Philippine IT-BPO Road Map 2016: Driving to Global Leadership Funded by the Commission on Information and Communications Technology (CICT)/Office of the President IT-BPO = information technology and business process outsourcing Commissioned by the Business Processing Association of the Philippines (BPAP and partner associations)
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Philippine IT-BPO Road Map 2016: Driving to Global Leadership
Funded by the Commission on Information and Communications Technology (CICT)/Office of the President
ITBPO = information technology and business process outsourcing
Commissioned by the Business Processing Association of the Philippines (BPAP and partner associations)
Note: Exchange rates for local currencies with respect to the U.S. dollar have been averaged for 12 months from Oct. 1, 2009 to Sept. 30, 2010Source: Everest analysis
Philippines is currently among the most cost-competitive destinations for IT-BPO services
29322426
19201617 1516 1415
7072
US Tier2 Mexico City Krakow Kuala Lumpur Cairo Metro Manila Delhi/NCR
Reflective of market averages. Range could vary depending upon Tier1 vs. Tier2 cities Suppliers vs. captives Scaled operations vs. midsize operations
Direct operating cost1 per FTE for English voice work2010; US$ ’000 per annum per FTE
Investor enablement through PEZA and other government initiatives
AdEPT = Advanced English Preemployment Training, CHED = Commission on Higher Education, DepEd = Department of Education, ELITES = Expanded Learning on IT Services, ICT = information and communications technology, TESDA = Technical Education and Skills Development Authority
The global offshore services market is growing at a healthy pace, and will more than double by 2016
BPO = business process outsourcing, CAGR = compound annual growth rate, E = estimate, ITESO = information technology and engineering services outsourcingSources: Everest analysis; NASSCOM
What does the Road Map 2016 (PPP) target of US$25 billion in IT/BPO revenue mean to the Philippines?
Jobs
Export Revenue
Tax Revenues
Gains Value versus US$15 billion scenario
Incremental 620,000 direct jobs and 2.5 million indirect jobs High paying BPO jobs will help strengthen taxpaying middleclass
Incremental US$ 33 billion export revenue through 2016, translating to 4 percentage points in market share, giving Philippines a solid 10% global market share
Deeper presence in high value nonvoice BPO sectors (e.g., banking, healthcare, media, KPO)
9% contribution to GDP, equal to OFW remittances following current growth rates
Incremental US$ 3.0 billion in taxes on wages US$ 1.2 billion tax on wages from direct employment wages US$ 1.8 billion tax on wages from indirect employment
10%Larger tax base with even larger multiplier effects through consumption
Food
Housing
Transport and Communications
Others
Savings
Taxes
PHP 22.5 billion 19 million
Bench jeans & 1.4 million iPod
nanosPHP 80 billion Investments Financial
institutions
PHP 73.7 billion Contribution of PHP
5,000/month to rental of 1.2 million HHs
PHP 232.7 billion 2.4 billion Chickenjoy
meals and… PHP 24.7 billion VAT PHP 110 billion
200,000 classrooms & 3.3 million families
receiving maximum CCT for a year
PHP 45.4 billion 3.2 billion jeepney
rides & 45 million P500
prepaid cards
Note: Based on consumption and savings of average Filipino family in the income 8th and 9th docile (in constant 2010 dollars) Sources: National Statistics Office; team analysis
The detailed Road Map has involved a review of several elements
Direction for talent initiatives
Definition of talent development prioritiesSeparation into near term musthave versus long term initiativesSuggestion on potential approaches and programs
Articulate role of BPAP
Suggest organizational and “role” changes to support Road Map 2016 targets and initiatives
Enabling ecosystem initiatives
View on incentive programRole of Next Wave Cities™Legal and regulatory environmentCapital availability
Road Map2016
Highlight key positioning and marketing priorities
Prioritize key markets and servicesReview competitor messaging
To drive talent intervention programs successfully, concerted action across six key effort areas is essential
Common themes across initiatives Key activities
1. Internal marketing to stakeholders
Drawing talent into the sector, particularly those having skill but not considering to work in the sector
Minimizing attrition at entrylevel jobs and migration overseas Targeted marketing to increase demand from students in relevant courses
1. Facilitate deep academeindustry partnership through more flexible regulatory environment
A vibrant talentdevelopment ecosystem involving industryacademia partnerships in curriculum design, teacher training, pedagogy, assessment criteria, etc.
Greater flexibility in approval process for curriculum changes Creating a sustainable private education and training ecosystem with job pullthrough for
students
1. Standards and accreditations to create job priority for talent
Standardized student testing (entry/exit) and teacher accreditation to maintain consistent quality and employment practices
Harmonized course content per international benchmarks Continuous stream of pullthrough of talent from industry
1. Program effectiveness, improvement, and innovation
Making programs more effective and relevant to the changing needs of the industry More inclusive at addressing diverse talent needs of different industry constituents Periodic revision of course content and introduction of new programs and courses
1. Advocacy for structural changes, funding
Rallying government for help or to take lead in easing structural bottlenecks associated with executing initiatives
Securing necessary funding to drive largescale programs that require significant investment 1. Research and
information (from a talent standpoint)
Factbases on skills availability to direct talent programs at scaling scarce skills Granular views into quality of talent pool (e.g., alternative pools, Next Wave Cities™)
A refreshed marketing agenda will be key to support achievement of Road Map 2016 targets
Marketing imperatives to achieve Road Map 2016
Current bottlenecks for the Philippines
Penetrate and grow footprint in new markets (UK and APAC)
Limited awareness of full range of ITBPO capabilities and positioning of Philippines in the global sourcing landscape
Lack of differentiated value proposition and branding visàvis nearshore and African locations
Diffused nature of visibility on overall proposition outside U.S.
Voicecentric stereotype Capabilities and success in nonvoice not visible enough
Drive greater mindshare in new segments to extend nonvoice services
Protect and consolidate traditional strongholds (voice, U.S.)
Threats from emerging locations with focused propositions (e.g., Chilenearshore for bilingual U.S.; Egyptmultilingual for Europe, the Middle East, and Africa)
A section of riskaverse U.S. companies may have concerns on operating risks requiring reassurance
To summarize, achieving $25 billion by 2016 will require a much stronger PPP to drive favorable outcomes across multiple areas Rapid increase in employable talent Skills to succeed in emerging services and
geographies Vibrant talent development ecosystem Aggressive incountry sector
promotion
Balancing and prioritizing both demand and supply imperatives
Integration and facilitation of initiatives across partner associations and member firms
Leadership on the global ITBPO stage
Aggressive protection of cost position Maintain or improve incentives Further strengthen government role in
creating an enabling environment for ITBPO
Greater public and private capital flows to drive scale and promote entrepreneurship
Continued success of Next Wave Cities™
Road Map2016
Distinctive ITBPO brand and coordinated marketing strategy
Market leadership for the U.S. for continued success in voice and rapid inroads into nonvoice services
Awareness of Philippines’ success and capabilities in the markets of the future