New Industrial Development Path Based on IT Service Business in the Case of the Philippines

The Philippine IT-business process management industry is in transition. Today, as the global outsourcing industry finds itself at the center of a more digitally integrated world in response to the disruption caused by COVID-19, it is also pushing the Philippines to shift to high-skilled, knowledge-based services in order to stay ahead of the competition. The chapter focuses on the rising contribution of manufacturing services to the country’s services export growth. The present study examines this trend from policymakers’ and other stakeholders’ perspectives and asks: What will it take for the domestic industry to climb up the value chain? More strategically, will this emerging trend help pave the way for the country to build its own manufacturing base and thus effect structural transformation? The study has two preliminary findings. First, increase in IT-BPM investments in the post-pandemic transition coincide with a growing interest in manufacturing services, including engineering design and data analytics. Second, the country seeks to leverage its leading global industry position and large high-skilled pool in order to stay ahead of other rising destinations. Nevertheless, for the Philippines to transition to complex and technology-intensive services it will need to gear up human resources and digital infrastructure, and ensure a robust university-industry interface—two prerequisites for the country’s own push toward industrial development.