SEVERAL challenges stormed the IT/Business Process Outsourcing (IT-BPO) industry this year, a sector that provides at least 150,000 workers in Cebu a combined P7 billion monthly. Despite that, industry officials believe it is still growing, although slower than in the previous years.
These past two years have raised some hurdles, including controversies spurred by President Rodrigo Duterte’s anti-US statements and US President Donald Trump’s inward-looking, America-first stance.
An attempt to remove the VAT exemption of BPO sales and imports, and a proposal to subject this to 12 percent VAT on gross receipts as part of the government’s tax reform program, also made headlines this year. Fortunately for the sector, the tax exemption was retained.
But for Cebu IT-BPM Organization (CIB.O) managing director Wilfredo “Jun” Sa-a Jr., these may just be all noise. The challenge, he said, has always been the availability of talent that can meet the changing industry demands.
Normal business event
Indeed, some BPO companies let go of some of its workers, and some foreign accounts chose to relocate back to the US. For instance, BBC News reported in June this year that Verizon had created a thousand new jobs at its US call centers, at the expense of a contract in Cebu.
But Sa-a said that many have also expanded like Accenture and Sykes Philippines. Others opened this year, including Dover, Fujitsu, and Mopro.
“When such (a layoff) happens, they (workers) will just be absorbed back by the industry,” said Sa-a.
For Qualfon Philippines senior manager Joslyn Canon, the entry and exit of foreign clients is a familiar industry scenario.
“It’s a normal part of the business so it’s nothing new. Every company experiences that. There are business decisions, like they want to consolidate their policies or transfer to other sites,” she said.
“This is a very minimal percentage. In fact, the need (for more workers) is much greater,” the executive added. Rather, the Cebu IT/BPM industry players want to view the ecosystem as one that needs innovative talent.
While good communication and basic computer skills may get one a job, the greater demand is for critical thinking and comprehension, said Canon.
Accenture Philippines digital lead JP Palpallatoc, in a conference with IT students and professionals in Cebu last November, emphasized the value of “reskilling” to thrive in a new wave dubbed as “Industry X.0” or the fourth industrial revolution.
An Accenture report that the official presented summed up the previous waves. Industry 1.0 took place during the 18th century when mechanical production was primarily powered by water and steam. Next, industry 2.0 in the 20th century was marked by mass production based on division of labor and powered by electrical energy. Third, industry 3.0 saw the widespread use of electronics and IT for the further automation of production starting the 1970s.
The most recent industrial wave adopts the “connected everything” approach, centered on users and their experience. For companies, it is about generating new models and revenue streams, said Palpallatoc.
Accenture is one of the pioneer IT-BPO companies in Cebu with five sites here. Sa-a said the fact that some of the BPO companies are expanding means that the industry itself does not rest on stagnant water.
The key to sustain this growth, and to encourage companies to tap talent here, is to develop them.
CIB.O, together with the Cebu City Government, launched the Learning English Application for Pinoys (Leap) program for selected high school students of Apas National High School. It is a stand-alone, computer-based training program with lessons and exercises to help users improve their English language skills, developed by the University of the Philippines and funded by the Department of Science and Technology. Its main goal is to address the need to improve basic English proficiency of Filipinos to meet the growing outsourcing industry’s demands.
More importantly, Sa-a said, he wants to see more computer literacy courses starting with elementary pupils.
“I think we should slowly push back down to the elementary level. We have approached DepEd (the Department of Education), regional and province, so we will have more computer literacy subjects even in the elementary level,” he said.
Among world’s best
On average, only 10 to 15 percent of applicants get hired in the local IT BPM scene, according to Sa-a. More than 60 percent of the accounts in Cebu are voice transactions, while the rest are non-voice services.
As the industry demands more complex skills, starting them young is the way to go. Sa-a suggests developing “gamefied” computer courses, so this will appeal more to children and help them appreciate the value of computing and information technology.
By 2018, CIB.O looks forward to a better ranking in Tholons’ Global Outsourcing Destinations list.
Sa-a said his office has been in talks with Tholons managing director Avinash Vashista to update him about Cebu’s current innovation and startup ecosystem. “We are working closely with Tholons, and we will try to work with them early so we will know more of what these criteria are,” said Sa-a.
Tholons, an advisory firm for global outsourcing and investments, released in June 28 this year the 2017 Services Globalization Index Top 100 “super cities,” where Cebu landed on the 12th spot, from being the eighth placer in 2016.
Cebu and the city of Pune in India were replaced in the Top 10 list by Sao Paulo of Brazil and Buenos Aires of Argentina, which ranked sixth and 10th, respectively.
Manila, which ranked second in 2016 after Bangalore, India, also dropped to the fourth spot. The top three “super cities” for outsourcing this year are Bangalore, Mumbai and Delhi, all in India. The new criteria, according to Sa-a, may have affected Cebu’s ranking this year.
For 2017, the global advisory firm introduced for the first time “innovation, startup ecosystem and digital transformation” as key components of the Tholons Services Globalization Index.
In its June 2017 report, it said it introduced digital innovation as its “prime gauge,” which looks into cities and nations for the number of start-ups, start-up diversity, start-up ecosystem and government incentives to promote entrepreneurship and digital transformation.