BusinessMirror June 09, 2022

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IT-BPM sector posts growth in revenue, jobs T

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HE IT and Business Process Management (IT-BPM) sector’s revenues rose 10.6 percent from 2020 levels to $29.49 billion in 2021, eclipsing its recalibrated target for 2022, according to the IT and Business Process Association of the Philippines (IBPAP). Employment figures in the industry also increased, recording a 9.1-percent growth compared to 2020, the IBPAP said in a statement on Wednesday. “The number of full-time employees [FTEs] in the country increased by 120,000 in 2021, bringing the sector’s total headcount to 1.44 million and recording a growth of 9.1 percent compared to 2020,” said IBPAP. Such robust growth in both employment and revenues, according to IBPAP President and CEO Jack Madrid, “validates what we had projected—that 2021 performance was beyond recovery; it marks a resurgence for the Philippine IT-BPM sector.” Madrid added: “Preserving jobs, driving investments, stimulating countryside development, and cre-

ating demand for real estate—these are the unequivocal contributions of the industry to nation-building.” The IBPAP attributed the growth to pent-up demand from global customers; higher confidence in work-from-home (WFH) setups by clients in contact centers and business process services; and growth in emerging sub-segments like e-commerce, fintech, health care, and technology. The enabling association for the IT-BPM sector noted that “more and more organizations in global business services [GBS] are also incorporating offshoring and outsourcing into their strategic initiatives to improve efficiencies and optimize costs in multiple geographies.” As such, the IBPAP chief stressed that this will spill over into 2022 and continue to boost demand for ITBPM services worldwide. Madrid said, “we should not miss out on this opportunity to capture a bigger slice of the global market.” However, the sustained growth of the sector will rest on several factors. In the IT-BPM sector’s case,

further reliance on offshoring and outsourcing will be driven by next-generation business models and assets. Addressing talent and skills shortage and competitive pricing models can also be among the factors to consider. Expansion across select horizontals and verticals and increased digital adoption by traditional players will also be potential drivers of growth in 2022. Still, the industry stakeholders need to watch out for three things to maximize the country’s growth potential and strengthen its global competitiveness in 2022, industry leaders said. The IBPAP noted that supply chain resilience from a talent perspective will be critical amid the talent competition that was worsened by higher attrition rates and growing requirements for emerging and niche skills such as automation, cloud, data and analytics, and cyber security. The second factor to watch out for is the integration of hybrid work models in business strategies. IBPAP emphasized that this will also become more

prevalent. “Globally, 70 percent of IT-BPM enterprises are saying that they will be implementing hybrid work arrangements. Locally, 80 percent of Filipino IT-BPM employees have expressed their preference for a hybrid work model over returning fully onsite,” IBPAP noted. In fact, government agencies have addressed several concerns on the return-to-office arrangement, as opposed to working from home. IBPAP said another factor to consider to sustain the growth of the sector is “location adversity” since it has also become a priority after the onslaught of the pandemic. “Given this, companies will need to leverage off alternative locations and adopt small-scale centers of microsites to achieve more robust business continuity plans [BCPs],” IBPAP emphasized. Apart from the three watchouts, IBPAP said, the future of the Philippine IT-BPM sector will also depend on the country’s ability to take advantage of emerging

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Thursday, June 9, 2022 Vol. 17 No. 244

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Return to ’19 debt-to-GDP levels need not be rushed

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HE country’s dollar defenses against economic imbalances fell to its lowest in more than a year in May, due largely from lower proceeds from foreign investments and the drop of gold prices in the international market. In a recent report, the Bangko Sentral ng Pilipinas (BSP) said the country’s gross international reserves (GIR) slipped to $103.53 billion in end-May. This is a $1.87 billion drop in a month’s time from the $105.4 billion recorded in endApril. It is also the lowest level for the country in 15 months, or since September 2020 when it hit $100.49 billion; and the third consecutive month of decline for the country’s GIR. The GIR is the level of foreign exchange holdings the Central Bank has during a given period. It is a crucial component of the economy as it is often used to manage the country’s foreign exchange rate against excess volatility. According to the BSP, the month-on-month decrease in the GIR level reflected mainly the national government’s (NG) foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures. The downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market also contributed to the decline in the GIR. Foreign investments still accounted for the largest part of the GIR during the month, albeit lower at $87.87 million from the $89.56 million seen in end-April. Meanwhile, the BSP’s gold holdings also dipped in value in May to $9.03 billion from $9.28 billion in the previous month. Despite the dip, the BSP said the latest GIR level represents a “more

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COUNTDOWN TO FREEDOM A visitor at the Aguinaldo Shrine in Kawit, Cavite takes a selfie using the mural of the Philippine flag and the signage of the Philippine Independence Day date and year as backdrop. The country will celebrate its 124th year of independence on June 12, 2022, marking the day when General Emilio Aguinaldo displayed the Philippine flag outside his home in Kawit, making the Philippines the first independent republic in Asia. NONIE REYES

ETURNING to the prepandemic debt-to-GDP level should not be rushed as the government should prioritize spending for the country’s economic recovery, researchers from the Philippine Institute for Development Studies (PIDS) said. PIDS Senior Research Fellow Margarita Debuque-Gonzales said the government may also implement a “light” fiscal consolidation plan to reduce debt as a share of the economy in the near term, as the government may also need to spend to recover from the impact of the Covid-19 pandemic. The national government’s debt-to-GDP ratio in the first quarter of the year rose to 63.5 percent, the highest since 2005’s 60.5 percent under the Arroyo administration. This is also above the internationally recommended 60-percent threshold by multilateral lenders for emerging markets like the Philippines. “What we’re saying is that you can have a light fiscal consolidation right now because we need to spend so that we don’t need to be too hung up on that in the near term because we also need to spend for recovery,” Debuque-Gonzales told reporters in an interview after S “R,” A

POVERTY REDUCTION IN RURAL AREAS SLOW: WB B C U. O @caiordinario

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URAL areas nationwide where food is usually grown will remain laggards in terms of poverty reduction, according to the World Bank. In a virtual briefing on Wednesday, World Bank Philippines Office Senior Economist Kevin C. Chua said poverty incidence is projected to decrease to 21 percent this year and continue to decline through 2024. However, the reduction in poverty will be slower in rural areas where there are less employment opportunities compared to urban areas such as economic centers in Luzon.

“Recent official employment statistics suggest that sectors associated with rural employment are recovering slower than other sectors, indicating that poverty reduction will likely be slower in rural areas,” Chua said. The Philippine Statistics Authority (PSA) said based on the 2018 poverty data per basic sector, farmers, fisherfolk, and individuals residing in rural areas are the poorest nationwide. Poverty incidence among farmers was at 31.6 percent and 26.2 percent among fisherfolk. The poverty incidence rate among individuals residing in rural areas was at 24.5 percent. Uncertainties that would also slow poverty reduction include the

ongoing war in Ukraine that has already affected food and fuel prices. Chua said food for poor households accounts for 64 percent of total household consumption while cereals comprise 44 percent. “The looming uncertainties on the ongoing war in Ukraine will slow down the decline in poverty mainly due to the direct effect of higher food prices and the knockon effect of fuel price increases,” Chua said. Last Tuesday, the PSA reported that inflation rose to 5.4 percent in May on the back of higher food and transportation costs. This marked a 37-month high in inflation and was the highest since S “P,” A

S “GIR,” A

PESO EXCHANGE RATES

■ US 52.9220 ■ JAPAN 0.3990 ■ UK 66.6500 ■ HK 6.7449 ■ SINGAPORE 38.5336 ■ AUSTRALIA 37.2732 ■ SAUDI ARABIA 14.1084 ■ EU 56.6742 ■ CHINA 7.9329

Source: BSP (June 8, 2022)


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