THE information technology and business process management (IT-BPM) industry said US tariffs may end up having an indirect impact on services, citing the growth slowdown from US President Donald J. Trump’s first term.
IT & Business Process Association of the Philippines (IBPAP) President Jonathan R. Madrid said: “We’ve had no impact so far, but we have seen this movie before. During Trump’s first term, there was an impact on services, resulting in single-digit growth in both 2017 and 2018,” Mr. Madrid said in an appearance on the Money Talks with Cathy Yang program on One News.
“Thus far, I think only goods have been mentioned specifically, but it’s certainly an issue that we are monitoring very closely because there’s a lot at stake,” he added.
According to Mr. Madrid, the industry accounts for 9% of the Philippine economy, generating $38 billion in export revenue and employing 2 million workers.
However, he said that the demand for outsourcing services in the Philippines continues to be high.
“As of today, demand outstrips supply. So the Philippines does not have a demand problem. Every week, IBPAP receives investor interest from both prospective and existing investors who want to expand or establish operations here in the country,” he said.
“This is because of what the Philippines has to offer. Being the youngest country in Asia with an average age of 25.3, we need to leverage that demographic advantage as well as our skill advantage,” he added.
He said that it is only India and the Philippines can claim to be world leaders in the IT-BPM industry.
“A lot has happened in the past decade. There’s a big difference between Trump 1 and Trump 2. But in this case, I think the tasks that the digital Filipino workers perform for our global customers are more complex and harder to replicate,” he added.
He said the drivers of growth for the industry include global capability centers (GCCs).
“The GCC sector, which already has over 250,000 employees in the Philippines, is one of the brightest and fastest-growing spots of IT-BPM,” he said.
GCCs are not outsourced services but are internal units of multinational companies tasked with managing back-office functions.
“I think this is probably going to be one of the powerhouses moving forward. I tracked the impressive growth story of the GCCs in India. And I think it’s only logical that the Philippines positions itself as the number two player in GCCs,” he added.
To date, over 100 GCCs are operating in the Philippines. — Justine Irish D. Tabile