Executive Summarycallcenter

The information technology and business process management (IT-BPM) and global in-house center (GIC) industry in the Philippines has grown at an annual rate of 30 percent over a decade. faster than the growth of the global offshore services market. As it has grown, the industry has diversified significantly in breadth, scale, and maturity of services. An ambitious forecast embodied in an industry road map of revenues of US$25 billion and 1.3 million direct employees by 2016 appears to be within reach.

If these targets are reached, the Philippine IT-BPM and GIC industry will have consolidated over 10 percent of the global IT-BPM market. This share will be maintained at least until 2016, when global market is expected to be between US$240 billion and US$250 billion (Everest Global estimate as of 2012).

Number one in voice, number two in non-voice

In 2010, the Philippines emerged as the number one provider of voice BPM services in the world, and in the ensuing period its leadership in this segment has been broadly acknowledged. Though there has been less visibility for the Philippines’ non-voice, complex services capability, and the contribution of global in-house centers (GICs), they have accounted for almost 15 percent of industry revenues in 2011 and are growing faster than traditional voice services.

Non-voice services are delivered in a wide range of functional and vertical areas which include engineering, health care, legal, financial, creative, and software services—among many others—for the energy, banking, investment, insurance, shipping, media, and other industries.

Collectively, the industry provides services for a wide range of prominent Fortune 1000 firms in North America, Asia, and European Union. IT-BPMs and GICs include small firms with less than 500 employees (80 percent), mid-size companies with up to 9,000 employees (18 percent), and large to very large multinationals with 10,000 to more than 30,000 full-time agents and knowledge workers (2 percent, Figure 2). In 2011, the industry employed approximately 638,000 Filipinos and was expected to expand by at least 20 percent in 2012. The Philippines’ share of the global IT-BPM and GIC market is estimated at approximately 9.5 percent.

IT-BPM Fig 2 Size, distribution IT-BPM industry FTEs

The IT-BPM and GIC industry is an important generator of jobs for skilled Filipinos. Its contribution to gross domestic product (GDP) was approximately five percent in 2011, and it is the Philippines’ third-largest net foreign exchange earner after tourism and remittances from an estimated 10 million overseas workers. Its contribution to economic development is centered in the National Capital Region—referred to as Metro Manila—and in other highly urbanized areas throughout the country, or Next Wave Cities™. Employment in these cities was estimated at 150,000 at the end of 2011 (Figure 3).

itbpm_fig3

Industry expansion beyond NCR

Globally, the Philippines is competitively positioned in terms of talent, costs, and risks relative to established and emerging offshore destinations. This augurs well for broad-based growth for the IT-BPM and GIC industry, and provides opportunities for the Philippines to continue its expansion outside established services segments (Graph 1). More precisely, the Philippines is poised for growth in the value-driven non-voice, complex services segments of the industry. The Philippines is a Top-3 location for talent according to analysts, both at the aggregate graduate pool level as well as among professionals in the finance and accounting areas and in other non-voice, complex services. From a cost perspective, the Philippines is competitively placed to provide the required arbitrage that new and mature buyers of IT-BPM services require. The industry also benefits from an enabling policy environment with impressive government and private-sector support for investors.

itbpm_graph1

Rapid Growth of PH ITBPM industry

In an industry road map commissioned by the Information Technology and Business Process Association of the Philippines (IBPAP) under the auspices of the former Commission on Information and Communications Technology (CICT), now reorganized as the Information and Communications Technology Office (ICTO) under the Department of Science and Technology (DOST), and developed by Everest Group and TeamAsia, IT-BPM industry growth was forecast to reach up to US$25 billion in revenue and direct employment of 1.3 million in 2016. However, Road Map 2011–2016 stipulated that a number of conditions should be met to achieve this target. These include government support, particularly in the area of remedial training and educational reform at all levels, granting of investor incentives, and providing visibility for the industry internationally as well as locally.

Two years following the development of the road map, the Philippine IT-BPM industry continues to expand at a robust rate. The industry grew 25 percent in 2010 and 24 percent in 2011.

The Philippine government, through the Technical Education and Skills Development Authority (TESDA), has provided substantial funding for remedial training for applicants to the industry in many key sectors, including animation, customer relationship management, software development, healthcare information management, and game development. Funding for skills development has also enabled special remedial training for trainers throughout the Philippines.

A number of schools already offer animation courses. The Animation Council of the Philippines, Inc. (ACPI) has already established linkages with educational institutions and helped formulate an industry-based curriculum. Meanwhile, the Game Developers Association of the Philippines (GDAP) designed three courses for the technical and vocational education.

Although talent supply remains a critical concern among industry executives—accelerating substantially from a top priority for 23 percent of respondents in a 2009 survey to 49 percent in a 2012 survey—these efforts appear to have contributed to at least some amelioration in forecast talent shortages.

Investor incentives have remained consistent and professionally administered by the Philippine Export Zone Authority (PEZA) and the Board of Investments (BOI), both promotional and regulatory agencies with authority to facilitate investment. These agencies operate under the Department of Trade and Industry (DTI).

The Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO) has provided broad-based support for the industry. DOST-ICTO supports a comprehensive range of programs covering industry development, human resource development, countryside development, research, marketing, among others, with the aim of leveraging the benefits of ICT use for national development.

To download a copy of the Road Map brochure, please click here.