The services sector in the Philippines has been experiencing a robust growth in recent years, prompting proposals for the country to “abandon” the manufacturing sector and shift its policy in support of the services sector.
The phenomenon characterized by the massive transition of labor and output share from manufacturing to the services sector is widely referred to as deindustrialization. This follows the traditional development models of human societies’ sequential pattern of economic development—from agricultural to industrial and to services-oriented economies.
If the Philippines were to leapfrog the conventional sequence and instead focus its policies on supporting the services sector, this would entail conscious shifts in education policy, infrastructure projects, trade and industrial policy, budget allocation, and other important areas.
The share of the services sector to total Gross Domestic Product (GDP) in the Philippines has increased steadily in the past three decades. As of 2006, it stood at 48.3 percent compared to 32.8 percent for industry and 18.8 percent for agriculture. The strong performers in the services sector in 2006 were finance and private services.
The boom in the stock market aided the 9.5 percent growth in finance while the expansion of the Business Process Outsourcing (BPO) sector underpinned the 6.8 percent growth of private services.
The BPO sector is regarded as one of the fastest growing industries in the world. International investment consultancy firm McKinsey & Company predicts that the demand for outsourcing services will reach $180 billion in 2010, with the customer contact services, finance and accounting, and human resource sub-sectors taking up the biggest shares. When it comes to the trend in primary business requirements, experts are seeing a shift from cost-effectiveness to skills quality and competence. This development all the more strengthens the Philippines' position as an emerging global leader in the BPO industry.
The Philippine outsourcing industry offers a wide range of services to companies that include not only traditional voice and IT services but also higher value services such as finance, animation, engineering, medical transcription and architectural services.
Last Updated on: 08-02-2010