THE country’s Information Technology and Business Process Management (IT-BPM) sector may be hitting impressive growth targets, but industry leaders warn that without urgent investment in talent upskilling, the country could lose ground in an increasingly competitive global digital economy.
Despite employing 1.5 million workers and generating more than $31 billion in annual revenue, the sector is facing a growing mismatch between industry needs and available talent, said Jonathan De Luzuriaga, president of the Philippine Software Industry Association (PSIA), during the Cebu Business Month 2025 Tech and Innovation Forum.
“There’s a lot of impressive data. But if you look closer, especially at software development — my turf — the cracks start to show,” said De Luzuriaga, who has headed PSIA for 11 years. “Client expectations have evolved rapidly with the rise of AI, cloud computing, and digital transformation. And we’re still catching up.”
The software segment alone contributes around $5.8 billion in export revenue and employs more than 180,000 Filipinos, yet De Luzuriaga said the local talent pool is lagging in high-demand skills such as API integration, cloud certification, data science, cybersecurity, and AI modeling.
“The nature of work has changed. Companies no longer ask for 100 developers for long-term projects — now they want five, highly specialized, AI-fluent engineers,” he said.
The global shift to remote work and tighter outsourcing budgets has intensified competition from emerging digital hubs such as Vietnam, Bangladesh, and Cambodia. The Philippine advantage of low labor costs is no longer enough, De Luzuriaga warned.
“We cannot build our future on being ‘cheap.’ We have to build on quality, innovation, and resilience,” he said.
Local developers are also competing with displaced talent from Ukraine, formerly a top producer of Java developers, who are now working remotely from across Europe. The war, coupled with the pandemic-induced decentralization of tech workforces, has dramatically reshaped the outsourcing landscape.
“If we don’t act now, we risk falling behind — not just to India or Eastern Europe, but to countries we never saw as competitors before,” he said.
Skills crisis in an AI age
Artificial intelligence has emerged as both a disruptor and a lifeline. While many Filipino firms are still integrating APIs into existing platforms, other economies are pushing ahead with large language model development — a gap De Luzuriaga called “troubling.”
“Our talent is good, but many can’t get past the interview stage. Some of the best devs are more comfortable talking to code than to HR,” he added, underscoring soft skills as another critical gap.
Beyond technical know-how, the industry is also short on leadership, critical thinking, and communication — competencies essential to project management and product innovation.
The PSIA recently launched the Philippine Skills Framework for software development, a roadmap that outlines career progression from entry-level coder to chief technology officer. However, De Luzuriaga said the document risks irrelevance unless it is paired with flexible, industry-led training programs that anticipate technological shifts.
To stay globally competitive, De Luzuriaga called for stronger collaboration between the government, academe, and industry — particularly in fast-tracking cloud certifications, cybersecurity programs and emerging tech adoption.
He proposed designating areas such as Negros Occidental as “cloud talent capitals,” citing the potential for regional centers of excellence in AWS, Google Cloud and Microsoft Azure.
“We’ve been the service provider for the world. But when will we build our own unicorns?” he asked. “We need to stop feeding on the crumbs and start owning the feast.”
“We can’t predict the future. But we can train our people to adapt fast, learn faster, and lead the change — not chase it,” he added. / KOC