Digital disruption to weigh heavy on PH’s IT-BPM industry – IBPAP

Published September 3, 2019, 12:00 AM

by manilabulletin_admin

By Bernie Cahiles-Magkilat

The IT business process management (IT-BPM) industry, the country’s second largest dollar earner, is recalibrating the 2022 Roadmap to validate whether the 8-9 percent growth target would still hold given the continuing uncertainty and threats of digital disruption that requires companies to prepare their talents to stay relevant.

Rey Untal, president and CEO of the IT Business Process Association of the Philippines (IBPAP), said they commissioned the Everest consultancy firm to conduct the study to determine the best, worst, and likely near term growth trajectory. Results of the two-year study will be presented by Everest on Thursday for review by the IBPAP board. While the recalibration will not discard the PH IT-BPM Roadmap 2022, there will be iteration and breakdown by sub-sectors and beyond the 8-9 percent annual growth target until 2022. Official results will be unveiled during the Innovation Summit on November 12 this year.

The 8-9 growth forecast under IBPAP Roadmap 2022 was set in 2016 yet. Unfortunately, the industry missed its growth forecast having grown 2 percent only in 2017 and 5 percent in 2018. There is also an initial number for 2019.

“The 8-9 percent growth forecast is a holding forecast until it gets changed which we are trying to validate,” he explained.

Everest, which has a global view of contracts signed, will also show how the IT-BPO offshoring industry will perform, how much of it will go to the Philippines and which provinces in the country are likely to benefit.

While there have been indications that some companies are growing higher than the forecast based on inquiries and conversations, there are also uncertainties in the industry.

“Uncertainties still remain although the protectionist policy is becoming less and less of an issue,” Untal said. What is evolving now in the US is the issue of minimum wage which is being pushed at the US Federal level. Locally, there is still the dangling taxation issue affecting the IT-BPM industry.

“If US labor cost escalates because that is labor arbitrage, the Philippines and India and other countries that host offshoring operation become more attractive,” he added.

But the issue of digital disruption is a big reality, especially AI (artificial intelligence) or IA (intelligent automation). Untal, however, said that some tech companies have been able to manage the global digital disruption.

“Those able to deal with digital transformation are growing faster than the industry,” he said.

The Everest 2016 study showed that the digital business (social media, mobility, cloud, artificial intelligence) accounts for only 30 percent of total global contracts signed and the bulk of 70 percent were still on the traditional services. Now, this has been reversed with 71 percent digital services and 29 percent traditional.

“Things are changing and it has very significant implication as to how we operate because we are susceptible. This is going to impact our industry as a whole,” he said.

The 2022 Roadmap, which was crafted in 2016, also stated that the growth being anticipated in the next five years is not going to be the same as jobs that fueled growth in the past two decades are constantly evolving.

This evolution has given most CEOs big headaches as they validate the huge problems in terms of talent upskilling and reskilling as operations go digital.