MANILA, Philippines - On track to hit the target of employing 1.3 million people and $25 billion in revenue by 2016, the Philippines’ Information Technology-Business Process Management (IT-BPM) industry is eyeing a new roadmap that will chart its direction until 2022.
Jose Mari Mercado, President and CEO, Information and Technology and Business Process Association of the Philippines (IBPAP), says the new roadmap will most likely be unveiled before the end of the year.
“The intent is to help us see how the global market will be like in the next six years, and how the IT-BPM industry should respond or manage that change,” he says.
Ranking second only to Overseas Filipino Workers’ (OFW) remittances, the IT-BPM sector has grown from $8.9 billion in revenues in 2010 to $18.9 billion in 2014; from 520,000 employees in 2010 to 1.07 million employees in 2014.
“The IT-BPM industry is a microcosm of our administration’s inclusive growth agenda where jobs are created all around the country,” President Aquino said in his keynote address at the 7th International IT-BPM Summit held recently. “We want to replicate this kind of success in each and every sector, and in the entire economy.”
But this same industry is also at a crossroads. The Philippine IT-BPO Road Map 2011-2016 is ending and it is on the cusp of a new era in technology where business models are changing rapidly, innovations are taking place at breakneck speed, a new administration is coming in next year, and the Association of Southeast Asian Nations (ASEAN) is integrating as an economic bloc.
Danilo Sebastian Reyes, Chairman, IBPAP, says one of the success factors why the industry has grown consistently over the years is because government has been a key enabler and that it is something that the industry is looking forward to in the next administration.
“The ASEAN integration is also an opportunity for the Philippines. The free flow of talent, for one, will help us in serving the companies that we already serve as most already have growing presence in the region. The need for them is to have a single site to service the Asian market,” he adds.
Contact centers, game development sector still growing
When Everest Research announced in January 2011 that the Philippines surpassed India as the number one voice services center in the world with $5.7 billion in revenues, the industry was ecstatic but said it should be open to more types of outsourcing services and should step up the value chain.
Today, contact centers still comprise two-thirds of the IT-BPM industry, growing consistently at 15-18 percent per annum. This year, it is poised to grow to over 700,000 employees by the end of this year.
Benedict Hernandez, President, Call Centers Association of the Philippines (CAP), says robotics and process automation are looming big in the horizon. In fact, he discloses that there is already an early stage implementation in the country of an automated contact center agent that can handle 20,000 simultaneous transactions.
“There is a great sense of liberation if we think about how to leverage technology to take out the boring stuff in our work so people can take on more challenging, more complex tasks,” he says, adding that there will definitely be job destructions and reinventions, as well as seeing the role of customer interaction in a new light. “It is interesting to know what will be the impact of these technologies as they find their way into our operations. The lower-paying jobs are more likely to be automated while the high-value jobs would stay.”
Meanwhile, the game development sector is on a roll, now with around 4,000 game developers and 10,000 animators in the country.
Alvin Juban, President of the Game Development Association of the Philippines (GDAP), reveals that the sector had enjoyed a compound annual growth rate of 10 percent since 2012, averaging $55 million in revenue, exclusive of game support services provided by the contact centers.
“Game development in the Philippines is barely 10 years old. We are still in the midst of learning and outsourcing has given us the path to learning,” he says. “Recently, we got the approval from the Commission on Higher Education (CHED) to launch four-year college courses for the games and animation industry. This is a very positive development and we are now waiting for the influx of these new professionals entering the industry in the coming years.”
Juban sees the need for the sector to create more studios, more work, more original IP as the opportunity in the Asia-Pacific region is huge. “The Asia-Pacific region corners 49 percent of the global games market. In Southeast Asia, we are ranked number three for growth,” he says, adding that the Filipinos’ strength has always been our Asian sensibility mixed with Western affinity.
Healthcare sector brings home more of the bacon
Surprisingly, the fastest growing IT-enabled service segment in the Philippines is the healthcare sector.
Myla Reyes, President, Health Informatics Management Association of the Philippines (HIMAP), says frontline healthcare services being offered by the country include anything that has to do with acquiring, analyzing and protecting medical information that is vital to the provision of the quality of care.
This sector traces its roots from the medical transcription services, which, between 2003 and 2009, has a workforce of 4,000 to 13,000 workers, generating revenue of $42 million to $91.5 million. By the end of 2014, the industry has ballooned to 86,000 workers, with revenues of $1.3 billion annually.
“It is not just medical transcription. There’s electronic health records (EHRs), healthcare management, medical coding, telehealth, care management, disease management, pharmacovigilance, among others,” she says.
Reyes shares that growth has also been influenced to an extent by the shifting of the US regulatory framework on healthcare, the increasing adoption of technology, the global focus on health and wellness and disease prevention rather than acute care, as well as new business models.
“Looking forward, we aspire to reach five percent share of the global healthcare BPO market by 2020,” she says.
Sustaining the momentum
Hernandez says that the danger of reporting one success year after another for the industry is complacency. However, going by the results of the 2015 Annual Industry Survey participated in by 145 organizations representing 40 percent of the IT-BPM workforce, there is still a lot of optimism in the industry.
Penny Bongato, Executive Director for Talent Development, IBPAP, shares that respondents reported growth prospects of about 10-25 percent across all sectors of the industry, while employment growth rate is pegged at 15-25 percent.
Respondents also cited that future priorities (next 2-3 years) include business growth (45 percent), digital adoption and automation (43 percent) and expansion to newer markets (43 percent).
While the US is still the top generator of outsourced work (60-70 percent), other geographies were also growing - Europe, UK, Australia and New Zealand (5-15 percent), Asia-Pacific (15-25 percent) and Japan (5 percent).
Industry veterans are one in saying that beyond the employment and revenue figures that the sector has generated in the last 15 years, what is more important is the broader social impact of the industry, especially in bringing jobs to the countryside, helping former overseas Filipino workers find work at home and reuniting them with their families and employing persons with disabilities (PWDs) or even retirees.
“And who knows?” President Aquino says in his speech, “Perhaps next year, you will be holding this summit in Dumaguete, or in another Next Wave City that has experienced an industry boom. Perhaps next year, you will be talking about how best to integrate basic animation and software development into the service management program, to open even more doors of opportunity for Filipino students. The possibilities for growth are endless.”