Despite the positive outlook for the entire information technology - business process management (IT-BPM) sector this year, the industry continues to face challenges, the most pressing of which is the talent and skills gap.

This issue is being addressed through collaboration among the IT-BPM group, the IT & Business Process Association of the Philippines (IBPAP), and the Department of Education.

In his presentation during the opening of this year’s International IT-BPM Summit (IIS) at Okada Manila on Wednesday, IBPAP president and CEO Jack Madrid stated that the top headwinds being faced by the IT-BPM are the talent and skills gap, intensifying global competition, high operational costs, issues in ease of doing business, and cybersecurity risks.

Madrid shared positive growth projections for the industry, with anticipated revenues of $38 billion and a workforce headcount of 1.82 million in 2024, surpassing the roadmap baseline targets but falling short of the sector's most ambitious goals.

“For the talent and skills gap, addressing the talent gap, especially in advanced digital skills like artificial intelligence (Al), data analytics, and programming, remains the top concern, as cited by 21 percent of 60 plus companies, representing 800,000 employee respondents in our midyear survey. Addressing this skills gap is critical to maintaining the industry's growth trajectory and ensuring its global competitiveness,” he said.

IBPAP has 415 member companies, employing over 1 million Filipino workforce.

Madrid further revealed that some of its members are having difficulty when it comes to embracing AI, as 8 percent of its members said they lost several workforces, while 13 percent said their numbers of workforce improved, while the remaining said nothing has changed in the number of their employees.

“There are more call center agents in the US than in the rest of the world. If AI is going to affect jobs, it’s the American agents who will be affected first. And where will those jobs go, to the best place that delivers those services, either the Philippines or India,” Madrid told reporters.

Despite this he said the industry has already grown 7 percent for this year, or 120,000 new jobs added to the current number of workers in the IT-BPM industry.

“That is a positive. The global growth rate is just 3 percent. India was just 3 percent, while the Philippines is currently at 7 percent, meaning, we are the best-performing industry this 2024. And the only way to continue achieving that is to improve our skills,” he emphasized.

To avert this, he said he already talked to Education Secretary Sonny Angara to address the issue.

“He was very receptive to the increase in the number of hours for internship; English as a medium of instruction in elementary, and teaching programming at the younger age in high school,” he said.

Madrid said countries such as South Africa, Colombia, Egypt, and Poland are rapidly advancing their IT-BPM industries, putting pressure on the Philippines to innovate and maximize its strengths in language proficiency, cultural adaptability, and technical expertise to maintain its competitive edge.

Also, the IBPAP official said one of the key problems that should be addressed is the Philippines being a country with high operational costs.

“Operating costs in the Philippines are higher than some of the other IT-BPM destinations, with recent tax reforms adding to the burden. Reducing healthcare expenses and streamlining other operational costs will be important in regaining competitiveness. For the ease of doing business, it is the inconsistent implementation of policies and coordination among government agencies that have begun to diminish the country's attractiveness as an IT-BPM destination. This has resulted in growing frustration among investors, underscoring the need for government action to address these issues,” he explained.

When it comes to cybersecurity risks, Madrid explained that as cyber threats become more sophisticated, the industry must strengthen its cybersecurity frameworks to safeguard sensitive data and protect its reputation, ensuring client trust is maintained.

"As we look to the future, IBPAP remains committed to innovation-leading the industry, shaping new opportunities, and navigating challenges with the same forward-thinking vision that has brought us to where we are today. This summit is both a celebration of our 20-year history and a reflection of our future ambitions—driving the industry to greater heights," Madrid said.