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Comprehensive Road Map needed to Sustain the Growth of Philippines’ IT-BPO Industry

Posted on October 21, 2014

THE PHILIPPINES will be on track to reach a potential $48 billion in revenues in the information technology and business process outsourcing (IT-BPO) industry by 2020 provided that an updated, comprehensive road map supporting its growth would be formulated within next year.

Information Technology and Business Process Association of the Philippines (IBPAP) President Jose Mari P. Mercado told reporters at the International IT-BP Management Summit yesterday that a revised industry road map for the five years following 2016 would be needed to sustain and maximize the country’s potential for growth.

“Our current road map is only until 2016, that’s the $25 billion that we’re projecting for 2016. What we want to do is update that road map… [to] project what will happen in 2020,” he said.

“The industry changes so quickly. The requirements change so much, so what we’re finding out is that our road map should be in increments of five years,” Mr. Mercado said.

“What’s the point of making a ten-year road map when five years down the road it’s practically not valid anymore?”

The official cited a Tholons report that projected that the country’s IT-BPO industry’s revenues could hit $48 billion in 2020 based on its compounded annual growth rate of 9-12% since 2004.

For this year, the IBPAP is expecting to reach revenues of $18 billion, a slower 16% increase from last year’s 22% growth from the 2012 level. For 2015 and 2016, the industry expects to grow to $22 billion and $25 billion, or 22% and 13.6% respectively.

Mr. Mercado said that growth in several sectors in the industry, such as animation and game development, are flat due to the high skill requirements for labor.

He said that while talent remains the primary reason businesses are choosing to outsource in the Philippines, IBPAP, along with the government and other stakeholders, are likewise working to further improve the workforce in the country through the planned road maps.

In this regard, initiatives from the Department of Science and Technology (DoST) are working to enhance the training and education of Filipinos inside and outside Metro Manila to bridge the gap between their respective skill levels.

Monchito B. Ibrahim, deputy executive director for industry development of the DoST information and communications technology office, said that the government is pushing to drive the BPO growth to the countryside through rural impact sourcing and training programs in the provinces like Camarines Norte and even Muslim Mindanao.

“What we are trying to cater for is the talent gap that will occur if we continue at the same rate five years from today,” Asheesh Mehra, vice-president and head of Infosys BPO Ltd, said.

For his part, Albert Mitchell L. Locsin, vice-president of the corporate enterprise arm of Philippine Long Distance Telephone Co. (PLDT), PLDT ALPHA Enterprise, said that building the road map is more about addressing problems before they arise to have a continued double digit growth in the industry for years to come.

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