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The information technology and business process management (IT-BPM) industry has cut its growth figures by $ 3 billion in revenue and 140,000 workers in employment, while reconsidering its programs and policies to recover from setbacks caused. By Covid-19.
Rey E. Untal, president and CEO of the Philippine IT and Business Process Association (Ibpap), said the industry is forecast to grow unchanged this year despite the challenges posed by the pandemic. He argued that a flat performance should be sufficient in a year in which most sectors are facing a decline on all fronts, from sales to earnings to the workforce.
However, a study by the Everest Group, the consultancy chosen by Ibpap to assess the outlook, reports a reduction in the industry figures until 2022.
Citing the Everest study, Untal said the industry by 2022 is now expected to generate just $ 29 billion, from the revised projection of $ 32 billion. It is also considered to now employ just 1.43 million workers, up from the previous forecast of 1.57 million workers.
In total, Untal concluded that the industry should generate $ 29 billion in revenue by 2022, as well as add 130,000 jobs between 2021 and 2022.
For IT-BPM firms to achieve these goals, Untal said they need political reforms to take place, particularly in infrastructure. He said that the pandemic forced industry players to accelerate their turn to digital, and this would be impossible to do if connectivity remains an issue.
The Ibpap chief said that telecommunications companies have pledged to accelerate efforts to build new transmission towers and improve internet connection, especially in rural areas, to facilitate the shift to remote work and blended learning.
Furthermore, Untal argued that the revised growth figures expect the tax regime to favor investors’ interests. As such, he said that reaching the income and employment figures also depends on the plan to lift the tax incentives granted to investors as detailed in the Corporate Recovery and Tax Incentives for Companies (CREATE) bill.
Warning about loss of tax benefits
Once passed, the CREATE bill will reduce corporate income tax to 25 percent, from 30 percent at one end, and introduce a new set of tax advantages at the other.
Industry groups, including Ibpap, have been calling on lawmakers to scrap the bill’s incentives component. They warned that exporters in economic zones will shut down their operations in the Philippines and move to another Southeast Asian country if the government goes ahead with its move to change incentives.
Despite the blows suffered this year, Untal said that the Philippine IT-BPM industry is expected to maintain its share of the global market.
While the industry is projected to grow between 3 and 4 percent globally, it is expected to expand as much as 5.5 percent domestically through 2022. Untal said health care has improved its numbers during the pandemic to counteract the falls registered mainly by travel, tourism and hotels.
Progress made by Pfizer and BioNTech in developing a vaccine has raised the optimism of IT-BPM investors here, according to Untal.
Last year, Ibpap lowered its growth forecast for the IT-BPM industry due to changes in tax policies here and the escalation of a trade conflict abroad. In the IT-BPM roadmap, the original projection was that the industry would generate $ 38.9 billion in revenue and employ 1.8 million workers by 2022.
According to Ibpap records, the industry last year added 71,000 new workers to increase its workforce to 1.3 million, and grew more than 7 percent in revenue to reach $ 26.3 billion, up from $ 24.5 billion in 2018.
