IT-BPM sector posts 5% growth in 2018

MANILA, Philippines — The country’s information technology and business process management sector (IT-BPM) posted a five percent growth in employment last year, lower than the eight percent target under the industry roadmap.

According to the IT and Business Process Association of the Philippines (IBPAP), the industry showed signs of recovery last year with direct employment rising by 5.1 percent to 1.23 million.

“While we saw signs of recovery in 2018, this was slower than the eight percent annual growth projected in our Roadmap 2022,” the group said.

It said the growth was seen due to the performance of new locators offering a wider range of higher-end services such as customer service, e-commerce, supply chain management, IT infrastructure support and analytics.

“With industry investors and locators regaining confidence in the Philippines, numerous incumbents proceeded with their expansions, particularly in the countryside,” it said.

Earlier, IBPAP president and chief executive officer Rey Untal said the group is reviewing revenue and employee count targets under its roadmap as the industry’s performance is falling short of the projected growth amid concerns by firms on the government’s plan to rationalize fiscal incentives under its tax reform program.

Under the IBPAP’s roadmap, the industry is projected to post an eight percent annual growth to be able to generate $40 billion worth of revenues and directly employ 1.8 million individuals by 2022.

Over the last two decades, the Philippine Economic Zone Authority’s formula has successfully attracted and retained investors including IT-BPM firms in the country.

Under the second package for tax reform or the Tax Reform for Attracting Better and High Quality Opportunities bill approved on third and final reading at the House of Representatives, however, the government will gradually bring down the corporate income tax to 20 percent from 30 percent, and remove the five percent tax on gross income earned (GIE) paid in lieu of all national and local taxes by firms including those in the IT-BPM sector registered with the PEZA.

The GIE has been considered an important incentive for firms which decide to invest and set up operations in the Philippines.

While the targets under the roadmap are being reviewed, Untal earlier said the IBPAP would continue to look at interventions to promote the growth of the industry.

As the industry faces need for upskilling and reskilling, the IBPAP said it would continue to work with government agencies such as the Department of Education, Commission on Higher Education, Department of Labor and Employment, and Technical Education and Skills Development Authority to ensure the right skills to allow the sector to continue to grow.

“Equally critical is the support of our policymakers and lawmakers to ensure our industry remains globally competitive as we move up the value chain, especially given the impact of digitalization,” the IBPAP said.