While the Philippines is still among the top 10 IT-business process management (IT-BPM) destinations globally, it is slowly losing its competitiveness in light of the “serious” talent crisis it is currently facing as the industry shifts from the traditional processes to digital-centric services.

In a presentation at the 1st IT-BPM Talent Summit in Makati by the IT Business Process Association of the Philippines (IBPAP) and the Department of Trade and Industry (DTI) on “Digital Talent War Future-proofing Digital Talent Needs for Economic Growth”,  global management consultancy firm Kearny showed that based on its Global Services Location Index, which measures the attractiveness of countries as global services hub, the Philippines ranked 9th in the traditional way of doing business services among 60 countries.

“However, the trend is that the Philippines is declining,” according to a Kearny official.

The Index showed that the Philippines plummets to 39th in terms of digital centric because of the country’s low digital resonance. This is 30 notches lower in the digital centric from 9th rank in the traditional IT-BPM services.

The rank was largely pulled down by the country’s low rankings in digital skills at 22nd; cybersecurity rating and legal code adaptability at 29th; corporate activity fir digital investment at 49th; and innovative outputs at 41st globally.

The study showed that by 2028, demand for digital roles are expected to hit between 300,000 to 400,000 annually but supply is only 200,000 to 300,000 annually.

Thus, a gap of 100,000 to 200,000 talents annually in the local industry.

Panelists during the morning session of the summit also unanimously agree that there is a talent crisis being faced by the industry.

IBPAP President and CEO Jack O. Madrid in a speech noted that since the launch of the Industry Roadmap last year, the group has spoken loudly about the serious talent gap in the industry.

Madrid cited the talent issue as critical because the IT-BPM sector is looking at 1.1 million jobs and a $60 billion industry by 2028, which is nine percent of the country’s gross domestic product.

Meantime, despite the threat, the Kearny study said this is also an opportunity for the Philippines to raise standards of local talents.

For instance, the study noted that large digital salary gap makes importing talent difficult for the Philippines, but at the same time it also said that this can become a key competitive advantage by boosting local talent supply.

In terms of average annual salaries for five in-demand digital roles, the Philippines ranked fifth lowest among Asean countries. Singapore topped as the highest salary offer in the region followed by Malaysia, Thailand and Vietnam.

This situation, however, is also an opportunity for the Philippines to grow local talent to boost offshoring for in-demand digital roles.

With current trajectory, the study showed that talent supply will not be able to cover the demand requirements.
Kearny recommended that the Philippine government needs to consider a holistic policy response. This means addressing four main digital and ICT talent challenges.

These are building future talent, retain existing talent, upskilling talent, and plugging short term gaps with foreign talent as needed.

In addition the study said that the Philippines should pursue both a larger and higher quality talent pool by leveraging global policy best practice for digital and ICT education.

The Philippines can also leverage local universities as a key source of talent to pursue both long term talent pool and quality improvements.

Additionally, the Philippines can further drive population tech literacy and development of relevant ICT skills beginning from early education.

The government should also leverage private-public partnerships to develop future talent.

Also, the Philippine government needs to provide incentives and create an attractive working environment to increase sector attractiveness and retain workers.