Aiming for Market Leadership in Information Technology Services
Aiming for Market Leadership in Information Technology Services
The information technology (IT) industry in the Philippines has been going through remarkable progress and growth in recent years.
In the hardware sector, the Philippines' semiconductor and electronics industries have been growing at the rate of 30 percent to 40 percent per annum since 1993.
In 2000, the Philippines' exports of semiconductors and electronics products reached more than US$23 billion, making it one of the leading exporters of the said products in the international market.
The same trend is seen in the software and network sectors of the Philippines' IT industry.
Recognized as having the second biggest software outsourcing industry in Asia, the Philippines has also become a preferred site of many companies that are looking for back-office operations.
America On-line (AOL), for instance, has manning stations in the Philippines that answer e-mails for AOL from all over the globe on a 24-hour basis.
The large U.S. book company Barnes & Noble also has electronic-publishing operations in the Philippines. Andersen Consulting, a U.S.-based technology consulting firm, designs its custom software in the Philippines for its clients overseas.
The Philippines also hosts the finance and accounting support teams of Caltex and City Bank, as well as the regional engineering design work operations of Flour Daniel, a U.S.-based engineering and construction firm.
The Philippines' reputation as a country of choice for many large international companies for their IT-related operations is affirmed by the results of several independent studies.
In 1999, as reported by the Far Eastern Economic Review, the Philippines' was ranked the world's leader for its availability of qualified engineers and IT workers.
In 2000, the Meta Group, a U.S.-based research organization, also released a new E-economy index, which ranked 47 countries according to their technological potential and competitiveness in selected categories.
In the group's survey, the Philippines ranked number one in the category of knowledge jobs and workers because of the availability of qualified engineers, information technology skills, senior management and higher education enrollment.
At present, there are more than 500 companies that have invested over $7 billion in the Philippines' IT industry, employing over 28,000 skilled and semiskilled workers.
Aside from the high quality workforce, these IT companies benefit from the lower average cost of employing a Filipino IT worker -- equivalent to just 16 percent to 25 percent of the comparable cost in the U.S. Many more foreign and domestic companies are expected to either set up or expand their IT businesses in the Philippines.
What makes the Philippines capable of meeting the challenges of the IT industry? It is a combination of the introduction of major industry reforms, the extension of institutional support by the government and the abundant supply of high quality human resources.
To maintain its attractiveness as a preferred site for IT investments, the Philippines has introduced several reforms and strategies in the IT industry.
In June 2000, the Philippines enacted the Electronics Commerce Law, a landmark legislation that provides the legal and regulatory framework governing commercial and noncommercial transactions through the Internet.
The law gives electronic messages and documents the legality, validity and enforceability of a written document, and mandates all government agencies to use and accept them.
The same law classifies hacking, infringements of intellectual property rights and other forms of cyber crime as acts punishable by law.
As part of its institutional support to the industry, the government also created the Information Technology and E-Commerce Council of the Philippines, which is mandated to oversee the implementation and updating of the National Action Agenda for the 21st Century or "IT-21."
The council is composed of concerned government agencies and members of the private sector.
The Philippine government is also prioritizing the development of IT parks where IT companies can enjoy competitive fiscal and nonfiscal incentives.
Further, IT services are now included in the government's investment priority plan, which means that IT-related activities can now enjoy prime incentives from the Philippine Board of Investments.
The Philippines, a nation of 76.5 million Filipinos, offers an abundant supply of skilled, English-speaking, highly trainable and competent human resources for the IT industry.
IT companies in the Philippines acknowledge the Filipinos' distinct culture of education and love for learning as the country's advantages in the age of knowledge economy where IT plays a major role.
The Filipinos' familiarity with IT is also evident in their growing spirit of entrepreneurship for IT businesses.
President Gloria Macapagal-Arroyo is committed to bringing about more progress in the Philippines' IT industry and achieving the goal of transforming the Philippines into a regional hub of IT-services in Asia.
Specifically, her administration intends to carry out the following strategies to achieve its goal:
a. Building physical infrastructure, particularly to enable connectivity at lower rates to make such costs on par with levels in developed countries and to include the most basic service of providing landlines to far-flung communities.
b. Enhancing the policies and legislative environment beyond the Electronic Commerce Act, particularly to promote e-commerce and mobile commerce security and convergence.
c. Enhancing IT human resource development, particularly by expanding and institutionalizing certifying programs to ensure the quality of IT professionals, and improving elementary and secondary education instruction in both math and science.