By quade
11 October 2023

The Future Outlook for the Philippine IT-Enabled Services and BPO Sector.

In the last few years, the IT-enabled services (ITES) and business process outsourcing (BPO) sectors have grown to be major contributors to economic expansion and new growth opportunities for the Philippines.

The Philippines has firmly positioned itself as an important player in the international ITES/BPO sector. These two businesses will contribute about $32.5 billion in revenue in 2022. This represents 10.3% growth from the previous year. Aside from their financial contributions, these places also represent huge employers in the country, with an estimated 1.57 million Filipinos employed in these fields.

These jobs are not low-value careers either, as the sector often produces highly competitive compensation packages and other benefits that have been crucial in lifting Filipinos out of poverty and addressing underemployment.

While this has been the case for more than a decade, new changes and challenges in the BPO and IT sectors have raised questions about whether the Philippines can maintain its success in these industries.

Table of Contents

Current Status of the Philippines ITES and BPO Industries

The Philippines presents a broad range of services in the ITES/BPO sector. Among the businesses offered in these places are customer support, technical assistance, financial and accounting support, healthcare offshoring, and digital marketing.

These services are used in countless countries across the US, Europe, and Asia, making the Philippines a major hub for outsourcing. A big part of this success was due to the widespread use of English among Filipinos, allowing for a cheap yet highly efficient workforce. This gives the Philippines many clients to work with.

This has played a huge part in diversifying the industry and serving various needs. Diversity like this is important, as it has helped create industry resilience to shake-ups. When new technology or challenges emerge, this can disrupt parts of the sector, but having this much diversification ensures that the industry can adapt and pivot to challenges.

Even with shocks like the COVID-19 pandemic, the BPO and ITES industries have shown considerable resilience to the challenge. Work-from-home arrangements were quickly embraced, allowing operations to continue. By 2022, the sector had gotten so big that the global BPO industry was valued at $261.9 billion, with more than 10% of that coming from the Philippines.

That high growth is expected to continue for the rest of the decade, as annual growth is projected at 9.4% from 2023 to 2030.

This success does not mean the Philippines can rest easy, as the country must be ready to deal with additional challenges. One place for improvement is providing higher-value services. Experts believe the Philippines should further invest in data analytics, digital transformation, and creative content services. There is room for growth here while being less vulnerable to automation.

Furthermore, the Philippines has worked to increase its market presence in new countries. While the USA and Australia remain top clients, more and more BPO businesses are doing business in Europe, Asia, and the Middle East.

Challenges and Solutions to the ITES and BPO Sectors

Emerging technologies such as automation and artificial intelligence are anticipated to have a significant impact on various industries in the near future. Consequently, there has been growing apprehension regarding potential job displacement. Despite the gravity of these concerns, some individuals perceive these transformations as advantageous prospects.

These tools can help employees improve their skills and productivity, allowing them to transition into more lucrative jobs. Here, AI can improve operations, productivity, and decision-making processes.

With all of these technological advancements, it has become critical that the ITES and BPO sectors adapt to these technologies to stay ahead and maintain their edge. Here, the Philippine government has assisted in various ways. Business incentives, infrastructure development, and training programs have allowed the Philippines’ BPO and ITES sectors to remain competitive.

Aside from the potentially disruptive technologies, another concern is the threat of cyber security as hacks and other issues become increasingly common. That is why the BPO and ITES have begun to use improved data privacy and security measures. These follow global data regulations and help ensure client confidence that their data will be kept secure.

Lastly, there is a need for stable internet connectivity and infrastructure to improve remote setups and digitization. This is where the Philippine government has stepped in to help the BPO industry, as they have invested in the necessary infrastructure.

So far, the sector continues to remain a major contributor to the Philippine economy, providing countless employment opportunities and ensuring the skills of Filipinos are not wasted. The challenges the industry faces have only led to further investment in this sector, which will help the Philippines retain its edge.