Philippines' BPO industry sees slower annual growth of 9% until 2022

MANILA, Philippines – The country's business process outsourcing (BPO) industry expects annual growth to slow down to 9% until 2022, due to its larger scale, sluggish industry growth globally, and security headwinds in the Philippines.

This is much slower compared to the local compound annual growth rate of 17% it saw in the past 6 years. (READ: A history of the BPO industry in numbers)

"[G]iven that we already have this much scale and further leading to maturity, the growth leading to 2022 is slower. Before, annual growth was in the mid-teens at 15% to 16%. When we forecasted it for [our] most recent roadmap, we projected growth revenue-wise to be around 9%," Rey Untal, president and chief executive officer of the Information Technology and Business Process Association of the Philippines (IBPAP), said in a media briefing in Makati City on Wednesday, September 27.

Real estate advisor and brokerage firm Leechiu Property Consultants had said office space in the country has been experiencing weakening takeup from BPOs this year.

Last year, Leechiu Property said the BPO sector accounted for 65% of leased office space in the country. This year, the real estate advisor said the sector's contribution declined to about 41% of total leased office space.

"I guess in the early part of this year – being a hangover from [the] previous year's concerns – many locators are taking what we call a wait-and-see attitude," Untal told reporters.

Security risks

The IBPAP chief said potential locators during the time were concerned about the security risks in the Philippines, particulary the ongoing crisis in Marawi City.

"I will not minimize those because those are in fact contributing to some of the headwinds that we are currently dealing with," Untal said.

"It certainly is unfortunate that we had the Marawi incident [which started] in May. We are looking forward to that being lifted soon and things will slowly go back to normal," he added.

Benedict Hernandez, chairman of the Contact Center Association of the Philippines (CCAP), was quick to point out that even if the global BPO market is growing at around 6%, the Philippines' share will still be much higher at 9%.

This was echoed by Untal who said that "an annual growth projection of 9% for the country's BPO sector is still substantial."

Under the industry's 2022 roadmap, local information technology-business process management (IT-BPM) is seen to generate revenues of $38.9 billion by end-2022, from a 6-year revenue of $25 billion until 2016.