The Philippine O&O Industry
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1 The Philippine O&O Industry SSME Conference 7 August 2008 Secretary Ray Anthony Roxas-Chua III Commission on Information and Communications Technology
2 Industry Overview
3 O&O Industry Growth Total Employees (000s) Annual Revenue (US$B) 350 $ $5.0 $ $4.0 $3.0 $2.2 $ $2.0 $ $ $ Source: BPAP
4 Segment Breakdown 2007 Breakdown by Employees 2007 Breakdown by Revenue Animation Engineering Transcription 3% 2% 6% Software 10% Animation Engineering Transcription 2% 3% 4% Back Office 8% Back Office 13% Contact Center 66% Software 9% Contact Center 74% 300K Employees 4.9B USD Source: BPAP, CICT, DTI
5 Global O&O Market Share China Other Central and Eastern Europe 4% 2% 5% Mexico 5% Ireland 5% India 37% Philippines 15% Canada 27% Source: Everest Group, 2008
6 Awards and Distinctions Offshoring Destination of the Year: Philippines Top 10 Outsourcing Cities in Asia Pacific: #2 Manila Top 50 Emerging Outsourcing Cities: #4 Cebu #23 Pasig #36 Baguio Top 10 Asian Cities of the Future: #7 Quezon City #8 Cebu #10 Davao
7 The Philippine Advantage
8 Quality Human Capital Abundant labor force of 32 million Over 400,000 college graduates per year Large pool of accounting and business graduates English proficiency Affinity with Western culture Customer service orientation Highly trainable Cost effective High level of commitment and loyalty
9 Telecommunications World Class Infrastructure Deregulated telecommunications industry High-bandwidth fiber backbone and digital network Redundant international connectivity Power Reliable electricity with excess capacity over current demand Real Estate Low rental rates with favorable terms Dedicated IT parks in urban areas
10 Government Support Talent Development PGMA Training for Work Scholarship Program SSME initiative Investment Incentives Board of Investments Philippine Economic Zone Authority Philippine Cyber Corridor 24 cities identified outside Metro Manila O&O Scorecard Establishment of regional ICT councils
11 PGMA Training for Work Scholarship Program (TWSP) Training program for potential hires PHP350M allocated to O&O industry Targets to train at least 40,000 near-hires by TESDA-accredited training institutions Vouchers range from P5,000 for call center training to P30,000 for software development training
12 SSME Initiative in the Philippines Collaboration among government, academe, and industry Objective is for the SSME Curriculum to be adopted by the higher educational institutions in the country Aims to develop a critical mass of trained professionals for the O&O industry
13 Board of Investments (BOI) Investment Incentives Grants fiscal and non-fiscal incentives in preferred areas of economic activity specified in the Investment Priorities Plan (IPP) Priority sectors include contact center, BPO/KPO, software development, animation, data transcription, engineering design and ICT support services Philippine Economic Zone Authority (PEZA) Grants fiscal and non-fiscal incentives to developers of economic zones, export producers, and exporters of IT enabled services Offers ready-to-occupy locations to foreign investors
14 PEZA IT Parks and Buildings Breakdown by Location Bacolod 6 Bacong, Negros Oriental 1 Bacoor 1 Baguio 1 Cabanatuan 1 Cagayan de Oro 4 Cainta 1 Calamba 1 Camarines Sur 1 Cebu 21 Davao 1 Dumaguete 1 General Santos 1 Iloilo 3 Leyte 1 Lipa 1 Manila NCR 78 Meycauayan 1 San Fernando, Pampanga 2 Sta. Rosa 3 Tarlac City 3 Urdaneta 1 Total 134 Source: PEZA
15 Philippine Cyber Corridor Cities with Operators Bacolod Bacoor Baguio Batangas Cabanatuan Cagayan de Oro Cainta Camarines Sur Province Cebu Clark/Angeles Davao Dumaguete Iloilo Legazpi Lipa Manila NCR San Fernando, Pampanga Sta. Rosa Other Ready Cities Dagupan General Santos Leyte Province Subic/Olongapo Tagbilaran Tuguegarao Urdaneta Cities with Operators Other Ready Cities
16 O&O Scorecard Talent Infrastructure Cost Business Environment College and high school graduates Professionals Schools and degree programs Airports Roads Utilities (telecom, power, water) Real estate Rental Regulatory fees and taxes Median pay Utility costs PEZA-approved facilities ICT Council Real estate developers
17 Regional ICT Councils Industry players Infrastructure/utility providers (telecom, power, water) Academe ICT Councils (universities, schools) Real estate developers Government (national and local)
18 Established ICT Councils Albay Angeles Bacolod Bohol Cagayan Cagayan de Oro Cebu Dagupan Davao General Santos Iligan Iloilo Koronadal Laguna Quezon City Urdaneta Albay ICT Association Angeles City ICT Council Bacolod Negros Occidental Federation for IT (BNEFIT) Bohol ICT Council Cagayan (Tuguegarao) ICT Council Cagayan de Oro ICT Business Council Cebu Educational Development Foundation for IT (CEDF-IT) Dagupan ICT Council ICT Davao ICT Solutions Association of Region 12 General Santos City (ISA12 GENSAN) Iligan ICT Council Iloilo Federation for IT (IFIT) Technology of Information and Communications in Koronadal (TICK) Laguna ICT Council Quezon City ICT Council Urdaneta City Council for ICT (UCC-ICT)
19 Challenges Ahead
20 Challenges Ahead Talent development Currency appreciation vis-à-vis USD High concentration of customers in USA Dependence on voice services Sustainability of labor cost advantage Competition from other countries
21 Thank You!
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