BPO sector sees slowdown to single-digit growth until 2022
THE business process outsourcing (BPO) sector is projecting a rate of revenue growth slowing down to the single digits until 2022 as the industry matures.
“The growth leading to 2022 is slower...We project growth of revenue at around 9%,” Information Technology and Business Process Association of the Philippines ( IBPAP) President Rey Untal said yesterday at the press launch of the 9th International IT-BPM Summit.
Mr. Untal said that the slowdown from double-digit growth of recent years is due to various factors such as technology and human capital. Stakeholders have crafted a road map for the sector for until 2022.
“For the past five to eight years, we have been growing in the mid to high teens...around 15% or 16%. When the luminaries in the industry crafted the road map, we factored in impact of technology, human capital, the pace by which the global industry will grow, and given that we already have this much skill and [a higher] level of maturity, [the growth is slower],” Mr. Untal said.
He added that the growth is “still substantial,” particularly in comparison with the global growth of the sector which is pegged at 5.7%, and that there is evidence that the “wait-and-see” attitude of potential investors is changing with upcoming investments by new players. Mr. Untal however declined to disclose the companies which are planning to locate BPO offices here.
New investment pledges registered for the IT-BPM industry fell by 34% year on year in the second quarter to P4.9 billion.
Benedict C. Hernandez, CEO of IBPAP, however said that even with slower growth, an estimated 100,000 high-value jobs will be added per year.
Catherine S. Ileto, vicepresident at IBPAP, said that operations in Mindanao remain normal, with operators in Davao being exempted from the imposed curfew with the implementation of martial law in the entire island.
Mr. Untal however noted that overall security risk are among the headwinds that the industry is currently dealing with.
On concerns regarding the protectionist stance of the United States under President Donald J. Trump, Mr. Untal told reporters that the industry believes that the “America First” policy of Mr. Trump “was not directed at the services industry” and that no relevant legislation concerning outsourcing has been passed.
“More importantly, there are no bills or specific laws enacted that would impact... outsourcing,” Mr. Untal told reporters.
Mr. Hernandez said that artificial intelligence (AI) is expected to take over large parts of the “transactional” market and will actually enrich human jobs. AI will take over “routine” tasks, and human workers will then have “more interesting” challenges.
“Technology will not necessarily eliminate jobs, [rather, it] will make the jobs more efficient,” Mr. Hernandez said.
He said that the industry forecasts 40,000 less workers for jobs requiring simple tasks, while about 70,000 workers will be hired for medium-skill and highskill types of work.
Mr. Untal said that the sector is “in a good position” for the oncoming impact of the use of AI, and that it is “working closely” with government partners and the academe to provide appropriate training to students and workers to equip them with the necessary skills demanded by the takeover of AI in transactional jobs. —