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

- By Eli­jah Felice E. Ros­ales Business · Finance · Taxes · Investing · Employment · Infectious Diseases · Society · Health Conditions · Philippines · Pfizer · Business Process Management · Everest Group

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.

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