IT-BPM steps back as future looks foggy

Roy Stephen C. Canivel | Philippine Daily Inquirer | May 31, 2019

The Information Technology and Business Process Management (IT-BPM) industry has decided to set aside its 2022 road map after an uncertain political climate left its revenues growing below target, casting a shadow on the industry’s prospects.

Instead, the industry would have to rethink how far it could still go moving toward 2022, its top industry official said, stopping short of saying it might likely miss its growth targets at the end of President Duterte’s term.

Rey Untal, president and CEO of the Information Technology and Business Process Association of the Philippines (IBPAP), said the “recalibration exercise,” which would be conducted by a foreign research firm, could take two to three months from now.

Untal said IBPAP did not decide on doing a recalibration exercise until the group saw the industry figures for 2018, which showed it had been underperforming since 2017.

He said the resulting numbers reflected the impact of political developments both here and abroad since 2017, including the uncertainty over tax perks.

The Duterte administration may have failed to pass its second tax reform package in the 17th Congress, but proposals changing the incentives offered to call centers, among other firms, have left a toll on the industry.

Called the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill, the tax package was to lower corporate income taxes while rationalizing the tax incentives offered to businesses.

“I think there was a prevailing discussion around the overall uncertainty, really. And [like] what we have said in the past, it’s less about what eventually the fiscal regime will be. It’s more about how we are managing the predictability of fiscal forecast,” he said.

“In our view, we have already seen a direct correlation of how growth happens in an environment when there is certainty, when there is predictability,” he added.

Back in 2016, the industry group launched its 2022 road map, which indicated targeting 1.8 million direct jobs and hitting $38.9 billion worth of revenues.

To achieve this, Untal said the industry needed a compound annual growth rate of around 8 percent for job creation and about 9 percent for revenue.

However, the industry likely only grew its revenues between $24.5 billion and $24.8 billion in 2018, Untal said.

At $24.8 billion, the industry would have only grown close to 6 percent from $23.4 billion in 2017, ending below the 9-percent target growth.

The industry was supposed to create 100,000 new jobs each year. But last year, it fell short of that target, creating only 60,000 new jobs to end with a workforce of 1.23 million, a 5.1-percent growth as opposed to the 8-percent target.

Even with the current environment, Untal said the industry still needed to grow at a faster rate than the global industry to keep its market position.

“Where we are right now is already lower than what the road map said. For us to achieve the $39 billion or $40 billion target in 2022, that means the growth has to accelerate faster, now the question is — is that even pragmatic?” he said.

Source: https://business.inquirer.net/271676/it-bpm-steps-back-as-future-looks-foggy#ixzz5pSfAUsoh