Crisis backs Philippine BPO, software sectors

Economic downturn bolsters growth for country's outsourcing and software industries, as market players form regional hubs to vie for U.S. contracts.
Written by Melvin G. Calimag, Contributor

MANILA--The local business process outsourcing (BPO) and software sectors are projected to see higher growth rates this year, as U.S. companies deploy cost-cutting measures by outsourcing their IT requirements to countries such as the Philippines.

Officials from the public and private sectors asserted that while the Philippine electronics manufacturing industry, particularly the semiconductor business, is indeed taking a beating from the global financial crunch, the tough economic environment is proving to be a blessing in disguise for local BPOs and software companies.

Beng Coronel, president of the Philippine Software Industry Association (PSIA), said in an interview that 2008 was a banner year for the sector, surpassing the group's growth target of 30 percent.

"I think it's only manufacturing that that has been hit in the IT sector because I haven't heard from any our member companies that they're laying off people. In fact, we're even hiring," said Coronel, who is also chief executive of software development house, PointWest Technologies.

While she declined to give any growth forecast for 2009, since the market is "still very dynamic", she noted that the industry is expected to stabilize in the second quarter when the economic policies of new U.S. President Barack Obama take effect.

For example, the BPO industry is bullish on Obama's plan to spend billions of dollars to build a fully integrated health IT system for American hospitals and doctors' offices.

Another industry group, the newly-formed National ICT Conference of the Philippines (NICP), said call centers and non-voice BPO players have sprouted in different parts of the country. These outlets are now organizing themselves into regional hubs so they can bid for U.S. outsourcing contracts, which have increased in number over the last few months.

George Sorio, chair of the NICP, said while the worldwide call center industry has shrunk due to the financial crisis, the Philippines' market share has grown bigger, allowing local players to open more sites and hire employees. Sorio is also part of the management team at call center company, Cyber City Teleservices.

Directive to "accelerate"
According to the Commission on Information and Communications Technology (CICT), it has secured funding worth 60 million pesos (US$1.3 million), which will be poured into talent development to grow the BPO industry and to combat the financial morass.

The CICT Chair Ray Anthony Roxas-Chua II said the agency is also bent on using up the 1 billion pesos (US$212 million) e-government fund, issued by President Gloria Arroyo under a directive to "accelerate" IT infrastructure spending this year.

Roxas-Chua, however, said there were no big-ticket IT projects lined up, as yet. "The proposals arrived at the middle of last year so we expect to approve them by middle of this year. But, we're hurrying up because we want to implement and finish them before the President completes her term next year."

Roxas-Chua, along with Coronel and Sorio, were guests at Thursday's launch and partnership signing between the CICT and Microsoft for the latter's BizSpark program for local SMEs. The project aims to spur the local software economy by providing Microsoft development tools and production licenses to small entrepreneurs at "no up-front cost", according to the partners.

Melvin G. Calimag is a freelance IT writer based in the Philippines.

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