A year of BPM expansion
Weaker peso ‘a blessing in disguise’ for IT BPM sector in Cebu, source of 138,000 direct jobs
BUSINESSMAN Donald Trump’s success in the US presidential elections and his vows to penalize companies that send jobs outside America did not stop Cebu’s Information Technology and Business Process Management (IT BPM) sector from growing, at least in 2016.
In fact, a key official in the local IT BPM industry spoke of company expansions and double-digit growth.
“This year, the IT BPM industry was still characterized by expansions… Growth was still very significant at 15 percent based on the latest and revised estimate released by the Cebu Economic and Business Unit (CEBU),” said Cebu Educational Development Foundation for Information Technology (Cedfit) managing director Wilfredo Sa-a Jr.
Direct employment in IT BPM companies in Cebu alone already stands at 138,000. This translates to P26.9 billion in wages circulated back to the economy this year. Sa-a said this does not include the value generated in indirect employment.
414,000 jobs
For every job created by the IT BPM industry, three jobs in different sectors like restaurants, transportation, retail, and construction are formed, he said. The official estimated indirect jobs to reach 414,000, translating to a total of P43.1 billion worth of wages yearly.
In addition, the weak peso turned out to be “a blessing in disguise” for the Cebu IT-BPM, described Sa-a, since the industry itself is an export activity.
The peso currently hovers in the P49 level. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo earlier traced this to demand for dollars for debt servicing as the year closes, higher dollar inflows and concerns on the Federal Reserve rate hike, as well as uncertainties on the economic and immigration polies under the Trump administration, which will assume office on Jan. 20, 2017.
Cautious
While Trump’s rhetoric against outsourcing companies has not caused turmoil in the Philippine IT BPM environment, a multinational Vietnamese investor said this has already caused jitters in the US.
“We’re still on a wait-and-see stance on what the US government will take in the coming time, but for those companies who highly depend on the business coming from the US, definitely they are very
Wnervous,” said FPT Software chief executive officer Hoang Viet Anh.
FPT Software of FPT Corp., reportedly the largest IT corporation in Vietnam, has Philippine operations in the Cebu IT Park, which opened in March 2015. They employ approximately a hundred IT specialists and engineers.
At this point, Anh said that Japanese companies cover 50 percent of their market, making them less vulnerable to any looming instability in the outsourcing industry following Trump’s pronouncements.
Locally, however, the IT BPM sector also has its share of challenges.
Talent availability, according to Sa-a, is one of them. Through Cedfit, the ICT Council official said they have coordinated with schools and companies to answer the academe-industry gap.
Room to learn
Among these are Cedfit and the National ICT Confederation of the Philippines’ (NICP) partnership with Information Technology and Business Process Association of the Philippines (IBPAP), where they are working on the funding for the Service Management Program (SMP) with the Commission on Higher Education (CHED). SMP, Sa-a said, is a five-subject enrichment program plus a three- to sixmonth industry immersion.
Cedfit also fostered a partnership with the Cebu City Government, Department of Education (DepEd), and the Department of Information and Communications Technology (DICT) in rolling out the Learning English Application for Pinoys (LEAP) to 27 senior high schools across Cebu City.
The organization also continues its partnership with the DELL-EMC for its Academic Alliance Program that aims to enhance the IT skills of teachers. In the coming days, Sa-a said, three teachers from Cebu and Dumaguete will present their research paper in New Delhi, India under the DELL-EMC program as part of the continuing IT education and exposure of teachers for global competitiveness.
Higher value
Aside from talent availability, increased competition among companies in terms of acquiring and retaining talents is also a concern.
For FPT Software, while talent was available to them when they expanded in the Philippines, managing director Do Tuan Anh has observed increased competition among companies in acquiring workers.
“In terms of talent resources, it’s getting a bit more competitive,” he said. To attract talents, BPO companies offer attractive salaries.
Aside from talent, investors also pointed out the poor state and high cost of internet connectivity in the country. “If it can improve, it can help a lot in our operation,” Anh said. Internet services in the Philippines are almost twice as expensive as that in Vietnam, and slower too.
Moving forward to 2017, IT BPM players continue to see opportunities in Cebu.
“The IT BPM industry is expected to continue to grow but in the higher-value space. We will not expect the same growth figures as in the past but this will continue to bring higher revenue as we will be focusing on the more complex activities,” said Sa-a.
Eye on new sites
Based on the IBPAP Roadmap 2022, the Philippine IT BPM industry targets to generate a total of 1.8 million jobs and revenues to reach approximately $39 billion annually.
Growth is also seen to be more inclusive as companies have started to expand outside Metro Manila and Cebu.
Among them are Mercedes Benz, which will be expanding in Metro Clark, while eBusiness BPO is headed for Cagayan de Oro. Meanwhile, ePerformax will be opening soon in Roxas City and Puerto Princesa City in Palawan. Sa-a said that ePerformax will be the first BPM locator in Palawan. The official said three other big companies that are already in Cebu are also eyeing expansion in key cities in the Visayas.