REY UNTAL President & CEO IT & Business Process Association of the Philippines

The IT-business process management (IT-BPM) industry has a new leader: Rey Untal. Untal comes on board as President and CEO of the IT and Business Process Association of the Philippines (IBPAP), which groups the country‘s ITBPM players, armed with a strong sense of patriotism.

Despite his reservation, Untal blended in with ease and deep understanding of an industry that is facing a lot of headwinds.

TAX PACKAGE Foremost, the industry is confronting of what could be a new era in the country’s taxation regime. The ITBPM industry, except for a subsector ROHQs (regional operating headquarters), has been assured of a status quo under the current Package 1 in the tax reform package approved in Congress.

ROHQs could be impacted because the House version has removed its 15 percent preferential tax rate. It is not certain if the Senate will eventually retain the ROHQs’ preferential tax rate.

IBPAP has appealed to Congress because based on its rough calculation, the removal of the preferential 15 percent tax on ROHQs will only give the government R1.5 billion in additional tax collection.

It maybe small in the grand scheme of things, but Untal stressed that in relation to employment that this subsector brings it is big with estimated employment of 150,000 of the 150 to 160 HOHQs operating in the country. Once the preferential tax rate is removed, ROHQs could be facing a higher income tax bracket.

Revenue wise, he said, the ROHQs contribute about $4 billion out of the total $23 billion the industry earned in 2016.

“This tax incentive is making the Philippines an attractive location for conglomerates as opposed to Malaysia, Singapore and Hong Kong,” says Untal.

“It is hard to say of the immediate impact, but it will definitely make the country less attractive as an ROHQ location,” says Untal adding that India is still number one for ROHQ because of its big talent pool but there are also other countries that are becoming more aggressive in terms of luring this kind of investments. He mentioned Malaysia, which he learned is luring ROHQs with good incentive package.

Untal is a firm believer that the reason the IT-BPM has grown to be become the country’s darling industry is because of the country’s good talent pool, acceptable infrastructure and conducive environment for this kind of industry to thrive.

“And we have proven that locators can in fact be successful here,” says Untal citing the big ROHQs such as Wells Fargo, Chevron and Citibank. These are big companies and this sector is growing aggressively. They’re servicing internal offices and shared services for their own company.

“ROHQs are also the ones that are equally aggressive in pushing works that are more complex, not the run of the mill kind of services, they are into finance and accounting, HR services and more of analytics. These are the jobs of the future and the reason they are able to do that is they have full control of their operation. So, it makes sense to deliver these services in one central location,” adds Untal.

The Package 2 of the tax reform is the more critical because the government will be about adjusting corporate income tax rates and incentives rationalization.

“That is going to be critical, but the draft is not yet available. We are really pleading to retain the incentives as we have them now primarily for the cost competitiveness angle because as a country we are not living in isolation. Other countries are equally aggressive in bringing into their location these investors and they are also extending incentives to make them attractive. So we should not make ourselves more expensive than we already are and become less attractive to potential investors,” adds Untal.

WEAK PESO The overall weaker peso is helpful to any export-oriented industry, but Untal said they cannot keep on counting on a depreciated peso. What is important, he said, is to make measures to increase revenue collection either through additional tax measures and efficiency in tax collection and other ways to raise taxes that will not burden the industry with additional cost because the flipside is a less attractive Philippines.

Untal even cited the report of the Philippine Economic Zone Authority that investments in the IT-BPM in the first five months of the year dropped by 34 percent versus same period last year.

“So, the least we could do is avoid further straining our cost competitiveness,” he adds.

As the industry is feeling that decline in investments, IBPAP is concentrating all efforts towards recovery. Already, IBPAP has been active in trade missions and follow throughs on potential locators.

COMPETITIVENESS

In the most recent Tholons Report on independent country and city competitiveness for the IT-BPM industry, the Philippines slid to number 3 from number 2. India is still number one followed by China in the overall country ranking.

“The most recent report, which came out last month, is a wake-up call for all of us,” adds Untal.

In terms of cities, Manila also slipped number 4 from 2 as two Indian cities showed up Bangalore and New Delhi on top of Mumbai. Also, Cebu was down to number 12 from number 8 in city competitiveness ranking.

“This may not be a cause of significant concern but since we’ve slipped, then there is a need for more action,” says Untal saying the Philippines is going up against Brazil and Mexico, which are entering the IT-BPM market.

“Other cities are doing their best and we all need to work together because we need all the energy,” he adds.

INTERVENTION

Untal added the industry, government and the academe have already put in some interventions under the roadmap.

There is a new criteria now that talks about innovation, digital and startup ecosystem, which have been tackled in the Roadmap 2022.

“We need to pivot into the digital world and be aggressive. Part of the roadmap is to step on the pedal harder to accelerate all activities,” says Untal.

Based on the IT-BPM Roadmap 2022, the industry is projecting total revenue to grow $38.9 billion by 2022 of which the contact center sector or the voice sector is expected to grow 8.2 percent to contribute $20.4 billion of total revenues. In 2016, the industry employs 1.3 million direct workers and $25 billion in revenues.

The threat of the tax reform program is just domestic, but the industry also continues to battle with the impact from the headwinds of US President Trump’s “America First” policy.

“To say that the industry will not be affected by the ‘America First’ would be naïve,” says Untal adding that there is a public relations dimension to this like how to manage how work is expanded outside of the US.

The best route, he said, is to make the Philippines visible by making more promotions overseas and drum up the country as best location for IT-BPM.

RECALIBRATION This is one reason Untal is pushing for a mid-year recalibration of targets and plans, especially with the decline in IT-BPM investments, which will have an impact down the road and will translate into headcount.

He is looking at a reassessment with the assistance of independent analysts to help come up with semestral checkpoints.

The industry though is still confident of growth although no longer the double-digit growth seen before when the industry was just starting. The industry has already reached some level of maturity. Until last year, the industry still grew in the high teens of 8-9 percent.

“We are meeting the 8-9 percent growth, and the Roadmap still projects the creation of 100,000 jobs each year in the next seven years,” says Untal.

A reassessment is timely given the wait and see attitude of American investors due to President Trump’s policy and the Marawi incident that has triggered an issue about security and safety.

Untal, however, said that while the Marawi and the Martial Law in Mindanao are still issues on the back of industry players, it has always been “business as usual” for the BPOs that are located in Mindanao such as Davao and Cagayan de Oro.

“They are still there,” says Untal.

THE PATRIOT

Untal could have chosen a life as an American immigrant in mid 2000, but his love for the country prevailed over that. Untal feels that if every individual, who can make an impact in the Philippines would move out then the Philippines would be in a pitiful state.

“So, I made a stand to contribute in the prospects of impacting more lives. I made a very difficult decision to surrender our greencard. It was not a very popular decision and everybody’s scratching their heads, but it is hard to explain. It is corny, that patriotic element,” he adds.

He spent a colorful 19 years with Accenture, including three years as an expat in Australia with his family. Until his retirement in August 2016, he served as Accenture Industry Group Lead for the Communications, Media & Entertainment, and High Tech Portfolio in Accenture’s Philippine Delivery Center.

“The dream was to pay it forward for this industry which has done so much for me and family,” says Untal.

He figured three simple objectives upon retirement: improve his golf game, take up a masters degree, and join the academe.

In the first few months from his retirement, Untal indulged himself in golf games. He played three times a week.

“I woke up at five in the morning to play golf, but my game did not get any better,” says Untal, making fun of himself. He said his games still remains erratic, but he still continues playing golf because it is a good exercise.

“Golf is fun, once the golf bug bites you can hardly explain why you endure the heat of the sun, walk 7 kilometers, and hit the ball and follow it. It is a mind game, it’s fun, good camaraderie, good friends and many of you are likeminded,” says Untal, who used to be a varsity player of the UAAP for two years playing table tennis.

Untal, who graduated from Ateneo de Manila University with a double degree in Physics & Computer Engineering, has a full understanding of how doing business beyond technology, but he never took up masteral.

“I never had the chance to do masteral because Accenture is like a masteral on its own,” says Untal.

Upon retirement, he explored a few schools in the US and UK. But he is now looking at the AIM as a very good option. He already sat down with AIM and feels the school has opened a new dimension to his objective.

The third objective of going into teaching is not that remote. The principles of quantum physics are still fresh in his mind, but more than that he can be a mentor to make students aware of what they have to help shape the future. The people he nurtured at Accenture from late 90s are now the leaders of the company and he took pride of that.

IBPAP His entry into IBPAP is perfect because this organization is also about nation building.

“What we do here is we are the voice of industry, an advocate, and to a large extent creating a large middle class and certainly help in poverty alleviation so whenever I hosted investors those are little efforts that I do. But we impact on jobs creation so I feel every effort I have has direct contribution to alleviate poverty and impact on the lives of people. So, I wake up everyday excited,” says Untal.

He looks at his role in IBPAP as sort of a statesman where he meets investors, analysts, and potential locators. As a conduit, he is supported by a strong team and board, all working to accomplish the objectives and vision set under Roadmap 2022.

“That vision is very strategic and if there is anything that keeps me awake at night, that is putting all the efforts to achieve our targets five years from now,” says Untal.

His biggest concern though before joining IBPAP was that his network was mostly outside of the industry and he has very little contact with local partners. Good thing he has a very supportive board. He also found out that BPO executives work as a small but tight unit, brought together in the same spot of like-minded people. This makes it easier for Untal to build a network as he blended naturally.

“I’ve been here for four months yet but it feels like three years already,” says Untal as time breezed by with all the meetings and activities thrown at his lap. The biggest shift was how he consumed one box of business cards in just one month. This is already his fourth box.

“Once I get to meet a lot of people, I get energized. I could not be happier,” adds Untal, who travels from his home in Fairview to the IBPAP office in BGC, branding the traffic as trivial compared to the role he plays in the organization.

“I was a patriot even before, but I am living it more now,” adds Untal, who rose from being a programmer and moved into the managerial post.

As a boss, Untal always emphasizes delivery and outcomes done fairly and without stepping into other’s toes.

“I am outcome driven, most of all and I like to help the team around me become more successful so they can take on what I am doing and I can take other stuff,” says Untal.

On his spare time, Untal never leaves house saying his wife has designed the house in such a way that it would be difficult for him to linger outside than necessary. Indeed, his house has a space that is not only fit for entertaining guests and loved ones but as a place for him to practice his golf.

“Weekend is for family. We make it a point we do something special on weekends, so I cook for the family and go to the wet market which I’ve been doing eversince,” says Untal, whose two kids, 21 and 18, are already starting to have their independent schedules.

Untal travels with his family to the US one or twice to visit his siblings, who are all in the US. Sometimes, they would travel to Europe and other parts of Asia and in local places they have not been to yet.

BULLISH Despite the challenges in the industry, Untal remains bullish of what IT-BPM can do to the economy.

“We will continue to be dealing with these headwinds to make this country more competitive,” he adds. There have been forecasts that IT-BPM will one day overtake OFW dollar remittances, but Untal does not like to compete in terms of what industry contributes the most to the economy.

“This is not a beauty contest, it does not matter who brings in the money because at the end of the day we all contribute in making the country more vibrant. We just focus on what makes this industry better and if time comes that it contributes more than the OFW then it is just a by-product, it does not make one less or more important,” says Untal.

The IBPAP has also gone full steam ahead with its human capital program and interventions with government, industry and the academe working together to better prepare graduates for the jobs of the future like upskilling people to be able to move to more high value tasks.

In fact, he said, a major factor in the IT-BPM’s success is the country’s competent labor pool, the western culture enabling the workers to muddle through with their good English, along with other factors of having the right environment, conducive, ease of doing business and right fiscal incentives.

“Our success is a combination of a lot of factors, we cannot take one as an isolated case. It has to be taken together,” he says.

Despite the headwinds, having a patriot at the helm is what makes all the difference.