The information technology-business process management (IT-BPM) industry is projected to exceed the   baseline targets for both job creation and revenue in 2024, but acknowledges challenges in meeting the aggressive target under its roadmap.

Still, the Philippine IT-BPM sector expects to grow by 7 percent from 2023 levels and   double than that of the global industry.

This, however, is slower than 10-percent compounded annual growth rate (CAGR) projected in its roadmap until 2028. The roadmap was released in 2022.

“I don’t consider this to be a setback. It is a reminder of how far we have come, but also how much more we can achieve. At our present trajectory we will achieve our baseline target by 2028,” said Jack Madrid, president and chief executive officer of the IT and Business Process Association of the Philippines (IBPAP), in his report at the 16th International IT-BPM Summit in Paranaque City yesterday.

“We will continue to aim to achieve our most aggressive targets. We have four more years. These numbers were established more than two years ago. But as we continue to push forward, we must acknowledge that the environment has changed,” Madrid added.

In his report, Madrid said the industry will achieve revenues of $38 billion and a workforce headcount of 1.82 million in 2024. 

The industry will add 120,000 new jobs this year.

“These figures surpass the roadmap baseline targets but fall short of the sector’s most ambitious goals,” said Madrid.

Last year, revenues amounted to $35.5 billion. About 130,000 were added to the workforce, ending 2023 with 1.7 million headcount.

Madrid said there are new headwinds that require new interventions. 

Foremost, he said, is the talent and skills gap which was identified by 21 percent of its members in a survey as the topmost concern.

“The talent gap   is indeed a critical threat to our industry,” Madrid said.

 He noted the growing demand for more advanced digital skills, such as data analytics programming, machine learning, an equally important in soft skill, such as critical thinking and problem solving, and even domain specific skills like in health care and banking. 

“(Demand is) outpacing the current capabilities of our present workforce,” Madrid said.

Another challenge, he said, is the intensifying competition posed by countries such as South Africa, Colombia, Egypt, and Poland which are rapidly advancing their IT-BPM industries.

“(This is) putting pressure on the Philippines to innovate and maximize its strengths in language proficiency, cultural adaptability, and technical expertise to maintain its competitive edge,” Madrid said,

He said operating costs in the Philippines are higher than in some of the other IT-BPM destinations and the  recent tax reforms added to that burden.

An ongoing concern is ease of doing business. 

Madrid said the inconsistent implementation of policies and coordination among government agencies have begun to diminish the country’s attractiveness as an IT-BPM destination. “This has resulted in growing frustration among investors, underscoring the need for government action to address these issues,” he said.

Madrid urged the industry to strengthen its cybersecurity frameworks to safeguard sensitive data and protect its reputation to ensure client trust is maintained.

Madrid also highlighted the significant role emerging technologies such as Al are playing in driving the sector’s growth. According to the survey, many companies have started implementing Al solutions in areas such as customer service, data processing, and quality assurance. These innovations are already delivering notable gains in productivity, efficiency, and service quality.

However, Madrid acknowledged that barriers to full Al integration remain, including high implementation costs and a lack of skilled talent. He emphasized the need for the industry to equip its workforce with the necessary skills to fully capitalize on Al’s potential and sustain future growth.

In his concluding remarks, Madrid called on stakeholders from the government, industry, and academe to collaborate in addressing these challenges. 

He expressed confidence in the sector’s ability to continue innovating and adapting to new opportunities.

Based on the IBPAP’s roadmap.  the industry is targeting a CAGR of 10.4 percent in the next six years, with annual revenues seen reaching $59 billion by 2028.

This is nearly double the industry’s $29.49 billion annual revenue in 2021, a 10.6 percent growth from the previous year.

The roadmap also aims to create an additional 1.1 million jobs in six years, 54 percent of which will be in the countryside.

IBPAP said this would bring the sector’s total headcount to 2.5 million by 2028.

The Philippines eyes to tap the $8.3 billion potential exports to the European Union (EU) under a planned free trade agreement (FTA). 

In a consultation conducted by the Department of Trade and Industry, officials said the Philippines will seek improved market access to the United Arab Emirates (UAE) under the planned Comprehensive Economic Partnership Agreement (CEPA). The Philippines has agreed to open up 80 percent of its market to UAE exports of industrial goods.

Allan Gepty, DTI undersecretary, said the Philippines expects EU to bring up emerging issues when they resume negotiations on FTA. 

Gepty noted the importance of meeting the 2027 deadline to complete the negotiations and have the FTA come into force by 2028. 

Gepty said the Philippines could lose its eligibility to the Generalized System of Preferences (GSP) Plus once it attains middle- income status projected to be in 2025. A country which stays in the middle-income status for three consecutive years automatically graduates from the GSP Plus. 

Emerging trends  expected to come up in the EU-Philippines FTA talks are on digital trade involving  cross-border trade, data protection, consumer protection, source code, customs duties on electronic transmission, regulatory cooperation; government procurement which calls for transparency, non-discrimination, market opening and  competition;  state-owned enterprises to ensure government does not compete with private sector  on certain businesses; trade and sustainability covering  labor, gender equality, climate change, biological diversity, responsible business conduct; sanitary and phytosanitary measures where EU would ask for  regionalization relative to animal and plant health disease, international standards, equivalence, notification, transparency and  energy and raw materials which call for  sustainable investment competition, exploration and production, standards and  cooperation.

Bianca Sykimte, director of the Export Marketing Bureau, in her presentation said the Philippines may accept UAE’s offer on tariff elimination of 4,621 tariff lines amounting to $519 million. Negotiations on market access are set to be concluded within the year.

However, the Philippines will ask UAE to reconsider accelerated terms for those offered for tariff elimination with longer staging. These involve 1,717 tariff lines valued at $ 29.9 million.

Sykimte said the Philippines will reiterate a request for the inclusion of some tariff lines of interest excluded by UAE in its initial offer. These involve 1,557 tariff lines amounting to $152.4 million.

The Philippines anticipates UAE to seek reconsideration on items earlier excluded by the country as these are of offensive interests. These are mineral oils and fuels, plastics and articles thereof, paper and paper articles and flour and starches and other pastry products and ingredients Sykimte said the Philippines’ initial offer includes mineral oils and fuels accounting for $833.6 million or 78.9 percent of UAE’s total request.

These are  plastics and its articles, tanning or dyeing products, iron and steel and articles thereof, copper and copper articles, aluminium and articles thereof, mechanical machinery and appliances, electrical machinery and equipment and its parts, and aircraft and parts thereof On the part of the Philippines, it will have wider access to UAE’s market for essential oils and cosmetic products, plastics and articles thereof, leather goods, garments/clothing articles, footwear, articles of stone and cement and similar materials, pearls and precious metals and stones, machinery and mechanical appliances, electrical machinery and equipment and its parts, aircraft and its parts, furniture and bedding accessories, and toys and parts and accessories.

The Philippine Economic Zone Authority (PEZA) yesterday reported investments approval in the first three quarters of the year grew 5 percent to P115.887 billion from P111 billion in the same period in 2023.

In a statement, PEZA said these investments would generate $2.5 billion in annual exports and would create 35,871 jobs once fully operational.

The investments would be poured into 179 projects.

In its last board meeting on September 23, PEZA approved 16 new and expansion projects which expected to bring in approximately P54.191 billion in investments, the largest investment approvals in a single month for the year.

In this latest board meeting, PEZA said, it registered a P50-billion project, the first big-ticket project under the Marcos administration, which may be eligible for an incentive package for highly desirable projects under the CREATE Law.

PEZA declined to identify the project but said it is engaged in semiconductor manufacturing and will be located in Calamba, Laguna.

This month’s approved projects are expected to generate $541.04 million in exports and provide 4,044 new jobs for Filipinos. 

This month’s approval represents a 285- percent increase from the P14 billion registered in September 2023.

Tereso Panga, PEZA director-general, said these numbers strengthen the outlook for reaching the P200 billion investment target of the agency for the year.

Panga highlighted the role of new projects and expansion projects in fueling the country’s economic growth. 

“With significant increases across various sectors, the Philippines is poised for an even more robust performance in the final quarter of 2024,” he said.

Of the 179 new projects registered as of the third quarter, 88 are in manufacturing, 45 are in information technology-business process management, 21 are in ecozone development, 11 are facilities, 8 are logistics and five are domestic-oriented enterprises.