IT-BPM sector trims revenue growth numbers by $3B; 140K less jobs seen

THE information technology and business process management (IT-BPM) industry has trimmed its growth numbers by $3 billion in revenue and 140,000 workers in employment, as it rethinks its programs and policies to recover from the setbacks caused by Covid-19.

Rey E. Untal, president and CEO of the IT and Business Process Association of the Philippines ( Ibpap), said the industry is seen to grow flat this year in spite of the challenges posed by the pandemic. He argued a flat performance should do in a year when most sectors are staring at a decline on all fronts, from sales, to profits, to labor force.

However, a study by the Everest Group, the consultancy tapped by Ibpap to assess prospects, reports a reduction in industry figures for until 2022.

Citing the Everest study, Untal said the industry by 2022 is now expected to generate just $29 billion, from the revised projection of $ 32 billion. It is also now seen to employ only 1.43 million workers, from the previous forecast of 1.57 million workers.

In total, Untal concluded the industry should bring in $29 billion in revenue by 2022, as well as add 130,000 jobs between 2021 and 2022.

For IT- BPM firms to achieve these goals, Untal said they need policy reforms to take place, particularly on infrastructure. He said the pandemic forced industry players to accelerate their pivot to digital, and this would be impossible to do if connectivity remains a problem.

The Ibpap chief said telecommunication firms have committed to expedite efforts to build new broadcast towers and improve Internet connection, especially in rural areas, to ease the shift to remote working and blended learning.

Furthermore, Untal argued that the revised growth numbers expect the fiscal regime to favor the interests of investors. As such, he said hitting the figures on revenue and employment depends as well on the plan to lift fiscal incentives granted to investors as packaged in the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill.

Warning on tax perks loss

ONCE passed into law, the CREATE bill will reduce corporate income tax to 25 percent, from 30 percent, on one end, and will introduce a new set of tax perks on the other.

Industry groups, including Ibpap, have been asking legislators to junk the component of the bill on incentives. They warned that exporters in economic zones will shut down their operations in the Philippines and relocate to another Southeast Asian country if the government pushes through with its move to change the incentives.

In spite of the blows suffered this year, Untal said the Philippine ITBPM industry is anticipated to keep its share in the global market.

Whereas the industry is projected to grow between 3 percent and 4 percent on a global scale, it is expected to expand by as much as 5.5 percent on the domestic side until 2022. Untal said health care has improved its numbers during the pandemic to offset the declines posted mostly by travel, tourism and hospitality.

The progress made by Pfizer and Biontech in developing a vaccine have raised the optimism of IT- BPM investors here, according to Untal.

Last year, the Ibpap lowered its growth forecast for the IT- BPM industry due to changes in the tax policies here and the escalation of a trade conflict abroad. In the IT- BPM road map, the original projection was that the industry would generate $38.9 billion in revenue and employ 1.8 million workers by 2022.

Based on Ibpap records, the industry last year added 71,000 new workers to increase its labor force to 1.3 million, and grew over 7 percent in revenue to reach $26.3 billion, from $24.5 billion in 2018.