The IT and Business Process Association of the Philippines (IBPAP) welcomes the filing of Senate Resolution No. 253 by Senator Bam Aquino and the convening of a public hearing by the Senate Committee on Science and Technology to examine the challenges confronting the IT-BPM industry amid rapid technological advancements, including artificial intelligence (AI), automation, and digital transformation. IBPAP led industry representatives in shedding light on various issues and concerns faced by the industry that can lead to loss of jobs and contraction of the sector.
Senator Aquino, joined by Senator Risa Hontiveros, tackled the various problems reported by IBPAP in a prior meeting, which included the growing seriousness and sophistication of cybersecurity threats and cybercrimes committed in IT-BPM companies, declining ease of doing business resulting from ordinances that are not compliant with the national law, impractical and burdensome requirements in certain department orders relating to OSH, increasing cost of doing business due to BIR RMC 05-2024 and the agency’s tax assessment practices and the slowness in rolling out TESDA funding for upskilling and reskilling programs proposed by IT-BPM players for near-hires and existing workers.
“The IT-BPM sector is a critical driver of national growth,” said Celeste Ilagan, Chief Operating Officer of IBPAP. “Investor confidence depends on resolving ease of doing business issues and investing aggressively in talent development.”
The same pressure points raised before the Senate will be the central focus of IBPAP’s first annual membership meeting for 2026, scheduled on March 4, 2026, where more than 400 member companies are expected to convene and consolidate their top industry concerns.
The IT-BPM industry employs 1.9 million Filipinos, contributes 8.2 percent to GDP, and is projected to generate US$42 billion in revenue by end-2026. The sector remains on track toward its Roadmap 2028 target of US$60 billion in revenues, provided structural constraints are addressed.
Regulatory Issues Affecting Competitiveness
IBPAP raised several concerns that may undermine investor confidence:
- Continued imposition of local taxes, fees, and charges by some Local Government Units (LGUs) despite CREATE MORE provisions granting exemptions to Registered Business Enterprises (RBEs)
- Inconsistent business permitting requirements, including additional local documentation for employees
- Bureau of Internal Revenue Memorandum Circular 05-2024, which as implemented in some areas subjects certain cross-border services to 25 percent final withholding tax plus 12 percent VAT
- Large and inconsistent tax assessments creating uncertainty for investors
Although clarificatory guidance was issued through RMC 38-2024, companies continue to report uneven implementation across Revenue District Offices.
“These concerns are escalated to global headquarters and influence location decisions,” Ilagan said.
IBPAP estimates that regulatory friction and related cost differentials may increase operating costs by 15 to 20 percent compared with competitor markets.
Cybersecurity and Legal Standing
IBPAP also called for amendments to the Cybercrime Prevention Act of 2012 to grant IT-BPM firms legal standing to directly file cybercrime cases when fraud affects foreign clients.
Currently, companies may bear financial liability but lack prosecutorial standing, limiting deterrence, and weakening client confidence.
The association is working with lawmakers and relevant agencies to pursue targeted amendments that will strengthen enforcement and reinforce the Philippines’ position as a secure outsourcing destination.
AI Disruption and Workforce Readiness
Artificial intelligence is rapidly transforming global services. While AI presents growth opportunities, it also poses risks to entry-level and voice-based roles without large-scale reskilling.
Projected government-funded AI training programs for 2026 may cover approximately 68,000 learners, a small portion of the 1.9 million-strong workforce.
“If there is no talent, there will be no locators,” said Frankie Antolin, IBPAP Executive Director for Talent Development and Attraction. “We need to embed digital capability across the workforce and accelerate industry-aligned training.”
IBPAP urged:
- Faster rollout of TESDA and DICT reskilling programs
- Accelerated approval of enterprise-based training initiatives
- Nationwide AI literacy programs
- Targeted support for SMEs and homegrown BPOs
National and Regional Impact
The industry supports significant employment outside Metro Manila, including more than 250,000 workers in the Visayas and growing hubs in Mindanao. IBPAP’s roadmap targets 40 percent of future growth in regional locations.
The association warned that even modest job losses in provincial hubs could significantly impact local economies.
Call for Coordinated Action
IBPAP welcomed the Senate’s commitment to further consultations and oversight. The association emphasized the need for:
- Immediate alignment of LGUs with CREATE MORE provisions
- Consistent tax implementation by BIR
- Targeted amendments to cybercrime law
- Accelerated, industry-driven AI upskilling programs
- Strong coordination among DTI, DICT, TESDA, CHED, and the private sector
“This industry helped build a new Filipino middle class,” Ilagan said. “With clear policies and decisive action, the Philippines can remain a global leader in IT-BPM.”
