What govt can do for the IT-BPO sector

12 Apr 2012

The Philippines ICT industry recently made a great promise: by 2016, it will contribute as much as $50 billion in direct revenues, 70% of which would come from the IT-BPO industry.

It also promised a projected $150 billion in indirect investments in the economy, primarily through real estate, transport and telecommunications, banking, and taxes.

The country’s economic development authority already sees the IT-BPO segment growing at 15% annually. Much hope is also pinned on the sector in helping ease the country’s 7% unemployment rate and accelerating countryside development. Currently, IT-BPO accounts for only 1.6% of the 40-million strong labor force and 5% of the country’s GDP.

Beginning with the Arroyo administration, the government has been gung-ho on harnessing the huge potential of IT-BPO as a means to leapfrog economic growth. Today, under the Aquino government, the Information and Communication Technology Office of the Department of Science and Technology is raring to tap into this gold mine—a priority in its ICT industry development programs.

All this raving about IT-BPO is for good reason. In recent years, the sector has contributed to the country’s economic growth, together with telecommunications, real estate, housing, and retail trade. The Philippines has already established itself as the clear global number two IT-BPO leader after India, which it had surpassed in 2010 as the main location for business support services.

To exploit the opportunity that IT-BPO brings, what is government doing for the sector? In recent years, public sector backing was mostly seen in developing a larger and targeted ICT human resource pool through programs for college, and technical and vocational education. Last year, the government set aside 500 million pesos through the Technology Education and Skills Development Authority (TESDA) for IT-BPO bridge training programs. Efforts are also focused on upgrading core IT skills other than those needed for call centers.

While people are the country’s greatest asset, IT-BPO can benefit from a wide range of reforms. At an ICTO workshop last March, various industry associations identified areas like domestic ICT industry development, Next Wave Cities, and ICT marketing and research as needing direct government support.

Policy reforms are also crucial and necessary. For starters, the government can pass the bill creating the Department of ICT which can serve as a centralized, go-to agency for all IT-BPO industry matters. It can also approve the Data Privacy Act,which follows strict international standards in mandating public and private institutions to protect the integrity and confidentiality of personal data being collected throughout their operations. Both bills have passed third and final reading at the Senate and the House of Representatives.

Reforms need not address the special needs of the IT-BPO industry alone. Developing and adopting a national broadband plan, for example, will reap all-encompassing benefits that can open new economic opportunities, and improve social services and public sector management. Addressing the bottlenecks in internet connectivity, especially outside urban centers, will support countryside development. Spectrum management, infrastructure-sharing, local internet exchange, and incentives for infrastructure roll-out are but a few long-drawn-out issues. Finally, improving the overall business environment, cited by ADB as a major factor for achieving sustainable growth in the country, can boost the performance of a slew of industries. This means lowering the cost of doing business, reducing the red tape in starting/shutting down a company, and making it conducive for local startups to compete.

With quality manpower skills, supporting policy/legal framework, reliable infrastructure, and a sound business environment, the great promise of the IT-BPO industry may become a reality much sooner than predicted.

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