Amid threats, Philippines spends millions to upskill outsourcing workers

[MANILA] Business-process outsourcing companies in the Philippines are spending about 1.4 billion pesos a year to upskill their workers, as the industry grapples with talent shortage, artificial intelligence and increased competition.

Each company that is a member of the 400-strong IT & Business Process Association of the Philippines has a learning and development team tasked to train new employees, Jack Madrid, the group’s president, said on Wednesday (Jan 28).

The amount the firms spend on upskilling is a conservative estimate and is comparable to that of India, the nation’s top competitor, he said.

“Our industry has gone beyond communication. To me, knowledge has become much more important,” Madrid said. 

Upskilling is now increasingly crucial, as the South-east Asian nation pushes to defend its turf in an industry that has helped bring in dollars and expand its middle class since the 1990s. Outsourcing accounts for around 8 per cent of the Philippines’ gross domestic product (GDP).

The country corners about a fifth of the global outsourcing market.

But over the years, companies have been looking to new outsourcing destinations such as South Africa, Colombia and Poland, Madrid said. In South-east Asia, Malaysia and Vietnam have also been carving a niche.

“Vietnam is a bigger threat,” he said, citing the country’s “quite advanced” educational system and the perception that it is “extremely strong in technology talent”.

The Philippine outsourcing group aims to increase its total workers to nearly two million and boost revenue to US$42 billion this year from a forecast US$40 billion in 2025. 

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“My concern is to make sure that we are a strong number two”, next to India, Madrid said. BLOOMBERG