Digital Transformation to Contribute Forty Percent to Philippines GDP by 2021

by - February 19, 2018

Digital age has brought lots of disruptions in our daily lives and in a whole in our economy.  With the way things are and three years from now, it is predicted by a new business study produced by Microsoft in partnership with IDC Asia/Pacific and released last February 8, 2018, that digital transformation will add an estimated US$8 billion to the Philippines’ GDP and increase the growth rate by 0.4% annually.

Mr. Hans Bayaborda, Managing Director of Microsoft Philippines shared, “The Philippines is clearly on the digital transformation fast track. Within the next four years, we expect to see approximately 40% of the Philippines’ GDP to be derived from digital products and services.”  He also said, “At the same time, organizations in Asia Pacific are increasingly deploying emerging technologies such as artificial intelligence as part of their digital transformation initiatives, and that will accelerate growth even further.”

The survey was conducted and participated in by 1,560 business decision makers in mid and large-sized organizations across 15 economies in the region, the Philippines are included with 100 respondents. It highlights the rapid impact and widespread disruption that digital transformation is having on traditional business models. It also identified five key benefits to their bottom line from digital transformation.

Research findings showed that organizations are seeing significant and tangible improvements from their digital transformation efforts across these benefits in the range of 6% to 12% today. Business leaders expect to see more than 50% improvements in those key areas by 2020, with the biggest jump expected in profit margin and productivity.

Digital Leaders in Asia Pacific to Gain Lion’s Share of Economic Opportunities

The study indicates that while 93% of organizations in the Philippines are in the midst of their digital transformation journey, only 7% in the entire region can be classified as Leaders. These are organizations that have full or progressing digital transformation strategies, with at least a third of their revenue derived from digital products and services. In addition, these companies are seeing between 20 - 30% improvements in benefits across various business areas from their initiatives.

The study indicates that Leaders experience double the benefits of Followers, and these improvements will be more pronounced by 2020. Almost half of Leaders (48%) have a full digital transformation strategy in place.

“The pace of digital transformation is accelerating, and IDC expects that by 2021, at least 48% of Southeast Asia’s GDP will be derived from digital products and services, with growth in every industry driven by digitally enhanced offerings, operations and relationships. The study shows Leaders seeing double the benefits of Followers, with improvements in productivity, cost reductions, and customer advocacy. To remain competitive, organizations must establish new metrics, realign organization structures, and re-architect their technology platform," said Daniel-Zoe Jimenez, Research Director Digital Transformation Practice Lead, IDC Asia/Pacific.  

The Study identified key differences between Leaders and Followers in Asia Pacific, which contribute to the improvements tracked:

Leaders are more concerned about competitors and emergence of disruptive technologies

The digital economy has also given rise to new types of competitors, as well as emerging technologies such as AI that have contributed to the disruption of business models.

Business agility and culture of innovation are key goals

 When addressing business concerns, Leaders are focused on creating a culture of agility and innovation to counter competition. Followers, on the other hand, are more focused on improving employee productivity and profitability.

Measuring digital transformation successes

Organizations across Asia Pacific are starting to adopt new key performance indicators (KPI) to better measure their digital transformation initiatives, such as effectiveness of processes, data as a capital, and customer advocacy in the form of Net Promoter Score (NPS). As organizations realize the potential of data as the new oil for the digital economy, Leaders are much more focused on leveraging data to grow revenue and productivity, and to transform business models.

Leaders are more aware of challenges in their digital transformation journeys

In addition to skills and cybersecurity threats as key challenges, Leaders have also identified the need to bolster their data capabilities through the use of advanced analytics to develop actionable insights in fast-moving markets.

Leaders are looking to invest in AI and Internet of Things

Emerging technologies such as AI (including cognitive services and robotics) and IoT are areas where Leaders are investing in for 2018. Besides these emerging technologies, Leaders are also more interested in investing in big data analytics to mine data for actionable insights than others.  

What sets Leaders apart from others are their ability to ride on the digital transformation wave from an organizational culture perspective. The study found that Leaders have these traits:

“There is a pressing need for organizations to adopt a leaders’ mindset to fully build their digital ecosystem—from employees, to customers, to partners—in order to grow their value chain,” said Andrea Della Mattea, President of Microsoft Asia Pacific. “In this regard, Microsoft is uniquely positioned to help organizations across Asia Pacific succeed in their digital transformation journey. We say this with confidence because we, as an organization, have also undergone digital transformation, and we understand what it takes to make these digital initiatives successful.”

In the study, it is also pointed out that Filipinos have more to gain with digital transformation since its many benefits includes potential increments to potential income with freelancing, creation of higher value jobs and increased educational and training facilities.  

For more information about the study, visit

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