The State of IT-BPO Industry in the Philippines

By Mervin San Andres
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At the turn of the millennium, the country witnessed a surge in the entry of foreign enterprises. Along with these entries are opportunities for thousands of Filipinos in numerous jobs such as call center positions and medical transcription. As the event coincides with the dawn of the digital age, IT professionals also benefited to this still-growing segment of economy. Business process outsourcing or BPO has become a key contributor the Philippine economy and continues to support thousands of professionals around the country.

A BPO essentially allows a business to delegate service-related processes to a third-party provider. The 90’s saw the emergence of several companies such as Accenture and Sykes who set up call centers, with jobs being outsourced from outside the country, especially from the United States. With the passage of the Special Economic Zone Act in 1995, foreign investors are further attracted to capitalize in the growing industry. Under this act, the Philippine Economic Zone Authority is established, along with provisions for lowering area requirement for development and tax incentives.

The Philippines continues to remain among the top destinations for BPO. Among the reasons that makes the country a top consideration for investors is the affinity to western culture, especially in the language, the large pool of graduates knowledgeable in IT, and the low labor cost. By 2015, the industry has generated 1.2 million jobs and revenue amounting to US$ 22 billion. With a forecasted annual growth of 15% to 18%, the sector is poised to overtake OFW remittances by 2017.

While the early players in the industry are mostly call center companies, job opportunities from other field such software and game development and animation became very significant. IT became a lucrative component that the sector would eventually be referred to as IT-BPO. However, as time goes by, the industry is finding itself shift from the outsourcing call center positions to more technical services such as software development and research.

Even though the need for more IT professionals continues to grow in the industry, there is still a need to hone the talent pool in the Philippines. While the country can boast itself as the top contender for customer service, other BPO destinations seemingly takes the spot for IT-related services. India, while being an early runner in the BPO race, continues to be a leader in IT-related services. With people driving the industry, it is important that only those who are competent handle the job being entrusted. Nevertheless, with around 150,000 graduates per year in the field of information technology and engineering, there is a positive outlook that these technical requirements will be fulfilled in the future.

At the moment, the IT-BPO sector continues to expand in the country. As much as 300,000 jobs await hopefuls in the planned expansion in the Clark Freeport, in part of an effort to shift investments to parts of the country outside of Metro Manila. The Information Technology and Business Process Association (IBPAP) estimates that 1.8 million jobs will be open by 2022, 70% of which being mid- to high-skilled roles.

The industry will continue to be challenged by the economic and political climate not only in this country but also abroad. As the industry is past its period of boom, growth is expected to be steady albeit with a slowdown. As recent shift in government policies around the world unfolds, uncertainty looms among the economic sector. However, government officials allay this fears by promising protection to the IT-BPO industry.

Despite the short period from its establishment as a key economic sector, IT-BPO has come along the way. And along the way, it continues to adapt to changing business needs. Businesses are shifting away from cost-effectiveness to being quality driven. Organizations are doing everything that is needed to sustain the needs of the sector. Moreover, the industry continues to look for individuals that are capable and professional enough to meet the ever-changing needs of the industry.

Mervin San Andres

Software Engineer

Mervin is a graduate of the University of the Philippines - Diliman where he took up BS Computer Science. He is currently working as a software engineer for a telecommunications equipment company, where he develops and maintains windows and web applications. In his free time, he would watch movies and anime.

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