Human Side Of Economics


(Part 3)

Although institutes of higher education are indispensable in turning out the talents needed by the new types of skills being demanded by more and more complex forms of information technology and business process management  (IT-BPM) services (such as those in data analytics), even more important in the coming five to 10 years are short, non-degree courses that will upskill, reskill, and retool the 1.4 million workers already employed in the industry and others who have graduated from formal education programs but are either still unemployed or underemployed.

As pointed out by the Everest Group Study conducted for the Business Processing Association of the Philippine (BPAP), as the usage of alternate channels such as social media, mobile, web, and chat proliferates and experiences enabled by data and analytics becomes the norm, contact centers are taking up the role of customer experience hubs. Furthermore, the traditional contact center model has changed drastically in the face of COVID-19, accelerating several pre-existing trends with a reinforced push for Artificial Intelligence (AI) and automation, a preference for cloud-based /modernized infrastructure, and an accelerated shift toward the use of self-service solutions such as conversational IVAs (intelligent virtual agents) and messaging platforms. As a result, increasingly in the near future, many contact center (CC) and business process (BP) companies in the Philippines believe that the larger share of volume in traditional call centers will come from complex transactions covering the entire extent of service-to-sales activities.

As the Everest study refers to as Acceleration lever 2, talent development will require a sustainable supply of skilled talents by introducing newer educational courses (formal, nonformal, and informal), revising existing curricula, strengthening training programs, and proactively positioning IT-BPM as a high-impact career option. Already, there is a growing talent shortage for a majority of new technologies skills as well as domain expertise. This is exacerbated by the serious demographic crisis being faced by practically all the developed countries in North America, Europe, and Northeast Asia. Populations are increasingly aging and there are fewer young people needed for all the manpower requirements of economies that are increasingly service-oriented. Despite all the talk about Artificial Intelligence and Robotization under Industrial Revolution 4.0, human beings are still indispensable in the delivery of most services. There are very few countries, at least in East Asia, that can compare with the Philippines in having a young, growing, and, for purposes of the IT-BPO sector, English-speaking population.

For the government and leading national associations, increasing the talent supply and upskilling/reskilling the existing workforce have become necessary in order to bridge the huge talent and skill gap that is being faced by the industry. The industry being basically a knowledge-based one, the first key intervention required is to increase the number of universities/colleges and quality of IT-BPM-related programs along with enrollment rates with a dedicated focus on cities outside the National Capital Region.

Since the Philippines is expected to be a major player in the global economy over the long-term (say, the next 20 years), every effort must be exerted to solve the current crisis of the low level of basic education which can be partly explained by the very meager resources being devoted by the State to public education. Now that the Secretary of Education is the Vice-President herself, there is greater probability that in the next six years, our public spending on education can be increased from the very low level of 2% of GDP to the average of the ASEAN countries of 6% of GDP. Instead of unreasonably multiplying the number of state colleges and universities, the policy of the State should be to subsidize the leading private universities through a voucher program that will enable the best and the brightest among the children of the lower-income families to enroll in the University of the Philippines (and a few other high-quality state universities and colleges) and the leading private universities. In the non-formal and informal educational institutions, there should be industry-entry mechanisms for a wider pool of ready workforce, especially for high-school and college dropouts, vocationally trained students, and the female workforce.

In the medium term, the emphasis should be the upskilling, reskilling, and retooling of both those already among the 1.4 million working in the sector as well as those already in the labor force (employed, underemployed, or unemployed) through courses offered in tandem with the Technical Education and Skills Development Authority (TESDA) to ensure scalability and quality of programs by introducing proper assessment and training regulations which are strictly followed by course providers. TESDA (that is now under the Department of Labor and Employment) should ensure proper training to course developers and faculty of academic institutions on how to create courses that are aligned with the Philippine Skills Framework (PSF). The International Labor Organization (ILO) should strengthen and scale up its “Women in STEM Workforce Readiness and Development” to increase outreach. Currently, only 15% of the TESDA’s budget is for IT-BPM courses. This can be increased to 25%. There should be a centralized government mechanism to bring efforts (e.g., skill surveys, PSF development) from all the agencies (currently more than 10 agencies/institutions are involved) which are the leading talent reform initiatives.

Another Acceleration Lever suggested in the Everest Study is to enhance the focus on creating awareness through marketing efforts to scale the outreach of educational programs and other training initiatives. This reminds me of the time I was in high school in the 1950s when the many of the best students graduating from high school considered accounting as the most attractive profession. Today, there should be an effort of the BPO-IT industry to present working in that sector as more glamorous and “sexy” than wanting to be a Certified Public Accountant. This is not difficult to do as regards the most exciting field of Big Data and data analytics. We should constantly repeat the new aphorism that “Data is the new gold.” Increase in the awareness of the IT-BPM sector as a profession can be achieved through job fairs, webinars, industry interaction, and social media branding to encourage and attract the youth to acquire the relevant skills or to pursue relevant degrees. Here, I must insist that the emphasis should be on competencies and skills and not on degrees (as Secretary of Trade and Industry Alfredo Pascual has been advocating in many of his public pronouncements).

(To be continued.)


Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.