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Secretary Ray Anthony Roxas-Chua IIICommission on Information and Communications Technology
The Philippine O&O IndustrySSME Conference
7 August 2008
O&O Industry Growth
Source: BPAP
101
163
236
300
0
50
100
150
200
250
300
350
2004 2005 2006 2007
$1.3
$2.2
$3.3
$4.9
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2004 2005 2006 2007
Total Employees (000s) Annual Revenue (US$B)
Software9%
ContactCenter
74%
Back Office
8%
TranscriptionEngineering
Animation
4.9B USD
4%3%
2%
Software10%
ContactCenter
66%
Back Office13%
TranscriptionEngineering
Animation
300K Employees
6%3% 2%
Segment Breakdown
Source: BPAP, CICT, DTI
2007 Breakdown by Employees 2007 Breakdown by Revenue
Global O&O Market Share
Philippines15%
India37%
Canada27%
Central and Eastern Europe
ChinaOther
5%
4%2%
Source: Everest Group, 2008
5%
5%
Mexico
Ireland
Awards and Distinctions
Offshoring Destination of the Year: Philippines
Top 10 Asian Cities of the Future:#7 Quezon City#8 Cebu#10 Davao
Top 50 Emerging Outsourcing Cities:#4 Cebu#23 Pasig#36 Baguio
Top 10 Outsourcing Cities in Asia Pacific:#2 Manila
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
World Class Infrastructure
� Telecommunications
� 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
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
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
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
Investment Incentives
� Board of Investments (BOI)
� 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
PEZA IT Parks and Buildings
Breakdown by Location
Bacolod 6Bacong, Negros Oriental 1Bacoor 1Baguio 1Cabanatuan 1Cagayan de Oro 4Cainta 1Calamba 1 Camarines Sur 1Cebu 21Davao 1
Dumaguete 1General Santos 1Iloilo 3Leyte 1Lipa 1 Manila NCR 78 Meycauayan 1 San Fernando, Pampanga 2 Sta. Rosa 3Tarlac City 3Urdaneta 1Total 134
Source: PEZA
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
O&O Scorecard
• PEZA-approved facilities
• ICT Council
• Real estate developers
• Rental
• Regulatory fees and taxes
• Median pay
• Utility costs
• Airports
• Roads
• Utilities (telecom, power, water)
• Real estate
• College and high school graduates
• Professionals
• Schools and degree programs
Talent
Infrastructure
Cost
Business Environment
Regional ICT Councils
Govern-m
ent(national
and local)
Academe (universities, schools)
Real
estate
developers
Infrastructure/utility
providers (telecom,
power, water)
Industry
players
ICT
Councils
Established ICT Councils
Quezon City ICT CouncilQuezon City
Technology of Information and Communications in Koronadal (TICK)Koronadal
Urdaneta
Laguna
Iloilo
Iligan
General Santos
Davao
Dagupan
Cebu
Cagayan de Oro
Cagayan
Bohol
Bacolod
Angeles
Albay
Urdaneta City Council for ICT (UCC-ICT)
Laguna ICT Council
Iloilo Federation for IT (IFIT)
Iligan ICT Council
ICT Solutions Association of Region 12 – General Santos City(ISA12 GENSAN)
ICT Davao
Dagupan ICT Council
Cebu Educational Development Foundation for IT (CEDF-IT)
Cagayan de Oro ICT Business Council
Cagayan (Tuguegarao) ICT Council
Bohol ICT Council
Bacolod Negros Occidental Federation for IT (BNEFIT)
Angeles City ICT Council
Albay ICT Association
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