After operational disruptions and uncertainty in 2020, the IT-BPM makes fearless forecasts with a recalibrated roadmap for 2022

Since its establishment in the country more than 20 years ago, starting with the call center sector, the Information Technology and Business Process Management (IT-BPM) industry has been nothing but resilient, maintaining its stability and steady growth despite economic down- turns, calamities and floods, and an infra- structure that constantly needs upgrading to keep its players competitive. 

It has shown that fortitude again through the COVID-19 pan- demic that paralyzed the entire globe, and sent the National Capital Region and many other cities in the Philippines on a yearlong quarantine. Rey Untal, president and CEO of industry association IBPAP (In- formation Technology and Business Process Association of the Philippines), captured their situation best in his description of how the industry fared during and after this crisis. “The impact of the pandemic has undeniably placed the Philippine IT-BPM sector in uncharted territories. So far, we’ve been able to navigate it fairly well, but this doesn’t mean that we can sit back, relax, and leave things up to chance.” 

According to the IBPAP report, the productive capacity of its workforce was cut down to 50 percent during the start of the lockdown on March 2020. As restrictions gradually lifted, it rose back to 73 percent and then reached 90 percent as rules be came more flexible, allowing the movement of people, products, and other factors in the supply chain at the start of 2021. The report also cites different sources that indicate an upswing: job portal Jobstreet says that 41 percent of its postings in 2020 came from IT-BPM companies; while the Philippine Economic Zone Authority (PEZA) record- ed about Php14.146 billion in investments flowing to the industry from January to September of last year. 

Derek Gallimore, CEO of Outsource Accelerator, which has positioned itself
as an “Alibaba” for outsourcing and specializing in Philippine suppliers, confirms this movement. He gives a more detailed description of the peaks and valleys that the industry players journeyed through.
The first three months since the beginning of the lockdown “were hell,” he admits candidly. “There was enormous operation- al disruption and uncertainty, with many BPOs (business process outsourcing) losing 20 to 40 percent of their revenues due to client account closures or cost-cutting.” 

Many of these client organizations were based in the United States, the United Kingdom, and Australia. They too had to downsize and reduce operational expenses, such as outsourcing, once their business- es started to feel the impact of economic uncertainty, limited cash flow, inadequate resources for the long term, and an unre- sponsive market. 

Around June to August, though, “Oper- ations and accounts stabilized, and confi- dence returned,” says Gallimore. “Numbers started picking up again. BPOs were well into negotiations with landlords about their offices, with many of them dumping their offices and opting for the work-from-home (WFH) model.” 

Then from September to November of last year, business began to pick up again
as the industry received inquiries from re- turning clients who did manage to bounce back, as well as from new businesses that resorted to outsourcing as a way to mitigate their own costs. Gallimore adds, “Business models were now considered pretty stable again. Many had now transitioned and sta- bilized their WFH arrangements. Clients, staff, and BPO owners were becoming used to the new normal.” 

The IBPAP report enumerates several factors that led to this stabilization. Most crucial was the recognition by the national government’s Inter-Agency Task Force on Emerging Infectious Diseases (IATF-EID) that the
industry was an essential service that should be allowed to function and operate. As such, aside from WFH, they were given permission to maintain a skeleton workforce in some of their sites. The industry itself boosted its operational capacity by maintaining within their ranks strict health protocols such as the wearing of face masks and face shields and performing social distancing. 

WFH employees were provided proper equipment such as computers and inter- net connection to be productive and keep work uninterrupted in their own domiciles. Meanwhile, staff onsite temporarily resided in accommodations near their offices or rode in office-provided shuttle transport services that brought them from their homes to the office, and vice versa. 

Still, to date, challenges remain and have to be resolved if the industry is to continue moving forward and maintain its momentum. Enterprises and entire sectors worldwide will continue to watch their cost structures. While this can draw some of them to outsource to cost-effective BPOs in the Philippines, others might prefer to engage their own in-country suppliers. Geopolitical changes, such as changes in government administrations from being outsource-friendly to outsource-resistant, can be equally disruptive. Then another shadow looming over a brighter future is the call to automate and digitize certain tasks that are being done by human agents today. While machine intelligence and 

AI had always been largely perceived as a threat even prior to the pandemic, demand for it might accelerate if the clients see them as a solution to trim their budgets. 

Gallimore points out that the WFH situation, while fueling the survival of many Philippine BPOs at present, may not be sustainable in the long run. He says, “The BPOs in the Philippines lose a lot of their value proposition if WFH becomes the new standard. Clients will be less inclined to pay the extra cost for offices if they are sitting dormant and not being used, or if the employees in the West are all working from home and they wonder why the staff in the Philippines should need to work from an office.” 

Adjusting to the new realities, the country’s IT-BPM industry “recalibrated” the results of its roadmap for 2022. During the 12th International Innovation Summit (IIS), which gathered industry experts and global leaders in the country from November 4 to 19, 2020, IBPAP forecasted 2022 revenues amounting from US$27.88 billion to US$29.09 billion, with a Compound Annual Growth Rate (CAGR) of 3.2 percent to 5.5 percent. Meanwhile, workforce growth is estimated at 2.7 percent to 5 percent, amounting from 1.37 million to 1.43 mil- lion full-time employees over the next two years. 

The forecast for the more immediate 2021 is revenues from US$26.8 billion to US$27.4 billion, and headcount of full-time employees from 1.32 million to 1.35 million. 

Untal said during the summit, “While these new figures stand as the Philippine IT-BPM industry’s goal for 2022, it is equally important to know how we will be achieving them. The recalibration study also provided us with imperatives we and our stakeholders must undertake, not only to fulfill these targets, but to strengthen our sector locally and globally.” 

These “imperatives” require the strengthening of the telecom infrastructure to improve its support of long-term remote work and WFH arrangements. Companies will also have to invest in talent develop- ment programs and equip their staff with next-generation skills. Digital and cyberse- curity initiatives will also have to be birthed and maintained for a pivot to digitally supplemented services that can be offered to clients. Other locations outside the NCR should also be developed as BPO hubs with their own homegrown regional talent and supported by able infrastructure. Global market share can also be increased by deliv- ering complex services, and by emphasizing the industry’s—and Filipino talents’—re- silience. Finally, the industry has to work closely with government to improve the ease of doing business and create a more business-friendly environment. 

Gallimore gives his own blue ocean strategy for the industry not just to survive, but to thrive and reach new markets: “The outsourcing industry is shedding its old call center image. Its future is moving away from the huge enterprise solutions for huge multinationals, which means catering to the 60 million small- and medium-sized busi- nesses across the globe that will employ five to 500 people offshore. These clients and businesses could potentially employ many millions of Filipinos over the coming few years. 

“These jobs are no longer the mass-hired high-repetition call center functions. In- stead, they are the high-value roles who will be working alongside, shoulder to shoulder, with their Western colleagues.” 

Untal also stresses that survival and success require a unified, concerted effort from all stakeholders, and the time to act is now. He remarks, “There are millions of Filipinos that rely on the continued success of the industry. We need to be deliberate and proactive with our efforts with the government, academe, and the private sector so that growth potential can be translated into tangible job opportunities. It is imperative for the Philippines to strengthen its position as a top investment destination.” 

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