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					THE PHILIPPINE IT ADVANTAGE
     Your Partner in Asia Pacific
        for Global Sourcing


                  Glenn G. Peňaranda
                  Trade Representative
     Philippine Trade & Investment Center - Chicago


                                                      BOI
Outline
• The Philippine Advantage

• IT Services in the Philippines

• Who Are With Us

• Sustaining Industry Growth and Service Quality




                                                   BOI
           Economic Scorecard
Economy has remained stable over time, 5.1% GDP for 2005;
5.4% GDP for 2006
Philippine Peso is one of Asia’s best performing currencies
 – 6-year high bolstered by OFW remittance, exports and portfolio investments

Headline inflation continued to ease at 3.9%
Stable and low interest rate environment
Improved investment flows reflecting continued investor
confidence
Ranked RP 2nd among 32 economies in level of business
confidence (Grant Thornton International Business Survey
Review for 2007)




                                                                                BOI
                            The Rise of Globalization
                               Preferred Offshore Locations

Country         IT                        IT                   BPO                  BPO
                Application               Application          Contact Centers      Transaction
                Development               Maintenance &                             Processing
                                          Support
Primary         India                     India, Philippines   India, Philippines   India, Philippines,
                                                                                    Malaysia

Secondary       Russia, Philippines       Vietnam, Eastern     Ghana, Eastern       China, Vietnam,
                                          Europe               Europe               Ghana, Mexico,
                                                                                    Eastern Europe



  Source: NeoIT (Dr. Pradeep Mukharjee, Nov-04)


                                                                                                      BOI
BOI
THE PHILIPPINE ADVANTAGE
 •Available quality human resources
 •Reliable infrastructure support
 •Strategic location in Asia
 •Hospital lifestyle
 •Attractive incentives

                                      BOI
         Available Quality Human Resources
   Labor force of 35.2 Million
       405,000 college graduates per year
         -   90,000 IT/Computer Sciences/Engineering
         -   114,000 Commerce/Business-related
         -   38,000 Medical & Allied/Natural Sciences
       Large pool of Quality Accountants, Lawyers, Engineers, etc.
   World-class English proficiency
   Strong customer service orientation
   Long tradition of excellence in the professions
   Highly trainable; Fast learning curve
   Cost efficient
   Universal cultural adaptation
   High level of commitment and loyalty
                                                                      BOI
           Available Quality Human Resources

The Swiss International Institute for Management Development
  (IIMD) study in 2004 rates the Philippines among 60 countries
                        in the Asia Pacific:

 #1 in the availability of skilled workers
       (out of 33 million total labor force)
   #3 in the availability of senior managers
   #4 in the availability of IT professionals
   #10 in the availability of accounting and financial skills
   #10 in the availability of expat middle management
   #12 in qualified engineers



                                                                 BOI
… Lowest IT Salary among 32 countries for same skills




                                                        BOI
          Reliable Infrastructure Support
 Redundant International Connectivity
 Expanding Multi-media Infrastructure
    24x7x 365 support operation
    Short lead time in provisioning international leased circuits:
     30-45 days
 Deregulated Telecommunications Industry
    More stable, robust, highly scalable due to numerous fiber
     optic landings/links
    Cost of bandwidth has gone down by at least 70% in the last
     4 years (From US$ 14,000 in 2001 to today’s rates of US$
     2,000 per month for E1 lines to U.S.)
 Power
    Stable with excess capacity over current demand
      – Back-up generator system: a regular feature in almost all
         buildings

                                                                      BOI
International Broadband Connectivity




                                       BOI
PLDT Domestic Fiber Optic Network
            (DFON)
                            Sanchez Mira
                                                                                   Legend:
                                                Ballestoeros
                        Laoag
                    Currimao
                     Vigan                           Tuguegarao                           DFON Station
                     Candon
                                         0
            San Fernando La          Baguio
                                                    Ilagan                                Inland FO
                                                  Cauayan
                      Union                                                               Cable
                                                                                          Submarine FO
                                               Solano
                      Dagup
                         an
                                             Cabanatuan                                   Cable
                         Tarla
                San Fernando c       1
                Pampanga Malol
                           Sampal
                            os        2 Quezon
                                           City
                                      Makati
                                oc
                            Binaka         Calamba
Existing Ring            Nasugb
                         u
                               yan       3   San Pablo
                                            Lucena             Pasacao
                                     Batangas
Capacity:                                                                Legaspi


Loop 0 – 20 Gbps                 Pinamalay
                                 an
                                                               4
Loop 1 – 42.5 Gbps                                                                 Calbay
                                                                                   og
                                                               Roxa
Loop 2 – 2.5 Gbps                                              s
                                                                           Daanbantay
                                                                           an             Taclob
                                                                                      Ormoan
Loop 3 – 97.5 Gbps                             La
                                               Paz                                    c
                                                                                          Maasi
                                                               Bacol
Loop 4 – 55 Gbps                                               od
                                                                         Cebu Jones       n


Loop 5 – 37.5 Gbps                                           Valen                 5           Butuan
                                                               cia
Loop 6 – 22.5 Gbps                                                                      Cagayan de

                                                                   Ozami
                                                                                          6
                                                                                        Oro

                                                                   s            Maram              Tagum
                                                                                ag
                                                                            Cotab
                                                                            ato
                                                                                              Davao




                                                                                                           BOI
                  Reliable Infrastructure Support
   Real Estate
      Low rates with liberal lease agreement terms; mostly administered by
       international property management companies (JonesLangLasalle,
       FPDSavills, CB Richard Ellis, Colliers, etc.)
           Total Occupation Cost for Prime Office Space in CBD (US$/ft2/year)1
                                Mumbai      Shanghai       Singapore     Manila
        Rent/Lease Rate                 93.06           44.86            41.53      17.11
        - Typical Lease Terms          9 yrs.          2-3 yrs.         3 yrs.     3-5 yrs.
        - Typical Months Free          1 mo.           1-2 mos.         1 mo.      3 mos.

   Presence of Dedicated IT Parks Right in the Center of Business Districts



                  1   – Global Market Rents Report by CB Richard Ellis, May 2006

                                                                                              BOI
Real Estate Cost




                   BOI
              Strategically Located in Asia
   Regional Hub for Logistics
    (FedEx, UPS, Lufthansa
    Technik)
   Access to the important 550
    Million People ASEAN
    Market
   Reachable within 4 hours by
    plane from Asian key cities
       Tokyo
       Seoul
       Shanghai
       Singapore
       Taipei
       Bangkok
       Jakarta
       Hong Kong


                                              BOI
               Hospitable Lifestyle

Expatriates’ top choice for quality of life

         Friendly people
         Value-for-money housing
         Modern recreational facilities
         First-rate educational institutions
              Presence of International schools




                                                   BOI
        Attractive Investment Incentives
   4 to 8 years Income Tax Holiday
   Special 5% tax rate on gross income after the lapse of ITH
    (for IT Park/Ecozone locators)
   Tax and duty exemption on imported capital equipment (for
    IT Park/Ecozone locators)
   Exemption from 10% input VAT on allowable local purchase
    of goods and services (e.g., communication charges)
   Unrestricted use of consigned equipment
   Exemption from wharfage dues
   Employment of foreign nationals
   0% duty on imported capital equipment (E.O. 313/E.O. 528)


                                                             BOI
ICT SITUATIONER




                  BOI
    IT Services in the Philippines

   Contact Center
   Business Processing
   Medical/Legal Transcription
   Software Development
   Engineering Design Services
   Computer Graphics/Animation


                                     BOI
Contact Center Industry

        Total Employees: 160,000
        Estimated Revenues for 2006: US$2,360 M
  Majority of the top call centers have set up
   operations
     Convergys, Sykes, Teletech, APAC, ICT, West,
      Clientlogic, Sitel, Echostar, NuComm
  Clients handled are Fortune 500 companies




                                                     BOI
               Business Processing
   Next growth sector after contact centers
      Total Employees: 36,000
      Estimated Revenues for 2006: US$288 M


 Meta Group cites the Philippines as Asia’s “Bright
  Spot” for outsourcing

   Strengths are Finance and Accounting, HR/Admin

   Abundance of accountants and lawyers


                                                       BOI
         Business processes outsourced to the Philippines

   Finance & Accounting
    General accounting & bookkeeping services; Accounts maintenance;
    Accounts receivable collection; Invoice and accounts payable
    administration; Claims processing(pre-need industry); Expense and revenue
    reporting, sales auditing; Payroll (including overtime tracking); Asset
    management/accounting; Financial analysis and auditing; Management
    advisory services; Inventory control and purchasing; Tax reporting and
    other financial-related services (financial leasing, credit cards, factoring and
    stock brokering)
   HR
    Payroll Processing; Benefits Administration; Compensation Planning; Travel
    & Expense Management; Expatriate & Relocation Services; HR Data
    Management; Stock Options Administration; Employee Interface Services;
    Learning Systems Administration; HR Application Dev’t. & Management
   Emerging Services
    KPO i.e. market research & analysis; Intellectual property management;
    Procurement; office assistants, and other non-voice services


                                                                                 BOI
 Key Players in Business Processing
Captives                         Third Party Providers
   AOL                           Accenture
   AIG BPSI                      American Data Exchange
   Chevron Texaco
                                  SVI Corp
   HP
                                  SPI Technologies
   HSBC
                                  DAKSH eServices
   Procter & Gamble
   Flour Daniel                  The Environments
                                   Collaborative
   Henkel Financial Services
   Deutsche Bank                 Eximius BPO
   Citibank Crescent Services    BayanTrade Dotcom
   Shell Shared Services
   Manulife
   Alitalia
   Watson Wyatt
                                                            BOI
            Medical Transcription Services
 64 companies currently operating in the Philippines
 5,500 medical professionals employed in MT cos.
 Estimated revenues in 2006: US$98 million
 Performance Level at 98 – 99% accuracy, with a
  turnaround time of 12 to 24 hour
    average 600 lines per day/MT
    in accordance to AAMT standards
    HIPAA compliant
 Technology / Standards
    ASPs and FTPs
    Majority of the companies are members of international MT and
     healthcare associations


                                                                 BOI
            Legal Transcription Services

 Total LT Firms: 9
 LT professionals: 750 employed
 Estimated revenues in 2006: US$9 m
 Key Players: Quisumbing Torres, SPI Technologies, SVI
  Corp., CD Asia, Inc., Medscribe Asia




                                                      BOI
           Software Development
 Over   300 software development firms
 Export Revenue in 2006 = US$272M
 Over 79,500 IT professionals
 Range of work includes: traditional 3GL programming
  work to use of 4GL, Object Oriented designs, and
  Java
 Software development for Mobile Phone technology
 Gaming technologies has become a hit
 51 companies with either CMM, ISO or EFQM
  certification (13.4% of total)
 Philippine Software Industry Association (PSIA) 2010
  Fly High Program

                                                     BOI
                Engineering Design
 Total No. of Engineering Design Companies: 14
 Total No. of FTE: 2,800
 Estimated 2006 Revenues: US$68 Million
 Capabilities
    Over 75,000 licensed professionals
    40,000 graduates of engineering courses annually (CAD-Enabled)
    High level of technical expertise in engineering design
    Practice of internationally accepted engineering standards
      CAM (Computer Aided Mfg) and CIM (Computer Integrated Mfg)
 Some players: Fluor Daniel, JGC, Lexmark, Tsuneishi, NEC


                                                                  BOI
        Computer Graphics / Animation Services
 No. of animation studios: 42
 Total employees: 5,500
 Estimated revenues in 2006: US$97 million
 Production work from major studios in the US and Japan currently
  outsource to the Philippines: Disney, Toei, Dreamworks, Pixar
 Capability in 2D and 3D
 Technical capabilities
       Able to render graphics in different platforms for the gaming industry
        (Nintendo, Sega, Game Gear, Game Boy and Sony Playstation)
       Video game development
 Filipino artistry and creativity with experience in different cultures to
  internalize storylines and concepts
 Firms in the Philippines: Artfarm Asia, Digital Exchange, Holy Cow!,
  Phil. Animation Studio, Top Draw, TOEI Animation
 Some popular animation work: Lilo & Stitch, Dragon Ball Z,
  Incredibles

                                                                                 BOI
              Employment & Revenue

              2004      2005      2006      2007      2008      2009      2010




Workforce     99,300   162,250   244,675   343,013   479,519   668,126   920,764




Revenue       1,474     2,419     3,627     4,992     6,769     9,130    12,199
(in US $ M)




              Top 3 Markets : North America, Japan, EU



                                                                             BOI
   BPA/P Membership
        - 168 Company Members
        - 4 Association Members
           (CCAP, ACPI, PSIA, MTIAPI)


Initiatives : The BPA/P - McKinsey Roadmap 2010 Project

              Partnership with NASSCOM



   BOI
WHO ARE WITH US




                  BOI
BOI
   Sustaining Industry Growth and Service Quality

Ensuring supply of English-proficient/ skilled
 manpower
   English Proficiency Enhancement Program being pursued in over 30
    universities & training institutions nationwide
   Skills/Competency Standards for technical & vocational training
    centers (e.g., call center agents, medical transcriptionists) strictly
    enforced
   Intensified Industry-Academe Joint Programs to enlarge the pool of
    qualified ICT professionals

Strengthening measures on Data Protection/Privacy
   Proposed Bill on Data Protection/Privacy to supplement existing draft
    guidelines


                                                                             BOI
     Value Proposition


Better Quality Delivery At
 A Significantly Reduced
           Cost


                             BOI
E-services Philippines Mission to Chicago
6-8 June 2007

7 June   - Business Forum at Illinois ITA
         - Business Meetings
         - Networking Reception

8 June   - Business Meetings

                                            BOI
THANK YOU



            BOI
Contact Details
    GLENN G. PEŇARANDA
    Trade Representative
    Philippine Trade & Investment Center
    Philippine Consulate General – Chicago
    Tel: (1) 312 345 9030
    Fax: (1) 312 345 9031
    Email: ptic-ch@sbcglobal.net




                                             BOI

				
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