Weekly with JC: IT-BPM in PH
By Danielle Kaith Medina
Since the pandemic began, the IT-BPM industry had to overcome adversity and demonstrate its world-famous resilience. It has also faced unprecedented disruption. That not only exposed vulnerabilities in our BCP but also saw altered client needs, modified work models, and accelerated the pace of digitalization. However, despite these hurdles, the industry continued to demonstrate its agility, resilience, and leadership. The sector actually grew by 1.8% in 2020, creating a net increase of 23,000 new jobs in terms of revenue. It grew 1.4%, ending the year with 26.7 billion, which is impressive for 2020.
The Everest Group determined that globally, the sector grew anywhere from 8 to 12% in terms of headcount and between 8 to 13% in terms of revenue in 2021. This was due to several reasons. The first of which is a soaring appetite for outsourcing through the use of both near shore and offshore centers. There’s also been an increasing move towards higher value services combined with the talent supply and demand mismatch which enabled providers to command premium prices through this period. Additionally, the surge in demand for Global Services has been driven by pent-up demand that started in the fourth quarter of 2020 and the accelerated IT modernization and business transformation plans of enterprises to adapt digital first business models. Several opportunity areas have been identified, including IT-oriented and complex services. Specifically, cloud and data center services, finance and accounting, IT, and application maintenance. Several emerging BPM subsegments have also seen increased success on the local front in 2021 such as insurance and health, BPO, and HR outsourcing.
According to the PSA, Philippine GDP grew 5.6%, which was a good turn around considering that it declined in 2020. The Philippine IT-BPM sector will fortunately follow. A similar trajectory will grow anywhere from 7 to 8% in terms of headcount and probably around 11 to 12% in terms of revenue. Those are impressive numbers for 2021 and a key factor that has helped expand our country. We are also seeing our sector continue to create job opportunities for more Filipinos between January to October 2021. There were 80,000 job openings in the industry and that is already 30% higher than the full year of 2020. In terms of real estate, demand from our sector continues to grow.
All of this sounds very impressive, but it would not have been possible without the continued partnership and collaboration with the government. We were identified as an essential industry very early on, and as a result of that, we received concessions that helped our members mobilize very quickly both personnel and cargo, allowing IT-BPM enterprises to operate at 100% on site capacity and achieve enhanced operations alongside our service providers. To accelerate the opening of the economy, we must prepare for scenarios where our request for an extension will be denied, and because of this, we will need to convene a meeting with our members to prepare the way forward for our needed transition.
With the elections coming up and the incoming new administration, we have already begun the process to work with whoever will run the government by the middle of the year. In the past two decades, our industry has contributed Php 329 billion in investments. That’s over 12% of the total investments of PEZA and that has resulted in almost 1,000,000 direct jobs. Our sector is expected to continue to lead in diversifying the export base of our country, according to the Department of Trade and Industry.
Growth is expected to be even higher than pre-pandemic levels. Global clients are looking to further increase their leverage of near shore and offshore locations to drive growth in the years ahead and this is because of some of the emerging trends. Digital is at the forefront of this trend. The accelerated adoption of digital technologies and the future of digital business will continue to be dependent on trust and extensive training. The growing demand for both niche and technical skills will continue with extensive training in such skills necessary in delivering services beyond the traditional work streams. Operating and working models will also need to change because in the aftermath of the pandemic, organizations have seen an increase in their location diversity.
A contingent or extended workforce is the next frontier for disruption and innovation. Attrition for our industry has always been high, but it has become higher, and so we need to address this which has also put pressure on fast-rising salaries. Misalignment of talent supply and demand is becoming serious as well. High demand skills are in short supply. Pandemic-related disruptions have increased this misalignment of talent, demand and supply. We have all heard about the great resignation where digital workers want more flexibility. In a in a recent survey that we conducted, 40% of the workforce have indicated some kind of intent to leave their current job in the next three to six months. Globally, the attrition in the industry has increased 10% over the previous year.
Adapting to new business models emerging from a traditional one requires a lot of change. Change enterprises are expected to transform from soiled fragmented institutions to organizations with comprehensive spec implementation that brings together agility. Changes brought about by the pandemic is really the concept of work from anywhere and that pertains to working remotely, either permanently or part time, with or without an actual corporate physical presence. The benefits of this are quite numerous, including gaining access to more talent, and this is relevant for the Philippines being an archipelago which allows us to access talent pools across our country. Work from anywhere has also resulted in an improvement in employee satisfaction by offering flexibility, thereby helping reduce attrition and unscheduled absences. It has also allowed our industry to remain competitive and retain our market share, both in terms of cost and operational flexibility. The decongestion of Metro Manila has also been a big benefit, allowing some of our employees to return to their home provinces while also reducing the overall carbon footprint. Last but not least is sustaining and improving productivity due to an optimized workday. Less commuting is always a good thing, and this has yielded a lot of benefits and productivity to our industry’s workforce.
The industry road map serves as our blueprint for the goals and the metrics of what we want to achieve as an entire industry. It is our intention to hand over our road map to the next administration. The enlightened legislation that we will expect from the next administration for our industry to continue its growth and defend its market share and retain the Philippines’ attractiveness as an investment destination. By the middle of this year, we will be handing over our road map to the next administration, because it is not just the industry road map after all, but the country’s road map, and we want the next government to co-own that with us so that we can achieve all the potential and growth and share all of these with the market.
Please visit and join the John Clements Talent Community.
About the author:
Kaith is a Psychology graduate from the University of Santo Tomas (UST) and a registered Psychometrician. Dancing and anything related to food is both her hobby and passion. She is a dog lover who enjoys spending free time with family and loved ones. Kaith loves exploring new things and activities that makes her grow as a person.
