THE Philippine business process outsourcing (BPO) industry is said to contribute nearly $30 billion to the economy each year. Some 1.3 million Filipinos were employed in over 1,000 BPO companies in 2019 and the figure is growing by some 8 percent to 10 percent every year.

Outsourcing, unlike many other industries, thrived during the pandemic as businesses scrambled to digitalize and redefine many functions. A 2020 Sprout Solutions study found that the BPO industry (31 percent), information and communication (9.79 percent), and health care (8.51 percent) were the biggest industries that let employees work from home during lockdowns implemented beginning March that year.

Two years later, the Philippine BPO industry is operating at an average ratio of 64 percent remote work and 36 percent on site, the IT and Business Process Association of the Philippines (IBPAP) said, with over a hundred companies implementing 90 to 100 percent remote working arrangements.

In 2021, the IT-BAP continued, the sector recorded $29.49 billion in revenues, 10 percent higher in comparison to 2020’s $26.7 billion. Headcount also increased by 9.1 percent, or 120,000 jobs added to 1.44 million employed by the industry, more proof that the Covid-19 pandemic hardly had an effect. The information technology and business process management (IT-BPM) sector, the Department of Trade and Industry said, has been one of the best performing in the past four years.

Revenues could hit $38.9 billion by the end of 2022, the IBPAP said. Also, the Philippines is expected to outperform the global IT-BPM sector with average revenue growth of 5.6 percent from 2016 to 2022 and a higher share of the global market of 15.5 percent this year from 12.7 percent in 2016.

For the first quarter of 2022, the Philippine Economic Zone Authority (PEZA) reported total IT-BPM investments of P8.14 billion, courtesy of 29 new and expanded projects that are expected to generate 3,168 direct jobs and annual revenues of $232.45 million.

“The Philippines has improved its capacity to offer BPM and non-voice IT services to a wider international audience and has proven itself as one of the top locations for premium services at more affordable pricing points,” Magellan Solutions said in a 2022 report.

“The expansion included solutions like health care information services as well as horizontal BPM services in industries like finance and accounting,” it added.

The continuing shift to digital, Intelliworx PH co-founder Veronica Valera said, will lead to more companies outsourcing work to external talent.

“Virtual assistants are on the rise as businesses are now looking into honing their workflow management to focus more on generating profits and revenues,” she said.

“Today, companies outsource administrative professionals who will take over their mundane and repetitive tasks. While these are considered routine and ordinary functions, it is worth noting that they are among the important elements in every business.”

The Covid-19 pandemic has also increased the need for artificial intelligence, business automation and cloud services. Social media management, omni-channel communication and data-driven analytics have also increased demand for talent as more companies outsource, Valera said.

Outsource Accelerator founder and CEO Derek Gallimore, for his part, said there were outsourcing opportunities for the Philippines in jobs other than those involving basic business functions.

“As we move into a more remote world, people are now hearing more about work from home, decentralized organizations, global organizations. And with the current situation, more companies are turning to outsourcing to save costs,” he said.

“This opportunity is hiding in plain sight. The Philippines does not realize the golden goose it has. When you get things moving, it is then people realize that Filipinos are not only good for basic tasks — they can be very capable and contribute to the entire organization chart of the business,” Gallimore stressed.

One hurdle facing the industry, however, is the government’s threat to remove tax incentives tied to being located inside ecozones if outsourcing firms continue with work from home or hybrid work arrangements.

PEZA warned in September that PEZA-registered firms could lose highly skilled employees, among others. A temporary solution was reached a few days later when the Fiscal Incentives Review Board approved the extension of work from home and hybrid work arrangements for BPO firms to December this year.

Finance Undersecretary Antonette Tionko also said that firms registered with the PEZA could simply shift their registration to the Board of Investments and continue to enjoy incentives.