Having toppled outsourcing giant India in the call center market last year, the Philippine ICT industry is aiming to level up further this year as the government and the private sector team up to set ambitious revenue goals and draft long-term programs.
According to analyst firm XMG Global, 2011 should be a positive year for the country's IT market with overall IT spending estimated to grow 11 percent to US$3 billion.
The BPO (business process outsourcing) industry, one of the country's main revenue earners, is again leading the charge. Industry group Business Processing Association of the Philippines (BPAP) is targeting to hit US$11 billion in revenues in 2011, a 20 percent increase from estimated US$9 billion in 2010.
The Philippines last year dethroned India as the global call center hub, hitting US$5.7 billion in revenues against India's US$5.5 billion and employing more call center workers than the former leader.
BPAP and the Philippine Commission on ICT (CICT) are projecting that the industry could create an additional 84,000 jobs this year, bringing the total number of IT-BPO workers in the country to 610,000.
The figures tally with XMG's estimated forecast which revealed that the growth of talent employed in offshore services for 2011 will reach 651,425. "One of 12 employed professionals in Metro Manila will be working either in BPO, call center or IT services," said Phil Hall, principal analyst at the research firm.
BPAP's chief, Oscar Sañez, said in an earlier statement that aggressive marketing, both locally and internationally, will be key for the Philippines to achieve the US$11 billion-revenue goal. "We have to increase the awareness of our potential employees of job opportunities in IT and BPO companies, including those in the knowledge process outsourcing and other non-voice sectors. We also have to improve our visibility internationally to market new services in new territories," he said.
Sañez also noted that President Benigno "Noynoy" Aquino III in December 2010 had pledged to allocate 62 million pesos (US$1.4 million) as "BPO promotions fund", adding that the amount would help the industry achieve this year's revenue goal.
Focus to include broadband, digital TV
For the CICT, the government agency in charge of the local ICT market, boosting the BPO sector is just one part of the "digital strategy" which spans 2011 to 2016.
Ivan John Uy, who heads the agency, told ZDNet Asia in an interview that the five-year plan--which will be launched soon--aims to enhance the country's software, telecoms, e-government and postal sectors.
This year, the CICT is coordinating with various academic and non-formal education institutions to "re-tool" jobless college graduates and youths, Uy said. "For instance, our nursing graduates who don't have work yet can be trained to become medical transcriptionists and healthcare support specialists," he said.
He cautioned that the country has to quickly replenish or augment its BPO manpower base. "We run the risk of [skills] shortage. We have lots of jobless people around but they don't have the skills," Uy said, adding that the government is also looking at the possibility of offering a "study now, pay later" scheme for the unemployed.
The CICT this year will also be preparing for the country's migration to digital TV, he said, elaborating on plans for the local telecoms sector.
Last year, the National Telecommunications Commission (NTC)--which operates under the CICT--selected a Japanese digital TV standard which broadcast companies must adopt by 2015.
Uy explained: "As part of our preparations, I've directed the NTC to organize a technical working group to draft, within the year, implementation rules and regulations (IRR) which would also serve as a guideline for broadcast companies."
Touching on the private telecoms sector, XMG said increased competition will force mobile operators to roll out better pricing, especially with regard to data plans and long-distance charges.
"[Leading] service providers will be those that can leverage their wireless and extended bandwidth capabilities," noted Hall, who is based in Manila. "Price, services and local content provisioning will be the dominant lure and battleground, as social networking continues to grow dramatically and cuts into the SMS market."
In the broadband space, the XMG analyst said subscriber base growth will be propelled by intense competition which will push down the prices of entry-level packages.
"Competition is increasing between fixed-line, cable and mobile providers," he said. "Among telco giants PLDT Smart and Globe Broadband, subscribers will continually lag behind cellular subscription. However, broadband will continue to remain [these operators'] growth area [and see] double-digit growth, making it an important revenue stream for all carriers."
Given the increasing demographics of Filipinos who are clamoring for better quality of service and pricing both at home and on-the-move, consumers are unlikely to stick to a single provider when buying broadband services, he noted.
"[To lead the market], service providers will need to develop loyalty programs and provide attractive pricing and bundling schemes," Hall said. "Internet TV will not take traction in the Philippines yet, but we foresee tie-ups between TV content providers and Internet for on-demand replay of shows. Watch for PLDT Group's TV5 as they strategically evolve to become the natural fit to take on this leadership role."
An interoperable government
Turning to e-government initiatives, Uy said the CICT will be pushing for interconnectivity and interoperability between IT systems deployed across different government agencies.
"Each agency has its own GIS (government information system) and data center which do not talk to each other. ICT adoption in the government is extremely low and fragmented," he revealed.
XMG, though, is not expecting any major leaps in this area this year. Hall said: "However, if the new Aquino government follows its stated plan, we anticipate a slow progression from more use of IT in government departments to true e-government applications during this presidential term."
With regard to the country's postal service, which falls under the domain of the CICT, Uy said reforms are underway to transform post offices across the Philippines into self-sustaining community e-centers.
He noted that the Philippine Postal incurred losses totaling 300 million pesos (US$6.8 million) last year. "We need to fix this and install a new business model."
Beyond the government sector, XMG said the Philippines can expect to see IT developments in other areas including social networking, consumer electronics, green IT, cloud computing and software development.
According to Hall, social networking activities in the country will see continued growth through 2011 and beyond. "Facebook and Twitter are taking market [share] from SMS," he said. "Like e-mail and the mobile phone before, these are culture-changing products and we have not seen their full potential yet."
"Expect more developments for use of social networking in business, but also expect higher levels of advertising, spam or its equivalent, viruses and other intrusions," he added.
XMG also expects tablets to claim its ascendancy in the gadget race.
"Most major manufacturers are due to release their first models in first-quarter 2011, while Apple is due to announce iPad 2," Hall said. "With the rise of the middle-class and tech-savvy Gen X and Gen Y Filipinos, expect to see these gadgets in local coffee shop. With a wide range of devices and operating systems, there will be no leader but expect Apple to remain strong, followed by Samsung and RIM."
Elaborating on cloud adoption, the XMG analyst said IT vendors are expected to grow their enterprise offerings through the public cloud. "However, we do not anticipate well-established companies with significant investment in IT to [migrate] their ERP systems or legacy applications just yet in 2011," Hall noted.
He said enterprises will need new software that built to be deployed on the cloud as legacy systems are not designed for such implementation.
He also pointed to green IT as a growth area for the Philippines as high utility costs in the country make a good case for the deployment of energy-efficient hardware and virtualized servers.
"The adoption of green IT practices will increase, albeit slowly, over the next 12 months primarily due to newer hardware refreshes," Hall said. "Unlike other green-conscious economies such as Singapore and Korea, businesses and industries in the Philippines must still collectively make a commitment to saving the environment and reducing carbon emission footprint generated by technology."
Melvin G. Calimag is a freelance IT writer based in the Philippines.