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Outsourcing subsectors cut growth targets through 2022 amid hurdles

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SEVERAL outsourcing subsectors cut their revenue targets across-the-board after the industry lowered its growth figures under a road map through 2022 due to geopolitical challenges, protectionism and automation.

Information technology (IT) and software trails the other subsectors with a 2.7-6.2% annual revenue growth target from 2019 to 2022, lower than its original 11.4% goal, the Information Technology and Business Process Association of the Philippines (IBPAP) said in a report on Monday.

The industry in November cut its revenue target to a compound annual growth of 3.5-7.5% from 9.2% set in 2016, based on a study conducted by the Everest Group.

The Philippine Software Association of the Philippines will hold seminars for academe and industry professionals and participate in IT events in Japan to strengthen the two countries’ investment relationship, IBPAP said.

Global in-house centers lowered their revenue goal to 3.2-5.2% from 8.4% set in 2016, while contact centers and business processing cut theirs to 3.3-7.4% from 8.2%.

Revenue projections of two subsectors were still higher than the industry goal despite the cuts.




Health information management set a target of 7.3-10.8% from 13%, while animation and game development’s new goal fell to 6.8-11.7% from 14%, according to the report.

These two subsectors are smaller than their peers. Juan Miguel del Rosario, president of the Animation Council of the Philippines, Inc. (ACPI), earlier said animation has a low base, making up a small fraction of the $20-billion outsourcing industry that employs a million workers.

“While contact center and business processing, global in-house centers, and IT and software remain as the biggest subsectors, the recalibration highlights that healthcare information management, animation and game development will grow at a higher rate than the overall Philippine IT-BPM industry,” IBPAP said in a statement.

The animation subsector will provide more technical and vocational training and participate in animation festivals, it said.

“ACPI is also currently putting together a large-scale multi-year training program for artists outside of Metro Manila to make them globally competitive as independent content developers or service providers working in animation studios locally and abroad,” the group said.

The game development association had signed an agreement with the Computer Graphics Arts Society of Japan to localize a computer graphics exam and improve local skills.

The health management sector is also investing in training programs and will participate in US road shows, IBPAP said.

To encourage more growth, IBPAP said it would invest in a reskilling program, allocate resources for country branding to attract investors, participate in public-private collaborations and promote ease of doing business and infrastructure development to boost the industry outside Manila, the capital.

Health information management expects annual job growth of 6.8-10.2% from 2019 to 2022, while animation and game development expects growth of 6.8-11.7%. These were lower than their original job growth rates of 10.1% and 13.3%.

Contact centers and business processing expect job growth of 2.8-6.7% (from 7.9% in 2016), IT and software at 2.7-6.2% (from 9%) and global in-house centers at 2.7-4.7% (from 3.9%).

The overall annual job growth target was lowered to 3-7% from 7.8%.

“The future of the sector remains clear when it comes to securing its continued growth,” IBPAP President and Chief Executive Officer Rey C. Untal said in the statement.

“Following the action plans that we presented during the summit, IBPAP has already initiated talks with different stakeholders of the industry to ensure that we have more cohesive, effective, and impactful initiatives for the coming years,” he added.

Mr. Untal said this would help them achieve their subsector and overall targets and help propel the Philippines in the global outsourcing marketplace. — Jenina P. Ibañez









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