Opportunities

Document Sample
Opportunities Powered By Docstoc
					Opportunities in
Services Exports
  Jose Edgar Mutuc
      ATIFTAP
WTO four modes of service trade
Mode 1 (cross-border supply)
where only the service itself crosses the border

Mode 2 (consumption abroad);
 the customer travels to the country where the service is
supplied

Mode 3 (commercial presence);
the supplier establishes a commercial presence abroad

Mode 4 (presence of natural persons)
 Presence of “natural persons”, where the provider of the
service travels from their own country to supply services
in another
          Export services
Developing countries export on the
average 68 different types of services to at
least 33 different export markets, of which
two-thirds are other developing countries
(ITC)
                        Services
Utilities
Wholesale Trade
Retail Trade
Transportation and Warehousing
Information Services
Finance and Insurance Finance and Insurance
Real Estate and Rental
Professional and Technical services
Management Services
Administrative and Support services
Educational Services
Health Care and Social Assistance
Arts Entertainment and Arts, Entertainment, and
Accommodation and Food services
Public Administration Services
Other Service Industries
             Types of Services
  Infrastructure services
These include architecture, engineering, construction,
  transportation, distribution, and financial services.

  IT-related services
These include computer consultancy, software
  development, data processing, database management,
  and call centers.

  Business services (non-IT-specific)
These include a wide range of business support activities
  such as research & development, equipment leasing or
  maintenance, market research, management consulting,
  translation, investigation
         Types of Services
Professional services
These include the licensed professions (other
than architecture and engineering) like
accounting, legal services, medical & dental
services, nurses & midwives, and veterinarians.

Quality of life services
These include education & training, health-
related services, entertainment services, cultural
services, recreational services, and sporting
services.
        Growth potentials
Total exports of services more than
quadrupled between 1980 and 2000,
growing from US$337Bn to US$1.4 trillion.
Asia‟s share of world total services exports
in 2000 was 18 per cent, equivalent to
more than twice the correspondent figure
for 1980
    Outsourcing potentials
European-based companies will fuel the
growth in offshore Gartner (2006)
Outsourcing estimated at 50% year on
year rise in spending on the world market
in 2006 and 2007.
                                    South Africa
                                    Philippines4

                                    Romania 4
                                    Malaysia 4
                                    Czech Rep
                                    Canada 11




                                    Hungary 5
                                    Ireland 11




                                    Mexico 6
ITO competency-destination matrix




                                    Poland 8
                                    Russia 9
                                    China 8

                                    Brazil 6
                                    India 13
2005 (Neo IT)




 CAD                                *   * *     * * * * * * * * * * *
 QA Testing                         *     *     * *         *
 Application Mgt/support            *   * *      *    * * * * * *
 IT consulting                      *   * *           *
 System integration                 *   * *      * * * *       *
 Packaged SW implementation         *   * *      *                   *
 SW localization                                    *        *   *     *
 Infrastructure mgt services        *   *                 *    *
 E-business                         *   *   *     *    * *
 Embedded technology                *            * *
 Multimedia & animation             *   *   *       * *      * * * * * * *
 Web based applications             *   *   *     * * * *          * * * *
 Wireless technology                *   *   *     * *
 EA (ERP, CRM, etc)                 *   *   *           *     * *
Health and Wellness Tourism
US corporations lose approximately $150 billion
each year to stress-related disorders.
Global medical tourism is worth $20billion
 Bumrungrad Hospital in Bangkok had more
than 350,000 foreign patients a year.
In Thailand,
   600,000 foreign patients had medical treatment worth
    20 billion baht in 2004.
   by 2008, revenue from medical tourism alone is
    expected to reach a 40 billion baht.
Health and Wellness Tourism
In 2005, Singapore generated $ 915
million (USD) from medical travel.
This is expected to increase at a rate of
8.13% through 2012, helping to turn
medical tourism into a $1.6 billion industry
for the country.
In India, medical procedures cost only
around 10% of US costs.
   Health Tourism potentials
The Philippines rank as the fifth most
popular medical tourism destination after
Thailand, India, Malaysia, and Singapore.
In 2006, the Philippines earned $200 M
In 2007, it was expected to gross $300 to
$400 million through health travel.
Highly competitive prices
Hopes to earn $1billion a year
        Engineering services
Global spending on engineering services is large
and rising – constituting about 2% of global GDP
Current spending on engineering services ($750
billion in 2004) is projected to increase to $1.1
trillion by 2020
   Automotive at 19%; Aerospace at 8%; Utilities at 3%
    in 2004.
   High-Tech/ Telecom is the dominant and fastest
    growing sector, with 30% of the market
While today only $10-15 billion of engineering
services is off-shored, the market is expected to
grow to $150 -225 billion by 2020.
IBM view of services (2008)
Technical services potentials
          Growth expectations
Some analysts predict that by 2020, services will account
  for 50% of world trade.
One of the main reasons for the exponential growth in
  services we have witnessed and for that which is
  predicted is the progress in telecommunications and
  information technology.
These developments have brought a proliferation of new
  opportunities for the sector and have played a major part
  in changing the way services are viewed and sold.

                           - Peter Walters,
                    International Trade Centre, Geneva
Reasons for services importing
Need to increase capacity and productivity
Access to high quality talent pool
Cost advantages
Access to growing markets
Factors that affect RP potential
             growth
Demand at buyer locations
Costs of operations in buyer locations
Advancements and availability in
technology in the country
Demand for RP services
Performance creates its own demand
AT Kearney Global Services Location (2005)
                  Cost   People &    Business   Total score
                          skills    environment
India (1)         3.47     2.14        1.26         6.87
China (2)         3.21     1.76        1.17         6.14
Malaysia (3)      2.95     1.12        2.00         6.07
Philippines (4)   3.58     1.16        1.05         5.78
Singapore (5)     1.62     1.44        2.67         5.73
Thailand (6)      3.27     0.94        1.51         5.72
Canada (9)        1.10     2.03        2.40         5.52
U.S. (11)         0.54     2.74        2.22         5.49
Indonesia (13)    3.51     1.06        0.89         5.47
Vietnam (26)      3.55     0.69        0.76         5.00
U.K.(28)          0.46     2.12        2.41         4.99
Australia (29)    0.97     1.66        2.29         4.91
AT Kearney Global Services Location (2007)
                  Cost   People &    Business     Total score
                          skills    environment
India (1)         3.22     2.34        1.44          7.00
China (2)         2.93     2.25        1.38          6.56
Malaysia (3)      2.84     1.26        2.02          6.12
Thailand (4)      3.19     1.21        1.62          6.02
Brazil (5)        2.64     1.78        1.47          5.89
Indonesia (6)     3.29     1.47        1.06          5.82
Chile (7)         2.65     1.18        1.93          5.76
Philippines (8)   3.26     1.23        1.26          5.75
Singapore (11)    1.65     1.51        2.53          5.68
Vietnam (19)      3.33     0.99        1.22          5.54
U.S. (21)         0.48     2.74        2.29          5.51
Canada (35)       0.77     2.09        2.30          5.16
RP Health Delivery Problems
Auxiliary services seldom get delivered to the
towns in the hinterlands.
Public health is in a dismal state when compared
to more progressive Asian neighbors.
Filipinos who suffer from illness or injury but
can‟t afford basic treatment. Private health,
even with the advent of “affordable” health
insurance, is still inaccessible to many average
Filipino citizens.
          Global Market
There are great potentials in exports of
services, but success is not assured.
Sari-sari store thinking will not work!
The global market is dynamic.
Customers are sophisticated with constantly
increasing wants and standards.
Competitors constantly improve.
       Services challenge
The service cannot be inspected before it
is purchased
What is being sold is “a promise to
perform”
Moments of truth determine success.
     The Indian experience
For every IT job, three other new jobs are created
Two-fifths of the Fortune 500 companies
outsource software requirements to India.
Greater efficiency as a result of servicing both
international and local clients.
India‟s cross border services exports are evolving
from lower-end, disentangled BPO services to
more integrated web-based and enabled
services.
     The Indian experience
“The Indian IT and software industry is
continuously renewing itself and seeking to grow
by addressing newer service lines; the latest one
being engineering services. Companies in India
have developed capabilities and skill sets, and
invested in technology platforms to leverage this
opportunity,” said Kiran Karnik, President
NASSCOM. “The growth in engineering services
signifies the need for global corporations to
expand their R&D pool beyond their home
countries.”
„You are never too small to export services‟.
  You can be a one-person firm and still be
  a successful exporter”
           - International Trade Centre
     Services Challenge

Constantly find a good profitable
      market and keep it
Constantly develop capabilities to
      satisfy that market
       Sales/Export Competence



                  e-competence


         Management Competence


Sell more and more frequently to present buyers
Convert nonusers into users
Induce brand switching into the markets of the
     competitors
Secure medium to long term profitability
    Management Competence
Strategy level: what you produce for whom
Capability level:
   Marketing: communicate with market and
    deliver your goods and services
   Production: all necessary tasks to deliver on
    services
Transaction level:
   Deliver the service and get paid
           Marketing issues
establishing credibility in the global market.
skilled in relationship marketing and how to utilize
networks of contacts (more than market research).
market information becomes outdated very quickly.
Few services can be marketed through agents so
service principals, who may only be interested in the
technical aspects of service design and delivery, need to
be trained in marketing skills.
Private sector associations have typically been focused
on regulatory control and domestic policy advocacy, not
on services exporting activities or services trade policy
advocacy.
“Why pick you as service suppliers?”
     What do you offer?
     What is your specialization?
     What have you achieved?
     What are your capabilities?
         Human resources
         Infrastructure and technology
         Information resources
         Alliances
         Ability to innovate
  Is the Philippines a selling point?
1. Does it have a geographic advantage?
2. Does it have a language or cultural advantage?
3. Does it have a human resources advantage?
4. Does it have a reputation for being particularly
  business friendly or familiar with other ways of
  doing business?
5. Does it have a reputation in a particular sector
  that can be leveraged as a country image?
6. Does it provide customer access to a range of
  other markets?
 Selecting the export market
The number of firms already exporting to, or
interested in, that market
Economic growth patterns in that market
Attitudes in that market towards importing
services, especially from your country
Historical links with that market, including
investment and tourism
Ease of access for your exporters (direct flights,
visa requirements)
Ability to pay, including exchange restrictions,
inflation rate, currency stability