IT-BPO Situationer and the DOST-ICTO’s

ICT Industry Development Programs

AmCham ICT Committee Meeting March 27, 2012

Alejandro P. Melchor III

Deputy Executive Director for ICT Industry Development Department of Science & Technology

Information & Communication Technology Office

Philippines has pulled away from the pack and established itself as the clear global #2 after India in worldwide IT-BPO

SSource: Aon Hewitt

Philippines has become the destination of choice. The world’s top locators are on hyper-growth mode.

IBM’s Global Location Trends Annual Report 2010 stated that Philippines surpassed India in 2010 as world’s #1 location for business support services (IT-BPO, shared services, RHQ)

But talent supply is the constraint to growth

PARADIGM SHIFT: LOCATORS ARE LOOKING AT TIER 2 & 3 CITIES. IN INDIA, 80% OF IT-BPO GROWTH IS TIER 2 & 3

Source: Tholons

The Stars are Aligned…

• …to dramatically increase PH market share in IT-BPO…

• …to attain world leadership in multiple high-growth segments of Global IT-BPO

• …to accelerate countryside development • …to decisively propel the country to global

competitiveness in the Knowledge Economy

INFORMATION & COMMUNICATIONS TECHNOLOGY OFFICE

Talent Development

Stepping-Up the Value Chain

Next Wave Cities

Domestic ICT Industry Development

ICT-Enabled Creative Industries Development

ICT Marketing & Research

ICT Industry Development Programs

iPPP- Public Private

Partnership for ICT;

Joint 5-year Investment

program

Designed to enable the

ICT Industry to generate US $50B in

direct revenues by

2016

• IT-BPO $33B • All other ICT

$17B

$33B target for PH IT-BPO is based on a high-growth scenario featuring 20% CAGR and vigorous iPPP growth initiatives*

*ICT-BPO Industry Growth, Transformation and Impact: Opportunities and Challenges for the Philippines- forthcoming book by Raja Mitra, Senior Consultant World Bank and ADB. Quoted with the author’s permission.

• The high-growth scenario: PH IT-BPO export revenue reaches US $55B level by 2020, fueled by a 20% compound annual growth rate (CAGR). • PH increases market share substantially in several high-value niches. • Domestic market and domestic outsourcing substantially larger. • Supply of skilled labor and revenue earnings per employee grow at high rate. • PH investment climate will be especially positive. • Substantive progress in public-private partnership initiatives to spur industry growth.

Year Export Revenues (20% CAGR)

2011 $11.0 B

2012 13.2

2013 15.8

2014 19.0

2015 22.8

2016 27.4 Domestic outsourcing 2016 5.6

Total: $ 33B

ICT Workforce Capability Development Program

One e-Learning Portal

National e-Competency Framework

Global Competitiveness

Assessment Tool (GCAT)

Industry Driven Curriculum

IT Professional Certification

National ICT Skills Registry

Database Globally-

competitive Filipino ICT Workforce

Aims to augment efforts of CHED and TESDA and support BPAP’s programs in

order to triple the size of ICT Talent Pool by

2016, improve employability by

200%, and develop the Core Skills

required by Industry

Stepping up the Value Chain Program We are #1 in call centers and we intend to become market leader in UK & Australia

We intend to attain world leadership in 4 more fast growing services

We intend to double our market share in 3 other fast growing services

Voice BPO

1. Healthcare Information Management Outsourcing 2. Finance & Accounting Outsourcing 3. HR Outsourcing 4. Creative Process Outsourcing

1. Information Technology Outsourcing (ITO) 2. Engineering Services Outsourcing (ESO) 3. Multilingual BPO

We aim to harness Philippine competitive advantages to attain world leadership in four more fast growing services and double our market share in 3 others

$590B administration cost gives rise to a $30.5B est. offshoring target from US healthcare legislation alone… The Philippines has a competitive advantage to dominate this offshoring opportunity, with its large talent pool of certified nurses Source: Healthcare Information Management Association of the Philippines (HIMOAP)

The global opportunity is much larger, what with at least 6 other geographies having similar healthcare legislation…and more coming!

11 PH Healthcare Outsourcing segment grew by 172% in 2011… we can be global leader in this est. $65B opportunity

Filipino IT professionals are becoming a global brand; actively recruited by other countries

Philippines has 3rd largest pool of engineers in Asia Pacific after China and India

Philippines has competitive advantages to increase market share in IT Outsourcing, Engineering Services Outsourcing

12

Next Wave Cities™ NWC Road Map

Talent Development

TELOF Transformation

Technology Business

Incubators

Career Marketing/ International

Marketing

Dynamic countryside development through ICT

• Significantly increase the jobs and revenues generated by NWCs

• Increase from 3 to 8 Centers of Excellence by 2016

• Increase from 5 to 10 NWCs in Global Top 100 by 2016

Next Wave Cities Location Assessment Model

Philippine ICT Industry Development Program

Aims to develop a 10-Year Road Map, Industry Mapping and Growth Programs for the: - IT-BPO Industry - Computer Hardware Industry - Software and Applications Development Industry - ICT-enabled Creative Industries - Semiconductors & Electronics - Telecommunications

THE INCUBATION LAB

Enabling Environment

Marketing & Research

Talent Building

Creative Skills

Entrepreneurship

IP Awareness

Policies

Strategic Programs

Legislation support*

Roadmap & Industry Mapping

Collaterals

Exhibits,Fairs, Trade Missions

PORTFOLIO (IP/Content) & the Philippine Brand

Animation, Games, Comics, etc.

ICT-Enabled Creative Industries Program will propel PH past Korea and China by 2016

Marketing & Research Program

-Career Opportunities Marketing -International Marketing & Geo Footprint expansion -Market Intelligence -Technology Foresight