Politics

Outsourcing industry slashes revenue goals amid pandemic

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credit: Bloomberg

By Jenina P. Ibanez, Reporter

The outsourcing industry once again cut its revenue and employment targets up to 2022, as growth is expected to be flat for the rest of the year due to on-going lockdown measures.

The Information Technology and Business Process Association of the Philippines (IBPAP) in a press conference on Friday announced a 3.2-5.5% revenue compound annual growth rate (CAGR) projection to $27.88-$29.09 billion for 2022. This is lower compared to the 3.5-7.5% CAGR forecast set last year.

Employment CAGR is projected at 2.7-5%, which would mean 1.37-1.43 million full-time employees. This is lower than the previous goal of 3-7%. This means the industry plans to add 130,000 jobs between 2021-2022.

IBPAP last year cut its targets from the 9% revenue CAGR and 8% employment CAGR set in 2016, citing pressures from geopolitical issues, automation, protectionist policies, and the rapid transformation of business models.

IBPAP President and Chief Executive Officer Rey E. Untal said industry revenues are projected to remain flat this year, although he expects the outsourcing industry to outpace the slumping economy.

“Globally, the IT-BPM industry is outperforming the economy, which is great,” he said. “If you look at the Philippines, we reported that the expected outcome for 2020 will also be relatively flat.”

The information technology subsector is experiencing challenges this year, although contact centers and business processing centers are experiencing this to a minimal extent, Mr. Untal said.

In contrast, the healthcare subsector and global in-house centers are experiencing a surge in demand, amid the pandemic.

Mr. Untal said the industry should not take comfort in the fact that revenues remained flat despite the shrinking economy, but should focus on quick recovery.

“Part of the study is in fact to look into the different drivers both globally and locally and anticipate to what extent can we grow this industry over the next two to three years.”

The IT-BPM sector is a key driver of real estate development and household consumption, which in turn fuels nearly 70% of gross national product.

Mr. Untal detailed six initiatives that could help industry growth. He said telecommunications infrastructure must be strengthened to support long-term remote work, and investments in digital and cybersecurity initiatives must be increased.

He also noted that the local industry’s position in the global market can be improved with more focus on industry resilience.

“The investments that need to be made need to be shifted as well. Obviously, the ability for highly urbanized areas or communities, we need to ensure that there is a robust infrastructure – telecoms being one of them, and power obviously is another – that we can rely on to consistently deliver the service that we do globally,” Mr. Untal said.

He added there must be more investments in upskilling and infrastructure development in the provinces, as well as improve the ease of doing business.

Noting that some work-from-home operations will likely be here to stay, Mr. Untal said that government regulations must support permanent remote working measures.

“We need to likewise look into our existing regulations and say, ‘Hey are there regulations that we have that prevent us from being able to do (remote work)?’,” he said.

IBPAP plans to start the pilot classes for its upskilling program in January. The industry group also partnered with Microsoft for free digital training programs that will be introduced next week.