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Outsourcing industry tempers goals

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THE INFORMATION TECHNOLOGY and Business Process Association of the Philippines (IBPAP) has cut its revenue and employment targets up to 2022 after a slowdown in recent years prompted the group to reevaluate its road map.

During its 11th International Innovation Summit at Manila Marriott Hotel in Pasay City on Tuesday, IBPAP announced a 3.5-7.5% revenue compound annual growth rate (CAGR) projection to $29-32 billion for 2020-2022, compared to the nine percent set in 2016.

Employment CAGR for the same period has been tempered to 3-7% to 1.42-1.57 million full-time employees, compared to an eight percent projection previously.

In his remarks at the event, IBPAP President and Chief Executive Officer Ray C. Untal said: “… [W]e deemed it necessary to take a pause, revisit our industry projections and reassess how exactly we will move forward. And so, after several analyses, we commissioned the Everest Group to undertake our recalibration exercise.”

Hanumantha Karthik, Everest Group managing partner, in a presentation noted subdued global information technology and business process management (IT-BPM) revenue and job growth in 2017-2018, saying he expected the trend to continue. “The revenue growth is more than head count. This is because of the shift towards digital, shift towards automation. So this thing about doing more for less, that’s really the theme that’s going to be impacting the global industry,” he said.

According to his presentation, annual global revenue growth can be expected to reach 6-6.5% by 2022, while annual employment headcount growth is expected at 4.9-5.3%.




RECOVERY?
While the Philippines has also been experiencing slower growth, there are signs that pace could be picking up.

Revenue growth in 2019 is now projected at 5.2%, following six percent last year and two percent in 2017.

Employment growth in 2019, on the other hand, is estimated at 4.7%, following last year’s 5.1% and two percent in 2017.

Everest Group studied global and local factors to arrive at the new targets, including geopolitical and regulatory changes like the United Kingdom’s impending exit from the European Union, proliferation of protectionist policies, automation, sluggish macroeconomic growth and rapid transformation of business models.

Certain subsectors, including healthcare, animation and game development, are expected to grow faster compared to the overall IT-BPM industry.

DRIVER OF THE ECONOMY
“The study gave us a lot of insights and, from that, it is clear that we need to take both strategic and sustained actions in specific areas to achieve the maximum Philippine growth potential for the IT-BPM sector,” Mr. Untal said in yesterday’s event.

The IT-BPM sector is a key driver of real estate development and household consumption, which in turn fuels nearly 70% of gross national product.

Acknowledging IT-BPM’s role as a driver of economic activity, the central bank had conducted annual surveys from 2005 to 2013 in order to form a clearer profile of the sector.

The 2013 report noted that industry revenues increased 13.8% to $15.3 billion in 2013 from $13.5 billion the preceding year.

Total employment had increased by 10.6% to 851,782 in 2013, “maintaining a double-digit growth rate” from the preceding year. — Jenina P. Ibañez

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