Philippine ICT trudges on despite uncertainties

Country's outsourcing industry instrumental in helping Philippines avoid negative growth last year but now faces uncertainty as national elections loom.
Written by Melvin G. Calimag, Contributor

MANILA--The local ICT industry is working to ensure it is business as usual amid the uncertainties brought about by the upcoming national elections, where existing policies risk being abandoned when a new administration takes over.

Last week, the Business Processing Association of the Philippines (BPAP), the country's main IT-BPO (business process outsourcing) industry body, held an event to highlight the results of its 2010 roadmap that expired this year. It hosted another event on Thursday, in collaboration with the Commission on Information on Communications Technology (CICT) and the Department of Trade and Industry (DTI), to announce an updated list of the Next Wave Cities, a program aimed at increasing the ICT competitiveness of cities in the countryside.

Despite these activities, however, the local ICT industry is working to keep business running as usual amid the uncertainties brought about by next month's national elections. In the Philippines, an incoming president typically discards policies established by the previous administration.

But BPAP, which represents different IT-BPO groups in the country, stressed that the fate of the local outsourcing industry cannot be left dangling in uncertain times.

The organization's chief executive Oscar Sanez, said in a presentation that the Philippines could have plunged into recession if not for the 450,000-strong IT-BPO industry.

"It was instrumental in [helping] the Philippine economy avoid a negative growth in 2009 by contributing US$7.2 billion in total revenue," Sanez said.

Referring to its 2010 roadmap, BPAP said all indications point to the industry's realization of its goals across the major economic domains--GDP (Gross Domestic Product) contribution, export revenues, employment creation--over a five-year period.

Research firm XMG Global said it "acknowledges the triumphs of BPAP" in meeting objectives outlined in its 2010 roadmap but warned about growing concerns over the quality and quantity of talent supply.

Its senior analyst Vincent Altez said the BPAP's 2010 estimates of total workforce and industry revenue resembled XMG's own estimates. The research firm has predicted the BPO workforce will reach 561,267 and the market will generate revenues of US$9.4 billion by year-end, growing 29 percent over a four-year period.

"Moving forward beyond 2010, the Philippines should respond appropriately to geophysical and geopolitical risks to protect its rank as a legitimate offshoring destination," Altez said.

"Being a disaster-prone country, regular maintenance of transportation and building infrastructure as well as the assessment of Comprehensive Land Use Plan (CLUP) would be among the best actions," he said. "Initiatives toward conflict management programs in the countryside would likewise mitigate violence and security problems preventing ideal locations for BPO expansion."

But even as the industry reveled on meeting its BPO objectives outlined between 2005 and 2010, the next chapter of the roadmap still loomed far in the horizon.

BPAP's director Gillian Joyce Virata said drafting an ICT plan requires a lot of resources although the government, through the Commission on Information and Communications Technology (CICT), has already allotted initial funding for the study.

For the 2010 roadmap, BPAP enlisted McKinsey Consulting for inputs, Virata said. "We're looking at a new roadmap that will cover 2010 until 2016, which will coincide with the term of the newly elected president. We''' probably commence with the study in August and release it in October," she said.

Sanez said the Next Wave Cities initiative was a crucial element that helped drive the 2010 roadmap. "This project does not merely rate their facilities of the cities. It's about building the capabilities in grassroots and engaging the local government units," he said.

He added that the BPO workforce in the areas included in the program grew by 48 percent in the last two years. In terms of revenue, cities in the list are expected to generate US$1.2 billion this year.

In fact, one area that was part of the Next Wave Cities last year--Metro Clark in Pampanga--has graduated from the list and now joins Metro Manila and Metro Cebu as established centers of excellence for outsourcing.

This year, Davao City in southern Philippines was adjudged as the best outsourcing location, followed by Sta. Rosa in Laguna and Bacolod City in Negros Occidental. In 4th to 10th positions were: Iloilo City, Metro Cavite, Lipa City, Cagayan de Oro City, Malolos City, Baguio City and Dumaguete City.

Davao City ranked the highest for availability of graduates and workers out of over 30 locations assessed, where the talent criterion carried the largest weight of 40 percent in the overall ranking.

In addition to talent, other factors affecting city ranking were infrastructure, cost and business environment. Cities were scored for the quality of their roads, access to international and domestic flights, presence of providers of fiber optic networks, reliability of power supply, availability of property sites, cost of labor and office space, vulnerability to natural disturbances, peace and order situation, the presence of ecozone sites and ICT councils, among other factors.

David Leechiu, managing partner for real estate firm Jones Lang LaSalle Leechiu (JLLL), also said during the press briefing that it is essential for the communities to "accumulate and document the scale their labor pool" in order to make it easier for BPO locators to decide whether to invest.

"It also a must that access, in the form of airports and seaports, be improved and that travel time by land or air from Metro Manila be limited to two hours," Leechiu said. "Lastly, the cities should ride with the tourism wave to build more accommodation and infrastructure."

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

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