Cebu IT industry braces for ‘cyclical slowdown’

CEBU, Philippines —  Leaders in Cebu’s information-technology-business process management (IT-BPM) are bracing for a slower growth pace of the industry starting this year.

Cebu IT/BPM Organization (CIB.O) president Perth Cabataña has warned players that irregardless of the pandemic, the slow growth pace is not a surprising phenomenon, but it is a normal cycle that takes place in any business.

In fact, the IT/BPM sector in Cebu continued to stay steadfast despite the hard lockdown in 2020.

“The industry has not declined. Yet, it continued normal operations except for few flexibilities like work-from-home,” said Cabataña in a press conference held recently to launch Cebu’s “Transformation Summit” to craft policy wish lists to cushion the projected slow growth and keep Cebu’s advantage in attracting outsourcing and high value offshoring jobs.

He said Cebu’s IT/BPM industry, which enjoyed a high of 50 percent growth from 2005 to 2011, is now going through its normal maturity adjustments, and the slowdown should not be a cause for alarm, reiterating “this is normal.”

However, while considered as part of the growing-up pains, Cebu is not resting on its supposed to be “laurels” in the fast growing IT/BPM sector. Rather, it will work hard in protecting the industry via promoting innovation and ecosystem developments.

 “The good thing is, we can do something,” while entering the slow growth space, Cabataña said.

Players are encouraged to change, update technology—not just the engineering side of it, but also infrastructure, adding that the Cebu should religiously employ the current unicorns which re-modeling the business as a whole.

Developing the ecosystem is strengthening the collaboration of stakeholders, including concerned government agencies and policy makers. Industry leaders led by Cabataña expressed commitment to start the work real hard.

After the six-year 50 percent industry growth from 2005-2011, Cebu IT/BPM sector’s growth trajectory made a downward shift to 15 percent from 2012 to 2015. A seven percent growth was seen in 2019 and three percent in 2020.

This year, while battling from the brunt of the pandemic, the industry is projecting a much slower 1.7 percent growth.

“We are still growing, but we are growing slowly,” Cabataña reiterated.

Besides the pandemic impact of businesses, the industry, has entered the slow growth phase or the so-called S-curve phase where old ways of doing business become mature and then become superseded by newer ways, he added.

“The industry now has to do something to arrest this slow growth for it to go beyond that phase,” he said.

IT and Business Process Association of the Philippines (IBPAP) president and chief executive officer Rey Untal in a report said majority or 87 percent of the IT-BPM firms are expecting to register five percent to 15 percent growth this year while 13 percent are anticipating flat growth.

Prior to COVID-19, in 2019 the employment in the industry grew by 1.8 percent to 1.32 million and revenues rose by 1.4 percent to US$26.7 billion.