How BPO’s contributed in the Philippine Economic scale?

Research taken from the May 16, 2018 report from Business World

The Department of Trade and Industry (DTI) defines business process outsourcing (BPO) as the
“delegation of service-type business processes to a third-party service provider.” The industry,
according to the department, is generally divided into the following sectors: contact centers,
back office services, data transcription, animation, software development, engineering
development, and game development.
Since its emergence in the country in the 1990s, the industry has exhibited exemplary growth
throughout the past years. The sector has then become vital to the country’s economy that it
has often been referred to as a “major economic pillar” and an “economic lifeline.” Oxford
Business Group (OBG) described the BPO sector as an “economic powerhouse” and “one of the
largest white-collar employers in the country.”
“Rarely has a new industry traced the trajectory from concept to prime economic driver as
quickly as business process outsourcing (BPO) has in the Philippines. In a very short time span,
BPO has grown from a handful of contact centers to a global back-office resource hub and call-
center capital of the world, drawing jobs and investment from all corners of the globe along the
way,” OBG noted in a 2016 report. The same report stated that the BPO sector’s contribution to
the country’s gross domestic product (GDP) has risen together with the number of companies
setting up operations in the country. The industry, as OBG reported, accounted for just 0.075%
of GDP in 2000, rising swiftly to reach 2.4% in 2005, 4.9% in 2011, and 5.4% in 2012. Moreover,
the sector’s estimated GDP contribution in 2015 was 6%.
“According to industry analysts, revenue from the country’s BPO industry grew 10-fold from
$1.55 billion in 2004 to $15.5 billion in 2013, reaching an estimated $18 billion in 2014,” the
report from OBG stated.
On the other hand, on a 2017 report, OBG stated, “In 2015 US source, a small group that
provides clients with outsourcing needs, reported that the IT-Business Process Management
(IT-BPM) sector — which includes IT, BPO, and engineering services — saw industry revenues
soar by 18.7% year on year to hit $18.4 billion in 2014. Growth was even stronger in 2015, with
IT and Business Process Association of the Philippines (IBPAP) reporting that annual industry
revenues reached $22 billion that year, a 19.6% increase over 2014 and exceeding a target of
$21 billion.”
In 2016, the IT-BPM revenue for 2016 came in at $22.9 billion. By 2020, US source expects BPO
revenue to reach $55 billion. OBG added in the report that the Bangko Sentral ng Pilipinas
stated that the industry will soon overtake the value of remittances from overseas Filipino
workers, which currently account for an estimated 10% of annual GDP. It is known that
remittances from overseas workers, along with the BPO industry, are the country’s top two
earners of foreign exchange.
 How BPO’s contributed in the Philippine Economic scale?

“The industry will soon surpass foreign remittances as the single largest contributor to GDP,
driven by growth in the emerging segments of health care, analytics, and financial services
outsourcing,” OBG stated.
On the employment aspect, OBG indicated that the BPO industry has also experienced a similar
rise in its record for job creation. The sector was reported to have generated an increase in job
opportunities from 101,000 employees in 2004 to 900,000 in 2013. OBG also reported that
IBPAP had indicated an estimate of 1.1 million people employed in the industry at the end of
2015, with new jobs primarily generated in knowledge-intensive business services including
computer and IT services, as well as in research and development.
By 2016, the sector is reported to have employed approximately 1.15 million Filipinos as driven
by the expansion of global in-house call centers. On the other hand, it was forecasted that the
sector’s employment reached to 1.3 million in 2017.
Meanwhile, IBPAP drafted a new Philippine IT-BPM Roadmap 2016-2022, which targets the
following: 1.8 million direct jobs; 7.6 million direct and indirect IT-BPM employments; 500,000
jobs outside of NCR; $40 billion in revenue; 15% global IT-BPM market share.
The said road map aims to strengthen domain expertise and capabilities in the emerging
sectors and ensure that the Filipino talent is future-ready amid rapid innovations in the areas of
digital transformation, artificial intelligence, big data and analytics, as well as evolving delivery
models.