IBPAP needs LGU support

Our information technology and business process management (IT-BPM) industry has been acknowledged as one of the most productive dollar-earning sectors.

The IT-BPM industry last year brought in $40.3 billion, and for this year is projected to earn a much higher $42.3 billion as it continues to maintain its No. 2 global position – just behind India.

However, the Philippines faces increasing competition from other countries, including our ASEAN neighbor Vietnam (which has better strength in STEM or in science, technology, engineering and mathematics) and from artificial intelligence or AI.

More unfortunately, according to the IT and Business Process Association of the Philippines or IBPAP, some local government units (LGUs) do not seem to see the big picture for the whole country and are instead posing an unwanted hurdle for IT-BPM investors in the country through the imposition of fees, permits and local ordinances that  impose additional taxes, fees and causes delays for IT-BPM investors to operate quickly and efficiently so as not to lose out in the race for international clients.

What was also surprising to learn from the IBPAP, was that the two most efficient and business-friendly LGUs are Quezon City and Pasig, while among those that are proving more bureaucratic are Taguig and Makati.

Who knew that Taguig and Makati, our two leading central business hubs, are now the ones who are making it difficult for the profitable  IT-BPM industry to grow and expand. Instead of ensuring ease of doing business, it appears that Taguig and Makati stymie the growth of the sector.

In a briefing led by Jack Madrid, IBPAP president and chief executive officer, and Celeste Ilagan, IBPAP chief operating officer, the two  officials revealed that their industry faces challenges that have already forced the sector to revise its industry roadmap and lower its revenue and employment targets drawn up in 2022.

Under its roadmap revenue projection back then, the IBPAP was bullish on a revenue target of $59 billion. But with the reality of increasing competition from other countries and AI, Madrid revealed that a downside revenue projection now sees a lower target  of just $43. 3 billion and a best case revenue projection of $50.5 billion by 2028.

According to Ilagan, the Philippines already  faces so many challenges in terms of talent and deficiency in infrastructure and policy-related issues.

“It’s not just talent, right? It’s not just infrastructure.

I also think there are certain policy-related issues that could discourage or encourage investors. We haven’t talked yet about that... what we have not talked about here are some of the challenges we have on the ease of doing business,” she said.

“What we see would be a challenge is that the existing investors in the country, who can probably expand more, are hampered by some of the policy and regulatory challenges. They  now are having second thoughts in terms of the expansion they have earlier planned for the Philippines. And our policy issues revolve around ease of doing business. And when we talk of ease of  doing business, what we have not really addressed would be our problems with the local government in terms of  business permitting.

And there are requirements on individual employees that make it quite difficult for the BPO players to be able to comply, and there is always a question from their headquarters about, you know, the growing difficulty of dealing with our local government units,” Ilagan said.

She said the ease of doing business “is really among the major issues that are raised to us by our members,  and the other is about  insider cybercrime. There are a few employees who are committing fraudulent acts inside their operations. At times, imperiling the account that is being served out of the Philippines, and if the client discovers this fraudulent act, they go to the extent of pulling out the account from the Philippines, and this can happen if we are not able to address this growing sophistication and seriousness of a cybercrime that is being committed by some IT-BPM employees. And therefore, a lot of our efforts now are directed towards engaging the Department of Justice, how they can help us, and also the law enforcement agencies like the PNP and the NBI.”

Fortunately, Ilagan said, action has been taken with local law enforcement authorities “so that we can work together in being able to build more successful cases and to be able to prosecute these bad actors that are identified by our BPO players.”

Ilagan clarified though that the cyber crimes committed are “fraudulent acts committed by our by  employees or some of the employees. For example, the client is a bank and the employee uses the credit card of the customer to purchase -- without permission, of course -- and if this escalates, the client, which is the bank, will see that the Philippines may not be  a trusted location. So, if at this point, the financial harm may not be significant, but eventually, if we are not able to address this, the reputation not only of the IT-BPM company is at stake. It is the reputation of the Philippines as a location for this kind of service that is at stake.”

Thankfully, so far, she said, “this is the first time, the first year... we have not been flagged for that. This is something that we are trying to address for the industry, to make sure that the maximum potential for growth happens in the Philippines.

We would like to make sure that the challenges encountered by our IT-BPM players are addressed. Nobody flags us for these types of things. These are problems that we identify on our own, and that as an industry, we would like to address so that we continue to be a reputable destination for more IT-BPM work.”