Global management consulting firm Kearney said its latest study ranked the Philippines 39th among 60 countries on digital-focused services in the Global Service Location Index 2021.
Kearney presented the study “Building future-proof digital talent pool in the Philippines” at the IT-Business Process Management Talent summit held at the Diamond Residences in Makati City Wednesday.
According to the study, from a metric of 60 percent for digital resonance in the digital-centric sphere, the Philippines measured 4.9, down by 30 notches from the previous GSLI.
It said the “Philippines’ low digital resonance is due to low rankings in digital skills, cybersecurity rating and legal code adaptability, corporate activity for digital investment and innovative outputs globally.”
It said that on traditional IT-BPM services, the Philippines continued to be among the sought-after IT-BPM destinations, ranking 9th among the top 10 locations with India, China, Malaysia, Indonesia and Brazil hogging the top 5 spots.
The Philippines ranked lower in terms of digital resonance in the traditional sphere, placing 35th among 60 countries.
The study highlighted the growing talent gap of 100,000 to 200,000 annually in the Philippines.
For the Philippines, positioning as global services hub is challenged in digital centric scenario. With current trajectory, talent supply will not be able to cover the demand requirements, it said.
Based on industry data, the Philippine IT-BPM industry is projected to grow by 10 to 12 percent on compound average growth rate with over 200,000 job vacancies in professional IT services while venture capital investments for the tech sector grew 46 percent.
It also registered 156 percent growth in the number of start-ups.
The large digital salary gap makes importing talent difficult for Philippines, but this can become a key competitive advantage by boosting local talent supply, according to the study.
The Philippines placed 5th in the ASEAN in terms of average annual salaries for five in-demand digital roles with Singapore, Malaysia, Thailand and Vietnam in the top four spots, respectively.
In terms of talent supply, the industry is banking on 320,00 students enrolled in IT with 80,000 graduates per annum. The figure has been stagnant in the past five years, and by 2028, the talent gap is expected to further widen to 400,000.
This is aggravated by lower STEM (science, technology, engineering , mathematics) graduates of 29 percent compared to Indonesia, Korea and Malaysia with 35 to 45 percent penetration and a high attrition rate of 25 percent in the IT-BPM industry.
The study encouraged the Philippine government to consider a holistic policy response by addressing four main digital and ICT talent challenges–building future talent, retaining existing talent, upskilling existing talent and plugging short-term gaps with foreign talent as needed.
It said the Philippines should pursue both a larger and higher-quality talent pool by leveraging global policy best practice for digital and ICT education. It can leverage local universities as a key source of talent to pursue both long-term talent pool size and quality improvements, it said.
