industry, the outlook is too cloudy to be certain how technology will affecting the sector. He noted that 20 years ago no one predicted how much technology changed the economic landscape, and the rate of change could be even more rapid in the next few years.

“Without a doubt, the BPO sector is technology-based. What’s going to happen to that? It’s absolutely unpredictable,” he said.

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