The Information Technology and Business Process Association of the Philippines (Ibpap) remains optimistic that the business-process outsourcing (BPO) sector will post positive growth by the end of the year.
The Ibpap noted that investment pledges registered at the Philippine Economic Zone Authority (Peza) continues to show signs of recovery. Rey Untal, Ibpap’s president and CEO, noted that the proposed Tax Reform for Acceleration and Inclusion (TRAIN) has also buoyed the sentiment of major BPO players.
“We will definitely end the year in growth, but I can’t give a figure. The latest version of the TRAIN bill at the Senate has been very favorable and supportive of what the industry is espousing,” Untal told the BusinessMirror.
Untal said the improving sentiment of BPO players has helped turnaround the performance of the sector in terms of Peza investment pledges.
“The reduction in investments does not constitute a contraction, it means we grew less compared to the previous year. But with these numbers narrowing down, I’m very pleased, and it validates the information I’ve been getting from the ground,” Untal said.
He noted that investments in the information-technology and busines-process management (IT-BPM) sector has been slowly recovery. In May investments fell by 34 percent, but this improved to -27 percent in August, and then to -21 percent in September. As of October, Untal said this has fallen further to -10 percent.
Earlier, Senate Ways and Means Committee Chairman Sen. Juan Edgardo M. Angara pledged not to alter the existing incentives given to the IT-BPM industry.
Peza has already successfully lobbied to keep the VAT exemption on locally made inputs purchased by its locators to be used in finished exports.
There were also proposals to remove the VAT exemption of those exporting services.
Aside from this, the end of the war in Marawi, which is near Cagayan de Oro—a destination that is increasingly becoming popular among BPO firms—has also boosted the confidence of BPO players.
Given these developments, Untal said businessmen have approached and have broached the possibility of locating their facilities in the Philippines.
The IT-BPM road map assumes an average yearly growth rate of 9 percent for the sector from 2016-2022, or from an estimated $23 billion last year to close to $40 billion in six years’ time. Employment is seen to grow 8 percent annually, from 2016’s 1.15 million to 1.8 million by 2022.
In 2016 the Ibpap reported that the industry provided direct employment to some 1.15 million Filipinos, and generated $23 billion in revenues. According to data from the Peza, investment pledges in the IT sector continued to tumble in October due to uncertainty over fiscal incentives.
Government data showed investments in the business-process outsourcing sector declined by 8.4 percent in the January-to-October period. Investments reached P14.4 billion in the 10-month period, lower than the P15.73 billion recorded last year. The number of projects also fell to 183 from 168 seen last year.
The value of IT service exports declined slightly to $8.023 billion, from $8.1 billion in 2016. Despite this, workers directly employed by IT sector rose to 658,892 in January to September, from last year’s 633,393.
Image credits: Alysa Salen