Trump protectionist policies scary, but sector need not worry if goals achieved — Cedf-it exec
US President Donald Trump’s protectionist policies were seen to slow down the growth of the Philippines’ Information Technology-Business Process Management (IT-BPM) sector, but a local industry leader said there was no need to worry as long as players meet targets within the industry roadmap.
Wilfredo “Jun” Sa-a, Jr., executive director of Cebu Educational Development for Information Technology (CEDF-IT), said Trump’s recent actions like putting up a “Bigly American Wall,” travel ban on seven Muslim-majority countries, and his protectionist tendencies are indeed scary.
“But as to the growth of the IT-BPM industry, our industry roadmap (until) 2022 does not project a growth as fast as before because the Philippines now targets higher value services and also anticipates the effects of automation or artificial intelligence,” he told Cebu Daily News in a text message.
Growth in terms of head count will not be as fast in the coming years, Sa-a said, but revenue will continue to expand if the roadmap target for higher value activities will be attained.
IT-BPM roadmap
The Philippine IT-BPM industry roadmap 2022 targets to directly employ 1.8 million workers, 73 percent of which hold mid- to high-value jobs.
This will translate to a total of 7.6 million direct and indirect jobs, with 500,000 jobs targeted outside the National Capital Region (NCR).
Presently, the industry employs more than one million workers, around 120,000 of which are based in Metro Cebu alone.
By 2022, the revenues generated by the IT-BPM industry would have jumped to $40 billion from $22 billion in 2015 with the Philippines cornering 15 percent of the global market share.
Sa-a said there will be a need for more IT or component activities, health information services, shared services, financial or banking services, as well as research and development, to name a few.
1,000 more workers
Accenture earlier announced plans to hire 1,000 additional workers in Cebu this year in a bid to expand their practice while also looking at setting up a new facility to cater to its growing workforce here.
The BPO firm was also looking to hire employees that are US-registered nurses, those who are fluent in Japanese, equipped with infrastructure services skills, and network engineer, among others.
The company’s practice in Cebu offers mostly non-voice services including finance, accounting, and health management, serving 120 clients across North America, Europe, and Asia Pacific.
Three big firms’ plans
Sa-a, meanwhile, disclosed to CDN that three big anchor locators in Cebu were also planning to make a similar expansion this year, although he said the companies have yet to make public announcements.
As the United States, which accounts for at least 70 percent of the Philippines’ IT-BPM business, enters a protectionist regime, some local players have started to turn to other markets such as China to offer English as Second Language (ESL) training.
Sa-a said that while this was a welcome idea, ESL is not exactly a high-value activity and that it will be hard to compete with Chinese companies since their labor is cheaper.
He emphasized the need to develop more high-value services here and reach out to European markets instead, which he said are more complex and would be difficult to take away amid developments in the US.
“At the end of the day, it’s still a business decision. Let’s just focus on getting our talents ready,” said Sa-a.
No pullout
He also pointed out that despite Trump’s latest pronouncements, no US-based outsourcing firms in Cebu have pulled out.
The industry leader said outsourcing firms are “very happy” with their operations in Cebu, which he described as “competitive” and can even “outperform” counterparts in Manila.
Last week, London-based economic research firm Capital Economics said Trump’s “America first” policy will inflict losses on the Philippines’ two biggest sources of dollars — the BPO industry and remittances from Filipinos.
“Mexico and China were the focus of Donald Trump’s anti-free trade rhetoric on the campaign trail. But the Philippines also stands out as one of the most vulnerable emerging economies to any moves by the US toward protectionism,” the firm said in a report titled “Trump’s ‘America first’ policy poses threat to Philippines” and also quoted in an Inquirer story.