By Justine Irish D. Tabile, Reporter
THE GROWTH of the Philippine information technology and business process management (IT-BPM) industry this year is expected to outpace the global average in terms of job generation and export revenues, an industry group said.
“We have grown to 1.82 million in 2024 and will hit 1.9 million by the end of 2025. So, we are closing in on the 2-million mark. What we will also hit in 2025 is $40 billion in export revenue,” IT & Business Process Association of the Philippines (IBPAP) President and Chief Executive Officer Jonathan R. Madrid said at a press briefing late on Monday.
“That is a growth of 5% over last year and 4% in jobs over the previous year. Growth is always good news but considering that the global growth of our industry only grew 3%, it shows that yet again the Philippines is leading the growth of the industry,” he added.
These numbers, he said, are the recalibrated targets for the year but are below the industry’s aggressive targets under the IT-BPM Industry Roadmap 2028.
“We are exceeding our baseline targets, but we are slightly below our aggressive targets,” Mr. Madrid said.
When setting the targets, he said that the industry considers the changing work types, availability of talent, and ease of doing business.
“This industry is no longer about cost optimization. It is about the availability of the talent, ease of doing business, and balancing where you give the work. Because investors cannot put all their work in one place, there has to be diversification,” he said.
“So, being such a leader, together with India, the issue of overconcentration has become a topic, and so we really need to address those other issues so that we can maintain our market share,” he added.
According to IBPAP officials, the industry continues to face challenges at the local government unit (LGU) level despite the implementation of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act and its implementing rules and regulations (IRR).
“With the passage of CREATE MORE, we hope that problems with LGUs and the Bureau of Internal Revenue will have been addressed,” said IBPAP Chief Operating Officer Celeste B. Ilagan.
“But we see that even with the issuance of the IRR, some of our members still encounter problems with certain LGUs. And it really revolves around how the LGUs interpret the provisions of CREATE MORE in terms of incentives that enterprises are entitled to,” she added.
To resolve this, she said that the Department of Trade and Industry, the Department of Finance, and the Department of the Interior and Local Government are planning to issue a joint memorandum circular (JMC) that will specify how the LGUs should interpret CREATE MORE.
“We have seen a draft of that JMC that has done the rounds of consultation. We know that there’s one more consultation in the province before they are able to pass that JMC,” she said.
“That will specify what the LGUs should follow in terms of imposing fees and charges, what requirements there are for business permits, all of that,” she added.
Ms. Ilagan said these challenges are being experienced by existing enterprises, as new investors are still checking out which cities they should set up shop.
Meanwhile, Mr. Madrid said there are opportunities for growth in global capability centers (GCC).
“I am happy to say that every week our office is visited by locators and investors who want to expand their footprint in the Philippines and are considering setting up operations in the Philippines,” he said.
“Much of the growth and interest comes from GCC; these are companies like JPMorgan and HSBC. I think this is a sector that we need to focus on because these tend to offer higher value-added jobs,” he added.
For instance, Mr. Madrid noted that India has seen an increase of 100 GCCs per annum, with its entire GCC industry already as big as the entire Philippine IT-BPM industry.
“I think we should really emphasize and focus on growing GCCs. As it is, we only have 150 GCCs in the country. I think the potential is much more,” he said.
“I think there is an opportunity to grow our presence in the GCCs. And I think this is important because the revenue per employee in GCC is much higher than the broader industry,” he added.
To date, the industry has 250,000 employees in GCCs led by banking and financial, insurance, and healthcare services. The GCCs accounted for $8 billion, or 20% of the total industry revenues last year.
Also, Mr. Madrid said that there has been a rise in employment in the countryside mostly because cities in the provinces do not have the same kind of public commuting issues faced by workers in Metro Manila.
“The countryside is a bright spot for the industry. Before COVID, we were only 25% outside Metro Manila. Today, we are at 32% of a bigger base,” he said.
“And according to our roadmap projections, we see that growing to 40% by 2028. Congestion in Metro Manila is an issue, so the countryside helps to decongest that,” he added.
However, he said that revenues are still higher in Metro Manila, as most of the GCCs are located in Metro Manila and Cebu.