Philippine BPO industry beats 2022 targets with hybrid work

setup
Call centers and peers optimistic for 2023 despite recession fears.

The Philippines' business process outsourcing industry exceeded industry growth forecasts last year as global companies continue to look
for ways to cut costs. (File photo by Yumi Kotani)

CLIFF VENZON, Nikkei staff writer

February 28, 2023 18:23 JST

MANILA -- Philippine call centers and other outsourcing companies beat revenue and hiring targets last year and
expect more growth in 2023, as global businesses continue seeking ways to cut costs.

The economically vital business process outsourcing (BPO) industry, which provides support services to
companies from Amazon to Zoom, saw revenue increase 10.3% to $32.5 billion, and staff count rise 8.4% to 1.57
million, the IT and Business Process Association of the Philippines (IBPAP) reported Tuesday.Financial services,
health care, retail, technology and telecommunications drove growth, it added. The trade association had forecast
8% to 10% revenue expansion and head count growth of 7% to 8%.

For this year, IBPAP said the industry could see its workforce reach 1.7 million and revenue hit $35.9 billion,
expansions of 8.3% and 10.5%, respectively. The group, citing its own survey, said 83% of outsourcing companies
expect to post growth in 2023 "despite a potential global recession," while 17% were "neutral with their forecasts."

The result of the survey also showed that organizations will continue to outsource and use global business services
to cut costs, the association said.

The better-than-expected performance in 2022 is the latest good news for the sector. In September, the government
allowed PBO companies with work-from-home arrangements for their employees to retain tax incentives. Many
outsourcing companies operated under an investment regime that required staff to work on-site to enjoy tax perks,
and the hybrid work setup was initially a temporary measure taken in response to the pandemic.

Amid intense lobbying for hybrid work to be made permanent, IBPAP pledged to generate 2.5 million jobs and
$59 billion in annual revenue by 2028, the end of President Ferdinand Marcos Jr.'s six-year term.

The lofty targets come as the call center industry faces a number of challenges, such as automation, as well as
difficulty hiring qualified workers and rising competition with other outsourcing destinations like India, Poland
and South America.

"We still have a long way to go, but [the] Philippine [industry's] stellar performance in 2022 brings us closer to
generating 1.1 million new jobs for Filipinos," said IBPAP President and CEO Jack Madrid in a statement.

"It's also a testament to the collective efforts that the private sector, government and academe have exerted to
retain the industry as an indispensable pillar of the economy," he said.
 Philippines BPO Industry Fears Grow Due to Weak
Cybersecurity
Narayan Ammachchi
January 2024

The BPO industry in the Philippines is deeply worried about the possibility of becoming a victim of
cyber thieves amid a wave of digital attacks exposing the country’s weak IT security system.

The nation’s IT/BPO sector earns more than US$30 billion annually. All of this money could be
jeopardized if a massive cyberattack were to strike the industry, said the country’s outsourcing lobby
group ITBAP.
The industry’s concerns stem from a series of recent cyberattacks on the country. The most shocking
attack exposed thousands of pages of sensitive data from the country’s public healthcare system, which
were published on social media.

The hacker responsible for the attack reportedly demanded a US$300,000 ransom from the state
insurance company and made the data public after the agency refused to pay.

The government’s helplessness was made evident when another group of cybercriminals defaced the
official website of the country’s elected representatives. Another cyber thief, who calls himself Phantom,
claims to have stolen data from the websites of as many as five government agencies.

One of the most worrying attacks for the Filipino BPO sector involved hackers breaking into the
country’s statistical department, an agency responsible for national identification cards.

“The IBPAP is deeply alarmed by these malicious acts, which not only jeopardize the operations of the
IT-BPM industry but also the reputation of the Philippines as an attractive investment destination,” said
IBPAP President Jack Madrid in a statement.