IT-BPO industry exports could reach $55B in 2020

By Cai U. Ordinario, Business Mirror

Posted at Jun 08 2011 07:02 AM | Updated as of Jun 08 2011 03:03 PM

MANILA, Philippines - If the government can fully develop the information-technology and business-process outsourcing (IT-BPO) sector services industry, it has the potential to earn export revenues of $30 billion to $55 billion by 2020.

This is according to a study made by World Bank consultant Raja Mitra, who estimates that medium-term export revenues from the sector could reach far more than the $9 billion it controlled in 2010.

Mitra made three assumptions that resulted in a low-end medium-term export revenue estimate of around $30 billion, the medium-end estimate at $45 billion and the high-end estimate at $55 billion.

“While not a panacea...expanding the scale and scope of exports of IT-BPO services as well as domestic industry development and use of ICT [information and communication technology] will offer new avenues that can help the economy to be more productive and accelerate efforts to achieve inclusive growth within the country and to interface and catch up with the rest of the world,” Mitra said in a slide presentation.

With revenues of this size, Mitra expects the IT-BPO services industry to contribute as much as 11 percent of the country’s gross domestic product (GDP) by 2020. In 2010 the industry contributed around 5 percent of GDP.

Mitra also projects that Filipinos employed directly and indirectly by the industry will reach 6.8 million by 2020. Those who will be directly employed by the industry could increase to 1.8 million by 2020 from 500,000 in 2010, while those who are indirectly employed could rise to 5 million by 2020 from 1.75 million in 2010.

However, these are merely projections and, in truth, Mitra said, the Philippines’ full potential in the industry has not been met. For one, the country lags behind in providing IT-related services and the use of high technology in all its IT-BPO services.

Mitra said these two factors would significantly help in growing the industry and allowing the Philippines to also shift to high-value back-office services, which are necessary to earn in more revenues.

“[It is] important to simultaneously develop the IT, telecom, education and other knowledge economy sectors and to enhance the potential synergies between BPO and other ICT sectors both in terms of external and domestic markets. Such a development offers significant promise it can contribute toward achieving sustainable and inclusive economic growth,” Mitra said.

Mitra said the Philippines already has a larger BPO industry than India and has already overtaken it in call-center operations. Metro Manila now has more people employed in the BPO export industry than any other city in the world.

Data collected by Mitra showed that the sector’s export revenues-ratio-to-GDP was less than 1 percent in the early 2000s and steadily grew to 4.8 percent in 2009. Its share of total exports, on the other hand, increased to 16 percent in 2008 from less than a percent in 2000.

Mitra also said the industry has already come a long way in boosting employment in the country. For one, direct employment in the sector as a share of the total labor force employment has risen to more than 1 percent from less than 0.1 percent in the early 2000s.