The next phase of the IT-BPM industry

Not known to all, the IT and Business Process Management (IT-BPM) industry started in the Philippines as early as the 1980s with basic encoding, a sprinkling of IT programming and in-house development as its humble beginnings. More than 30 years down the road, the industry has grown to over 1,000 companies, generating jobs for more than 1.3 million Filipinos while indirectly impacting close to 4.1 million more people across the country.

Today, the IT-BPM industry is the largest job generator in the country and one of the biggest private sector employers. Also, alongside overseas Filipino workers’ remittances and tourism receipts, it is one of the economy’s major sources of foreign exchange, with recorded revenues of $24.7 billion in 2018.

Everyone has seen how the IT-BPM sector has positively affected millions of Filipinos. The exponential growth of the industry has also triggered multiplier effects across the local economy, spurring commercial real estate development and, of course, consumption spending. In 2018, the growth of our industry contributed P963.6 billion to other business sectors, including: food industry (P138.1 billion), banking (P83.7 billion), real estate (P73.9 billion), hotels (P63.6 billion) and transportation (P53.8 billion).

As the enabling association of the IT-BPM sector, we face both challenges and opportunities head-on, leveraging on the continued dialogue with stakeholders in the academe, industry and key government agencies to fast-track the human capital and infrastructure development requirements and enactment of legislation that truly promote ease of doing business.

On the legislative front, the IT-BPM industry supports the Tax Reform Package 2, or now better known as Citira (Corporate Income Tax and Incentives Rationalization Act), and we laud our government’s objective to reduce overall tax rates. But we encourage our legislators to take into consideration how rationalizing incentives may lead to a point where it negatively impacts job generation. Fiscal incentives sustain the attractiveness and competitiveness of the Philippines as a preferred IT-BPM destination, and uncertainties over it influence investment decisions to retain or locate operations in the country.

We remain optimistic in our industry’s continued growth; however, we respectfully seek support over certain provisions, specifically the full inclusion of our industry in the Strategic Investment Priorities Plan and the retaining of VAT Zero Rating for exports above 70 percent. Equally important is having the sunset provision of 10 years at 7-percent gross income earned, while maintaining the Philippine Economic Zone Authority’s one-stop shop model will ensure increased confidence from both existing and potential investors.

From a talent perspective, a high priority for our industry is the upskilling of both pre- and in-workforce, to better prepare for higher complexity work as disruptive technologies of the Fourth Industrial Revolution become more prevalent. With the rate of the disruption, the Philippines will need talent who are not “narrow specialists” but are of a generation of lifelong learners. The skills and mindset pivot involves crucial steps that will keep the Philippines relevant and globally competitive.

Given the right environment and continued support from stakeholders, the IT-BPM industry will continue to thrive and remain as one of the major contributors to elevating the Filipino quality of life, while driving inclusive growth in the countryside and serving as a catalyst for improving education, to enable a nationwide readiness for the jobs of the future.

Rey E. Untal is president and CEO of the IT & Business Process Association of the Philippines.

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