Vietnam, Malaysia compete for IT-BPM market

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

MANILA, Philippines — Even as IT and Business Process Association of the Philippines (ITBAP) president and chief executive officer Jack Madrid remains optimistic that the Philippines will continue to be the second (India is no. 1) top provider of the global outsourcing market for the information technology and business process management services market, he admits that global competitors are vying for a slice of the global ITBPM market.

According to the ASEAN+3 Macroeconomic Research Office (AMRO), in 2024, the Philippine ITBPM industry employed 1.8 million workers, accounting for 3.8 percent of total employment, and generated $38 billion in revenue, equivalent to 8.2 percent of GDP. It was also the second largest source of foreign exchange earnings after remittances, contributing about 64 percent of total services exports in 2024.

The Philippines, according to AMRO, is the world’s second largest global service hub after India, accounting for an estimated 16 to 18 percent of global IT-BPM employment. Recognizing its strategic role, the authorities have continued to promote the industry through incentive offers and investment facilitation. In 2024, 71 percent of the 427 Philippine Economic Zone Authority (PEZA)-registered economic zones were IT parks and centers, hosting numerous IT-BPM enterprises and providing both tax and non-tax incentives.

For 2025, Madrid estimates that revenues will exceed $40 billion and may actually reach as much as $42 billion.

The other component of the ITBPM market, in which India continues to dominate with its technical skills, includes AI integration, cloud-based services and the expansion in Global Capability Centers or GCCs.

GCCs are specialized, company-owned, offshore units established by multinational corporations to perform core business functions such as IT services, research and development, finance and human resources in strategic, often lower-cost locations.

Unlike traditional outsourcing, GCCs are wholly-owned subsidiaries that enable firms to retain control over operations, quality and culture while accessing global talent and driving innovation.

In a briefing Wednesday, Madrid acknowledged that “In the past decade, new ITBPM and BPO destinations have emerged. And they are aiming to capture some of the market share of the Philippines. Countries like Egypt, Poland, South Africa, Vietnam, Malaysia, Colombia in South America, Costa Rica are some of the destinations that global companies go to.”

He elaborated that “each destination has its own strength. Colombia and Costa Rica, because they are closer to the US. There’s a complementary time zone.

It’s called near shoring, and the growing segment of the US customer base is Spanish speaking. And so that is an advantage of countries like that.”

Madrid remains confident that the Philippines will continue to be among the leaders even with the advent of Artificial Intelligence or AI.

According to the ITBAP head, “the good news is, India and the Philippines continue to be the major players, and it should be our collective objective to protect and retain that market share. We will not be number one, but it doesn’t matter. Because our population, you know, you can compare the population of India and the Philippines.”

It is interesting to note though, that some of the ITBPM services providers are owned by Indian principals.

What matters, Madrid emphasized, “is capability and our ability to solve our global customers problems in a satisfactory manner. So let’s not worry too much about competition. Let us be concerned about the ease of doing business. Let us deliver on the promises made to our investors by making it easy for them to do business. Let us avoid inconsistency in implementation of rules and regulations. Let us strengthen our infrastructure because as you know, the bulk of our growth ever since the pandemic started has been outside Manila, which is a good thing.”

He continued, “We have seen the growth of Clark, Davao, Iloilo, Bacolod, as ITBPM destinations. So let us leverage and take advantage of our countryside and diversity. And of course, work flexibility, which has been a big driver of the growth of our industry that accelerated that during the pandemic.”

Madrid makes a good point for the government to remain vigilant in ensuring that the Philippine ITBPM services sector remains competitive, especially with the competition that we now face from our two neighbors in the Association of Southeast Asian Nations (ASEAN) — Vietnam and Malaysia —who have clearly been attracting more investments, with Vietnam particularly posting the highest growth of 7.1 percent in 2024 and is expected to post an impressive growth of eight percent for 2025 based on AMRO projections.

Vietnam, Madrid admitted, has better skills in STEM. STEM stands for science, technology, engineering and mathematics. Based on the most recent ranking (as of 2022) of the Program for International Student Assessment, the Philippines is almost at the bottom, at 77th out of 81 countries. Vietnam’s 2022 PISA ranking was 31.

Vietnam’s STEM strength, Madrid added, “is consistent with India, but the Indians have specific strengths. You know, they’re stronger in some technical skills.”

At the moment, Madrid is not yet worried about competition from Vietnam. “No, it’s not big. I don’t even know who number three is. My concern is to make sure that we are a strong number. I mean, we shouldn’t worry about it. This is not a thing. Our only competition is ourselves. If we get better, then we will dominate. And that’s all we should do. Let’s not worry about the others. This is not a race, because there’s so much work here. There’s so much demand. So let’s maximize our market share. What’s our global market share overall? 20?”

Malaysia, on the other hand, Madrid revealed, has the capability to tap the lucrative Chinese market that the Philippines cannot service because of its lack of Chinese-speaking Filipinos even though we have a very strong Filipino-Chinese community. Malaysia, however, has more Chinese-speaking Malaysians.