The past year has been, without question, a period of unimaginable disruption and incredible change for many, with practically all industries trying to cope with the aftermath of COVID-19 and the global economy contracting by an unprecedented 3.5%.
Despite this, the Philippine IT and Business Process Management (IT-BPM) sector continues to demonstrate adaptability, innovation, and leadership. According to the IT and Business Process Association of the Philippines (IBPAP) the number of full-time employees (FTEs) in the country increased by 23K in 2020, bringing the total industry headcount to 1.32M and registering a growth of 1.8% compared to 2019. Meanwhile, the sector recorded revenues of $26.7B in 2020 or a 1.4% jump from the previous year.
“These numbers come as very welcome news for the industry especially with the country’s Gross Domestic Product (GDP) slipping by 9.6% in 2020,” said IBPAP President and CEO Rey E. Untal. “When IBPAP commissioned the recalibration study in July 2020, we already knew that the far-reaching effects of the health crisis did not spare the IT-BPM sector. The fact that it reached this level of growth by year-end is proof of the industry’s resilience and fundamental role in the Philippine economy.”
Although Hospitality and Travel were unsurprisingly affected by the pandemic, verticals like Healthcare, E-Commerce and Retail, Banking, Finance and Administration, and Insurance flourished enough to help propel the industry’s headcount and revenue growth.
With most organizations regaining their momentum by September 2020, the Philippine IT-BPM sector was already able to display signs of recovery by the fourth quarter. There was also a notable upturn in IT Outsourcing (ITO) projects in the latter part of the year as clients invested more in digitization to mitigate prevailing issues caused by the outbreak and as a way to enhance their Business Continuity Plans (BCPs).
This is further reinforced by insights from the government and on real estate take-up.
According to the Philippine Economic Zone Authority (PEZA), investment pledges for the industry remained flat in 2020 whereas total investment pledges fell by 19.1% during the same period.
In parallel, a report by Leechiu Property Consultants (LPC) stated that office space demand reached 389K sqm. in 2020 and that close to 50% or 189K sqm. came from the IT-BPM sector. It was also recorded that the Province of Iloilo captured 48K sqm. of the take-up by Business Process Outsourcing (BPO), higher than even key cities in Metro Manila.
2021 and Beyond: Growth Outlook and Strategic Imperatives
In an industry-wide survey carried out by IBPAP, it was shown that 87% of IT-BPM companies are expecting to see between 5-15% growth in 2021, with the other 13% anticipating flat growth. There was also a good number of firms expressing that they have plans to expand in the countryside within the next 12 to 18 months.
A majority of organizations are also saying that hybrid working models will continue to prevail in 2021 and possibly, in 2022 as well. Currently, the IT-BPM sector is able to deliver work and provide service through a 70-30 split between work-from-home and on-site work. Moving forward, this will most likely change depending on company policies, government mandates, and digital capabilities.
IBPAP also found that IT-BPM firms will be prioritizing optimization of existing operations, digital transformation, and the upskilling of their human capital this year.
Separately, in the recalibration study conducted by the Everest Group, the following strategic imperatives were identified to help the industry achieve its potential to attain headcount growth of 5% and revenue growth of 5.5% per annum from 2021 to 2022.
▪ Stronger pivot towards becoming a more digitally enabled nation, one that continues to be globally competitive and relevant as a prime investment destination;
▪ Expedite investments in talent attraction and development, particularly for Domain and Digital Skills;
▪ Enhance government support and fortify the sector’s role in the formulation of enabling and responsive public policies to create a business-friendly environment;
▪ Refresh Philippine IT-BPM’s value proposition and promote continuing positive conversations around the IT-BPM industry through strategic marketing and targeted investor relations initiatives; and
▪ Hasten projects in improving and strengthening telecommunications, power, and transportation networks as well as other infrastructures.
Given the persisting COVID-19 situation in the Philippines, an urgent and pressing matter that also needs to be addressed is the timely, efficient, and widespread rollout of the vaccine. This will be critical not only in the health and safety of the general population but also in bringing back a sense of normalcy and predictability for the business sector.
