It-Bpm and Gic Road Map 2012-2016

Publishers Department of Science and TechnologyInformation and Communications Technology Office Hon. Mario G.
Montejo Secretary, DOST Undersecretary Louis Napoleon C. Casambre Executive Director, ICTO Alejandro P. Melchor III Deputy Executive Director, ICTO Patricia May M. Abejo Director, ICTO Information Technology and Business Process Association of the Philippines Alfredo I. Ayala Chairman Benedict C. Hernandez President and Chief Executive Officer Gillian Joyce G. Virata Senior Executive Director Editorial Team Gillian Joyce Virata Patricia May M. Abejo Atty. Allen Liberato-Espino Michael Alan Hamlin Jerni May Camposano Trizzy Jennifer Orozco Karen Azupardo Designers Walter John Gonzalez II Liagi Ann Jezreel Ramilo Patrick De Jesus Raymond See Maria Gracia Romero Contributors Indu Badlani Antonette Consuelo Carolyn Echavez Juanloz Botor Jeanette Carrillo Grace Dimaranan Alvin Juban Michael Lim Myla Reyes Nora Terrado Jojo Uligan Joie Villanueva Jeff Williams Special Thanks to: Everest Group
IT-BPM and GIC Road Map 20122016 Copyright 2012 Business Processing Association of the Philippines and TeamAsia Published by Department of Science and Technology Information and Communications Technology Office ICTO Building Carlos P. Garcia Avenue Diliman, Quezon City Philippines Web: www.icto.dost.gov.ph Information Technology and Business Process Association of the Philippines 5th Floor C2 Building Bonifacio High Street, 30th Street corner 7th Avenue Bonifacio Global City, Taguig City Philippines Tel No.: +632 817 2727 Fax No.: +632 817 8141 Web: www.bpap.org and with the support of TeamAsia (Hamlin-Iturralde Corporation) Unit 308 Bldg. B, The Plaz@, Northgate Cyberzone, Filinvest Corporate City Alabang, Muntinlupa City, Philippines Tel No: +632 757 3500 Web: www.teamasia.com All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publishers. The publishers have used their best efforts in preparing this report and disclaim liability arising directly and indirectly from the use and application of this report. Any omissions or errors are unintentional and will, if brought to the attention of the publishers, be corrected in future editions.
Acronyms
ACPI ADB AdEPT AIM ANZ APAC APEC ARRA BEST BOI CAGR CCAP CHED CM CRM DOSTICTO DTI EMEA ER&D EU F&A FTEs GDAP GDP GIC HEI HIM Animation Council of the Philippines, Inc. Asian Development Bank Advanced English Pre-employment Training
Acronyms
HIMOAP HIMOSC Healthcare Information Management Outsourcing Association of the Philippines Healthcare Information Management Outsourcing Services Congress human resources Information Technology and Business Process Association of the Philippines International Contact Center Conference and Expo International Classification of Diseases information and communications technology industry public-private partnerships information technology and business process management information technology outsourcing Industry-based Training for Work Scholarship Program knowledge process outsourcing local colleges and universities micro, small and medium enterprises Next Wave CitiesTM Outsource2Philippines overseas Filipino workers Philippine Development Plan Philippine Economic Zone Authority public-private partnerships Philippine Software Industry Association Philippine Society for Training and Development small and medium businesses Service Management Program Software Products Incubation Group of the Philippines state universities and colleges
Asian Institute of Management HR Australia and New Zealand IBPAP Asia Pacific ICCCE Asia Pacific Economic Cooperation ICD American Recovery and Reinvestment Act ICT Basic English Skills Training IPPPs Board of Investments IT-BPM compound annual growth rate ITO Contact Center Association of the Philippines I-TWSP Commission on Higher Education customer management customer relationship management MSMEs Department of Science and TechnologyInformation and Communications Technology Office Department of Trade and Industry Europe, Middle East and Africa engineering research and development European Union finance and accounting full-time employees Game Developers Association of the Philippines gross domestic product global in-house center higher education institutions healthcare information management NWCs O2P OFWs PDP PEZA PPP PSIA PSTD SMB SMP SPrInG.PH SUCs KPO LCUs
Road Map 20122016
VII
Acronyms
T3 TESDA TM 1 TM Plus Train the Trainers Technical Education and Skills Development Authority Trainers Methodology 1 Trainers Methodology Plus
Contents
Snapshot Executive Summary Chapter 1 The Philippine IT-BPM and GIC Industry: Current State and Positioning Chapter 2 The Global Market: The Role of the Philippines Chapter 3 The Role of IBPAP Chapter 4 Next Steps Chapter 5 The Voice BPM Sector Chapter 6 The Software Development and IT Outsourcing Sector Chapter 7 The Animation and Game Development Sector Chapter 8 The Healthcare Information Management Outsourcing Sector Chapter 9 The Role of the Government: Transforming Public-Private Partnership Conclusion Annex References About the Publishers 01 03 07
19
23 33 37 43
51 57
63
71 74 76 79
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Snapshot
Despite the slow-moving global economy, information technology (IT) spending remains on an upward trend, having grown by 5.4 percent in 2011. Also on the same year, spending on hardware rose by 7.6 percent, IT services by 3.3 percent, business process management (BPM) by 4.3 percent, software products by 5.6 percent, and engineering research and development (ER&D) by 2.2 percent. In comparison, global sourcing posted a 12-percent growth in the same period, twice the rate of global technology spending.
Emerging Trends
Cost and talent remain the most important growth drivers for the global outsourcing industry. Demand for emerging verticals is increasing, leading vendors to expand into new or specialized services and in emerging geographies within Asia Pacific and Europe, Middle East, and Africa (EMEA) with relevantly untapped talent, conducive business environments, and low risks. NASSCOM Strategic Review 2012 identified the following key global sourcing trends (Figure 1).
Figure 1. Key Global Sourcing Trends
Technology Spending
US$ 1.7 trillion
global technology spend. New technologies driving business.
Services Dominate
45 percent
market share of IT services and BPM in global technology spend
Disruptive Technologies
Cloud, enterprise mobility, social media analytics redefining the sector
Global Sourcing
US$ 118 billion
global sourcing market growth of 12 percent. Sustained growth, enhanced value creation
Changed Landscape
Changed landscape, smaller contract sizes dominate, utility pricing model
New Opportunities
Industry-specific solutions, faster time-to-market, emerging verticals and geographies driving growth
Source: NASSCOM Strategic Review (2012)
Gartner expects that until 2016, there will be higher demand for services related to customer management (CM), human resources (HR), and finance and accounting (F&A) BPM services generally, with growing adoption in banking and financial services BPM (such as credit card processing and mortgage services), telecom BPM (billing BPM services), and supply management BPM services (which includes procurement outsourcing) (Table 1). This is also the case for the Asia Pacific region.
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Table 1. IT-BPM Market Five-Year Compound Annual Growth Rate (CAGR) by Process Domain Segment TABLE 3: BPO Market Five-Year CAGR by Process Domain Segment
Executive Summary
The information technology and business process management (IT-BPM) and global in-house center (GIC) industry in the Philippines has grown at an annual rate of 30 percent over a decade, faster than the growth of the global offshore services market. As it has grown, the industry has diversified significantly in breadth, scale, and maturity of services. An ambitious forecast embodied in an industry road map of revenues of US$25 billion and 1.3 million direct employees by 2016 appears to be within reach. If these targets are reached, the Philippine IT-BPM and GIC industry will have consolidated over 10 percent of the global IT-BPM market. This share will be maintained at least until 2016, when global market is expected to be between US$240 billion and US$250 billion (Everest Global estimate as of 2012).
Process Domain Segment
CAGR (%) 2011-2016
Administration Services Customer Management Finance and Accounting Human Resources Operations Supply Management
Source: Gartner (August 2012) Source: Gartner (August 2012)
5.5 5.0 4.1 4.9 7.7 4.6
Number one in voice, number two in non-voice

In 2010, the Philippines emerged as the number one provider of voice BPM services in the world, and in the ensuing period its leadership in this segment has been broadly acknowledged. Though there has been less visibility for the Philippines non-voice, complex services capability, and the contribution of global in-house centers (GICs), they have accounted for almost 15 percent of industry revenues in 2011 and are growing faster than traditional voice services. Non-voice services are delivered in a wide range of functional and vertical areas which include engineering, health care, legal, financial, creative, and software servicesamong many othersfor the energy, banking, investment, insurance, shipping, media, and other industries. Collectively, the industry provides services for a wide range of prominent Fortune 1000 firms in North America, Asia, and European Union. IT-BPMs and GICs include small firms with less than 500 employees (80 percent), midsize companies with up to 9,000 employees (18 percent), and large to very large multinationals with 10,000 to more than 30,000 full-time agents and knowledge workers (2 percent, Figure 2). In 2011, the industry employed approximately 638,000 Filipinos and was expected to expand by at least 20 percent in 2012. The Philippines share of the global IT-BPM and GIC market is estimated at approximately 9.5 percent.
Key drivers for outsourcing in emerging economies within Asia Pacific are the opportunity to adopt new services (such as social customer relationship management and mobile services for customer management BPM), scalability, the infusion of best-of-breed processes and technology, faster time to market, and improved quality of administrative service to both internal and external clients.
Figure 2. Size distribution of the Philippines IT-BPM industry FTEs

2011
2% 1% 3%
> 10,000 14%

Percentage split by number of FTEs No. of IT-BPM firms in the Philippines: 795 100%: 525 companies surveyed by IBPAP
5,001-10,000 2,501-5,000 501-2,500 251-500 51-250 < 50
30% 15%
35%
FTEs = full-time employees
Sources: IBPAP, Everest Group, and Outsource2Philippines (2011)
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The IT-BPM and GIC industry is an important generator of jobs for skilled Filipinos. Its contribution to gross domestic product (GDP) was approximately five percent in 2011, and it is the Philippines third-largest net foreign exchange earner after tourism and remittances from an estimated 10 million overseas workers. Its contribution to economic development is centered in the nations National Capital Regionreferred to as Metro Manilaand in other highly urbanized areas throughout the country, or Next Wave CitiesTM. Employment in these cities was estimated at 150,000 at the end of 2011 (Figure 3).
Graph 1. Rapid Growth of the Philippine IT-BPM industry

Philippine IT-BPM industry size 2006-2011; US$ billion
x%
YoY Growth
Impact over 6 years

Contribution to 4-5% of annual GDP GDP Employment generation Largest privatesector, new-job creator 448, 000 direct From 1.0 million to 1.4 million indirect jobs Significant export impact Third-largest export earner based on net value added Catalyzed growth of 10+ Next Wave CitiesTM adding over 150,000 jobs
Figure 3. Industry expansion beyond National Capital Region

8.9 7.1 ~25% 6.1 ~17%
11.0 ~24%
Distribution of FTEs by delivery location Percentage, FTEs; 2007: ~297K; 2011: ~638K FTEs
Metro Manila
2007 2011
4.8 3.2 -50%
~26%
Foreign exchange earnings
~246K (83%) ~489K (77%)

2006 2007 300 6% 2008 370 6% 2009 423 7% 2010 525 8% 2011 638 9.5%
Key takeaways
Metro Cebu
~16K ~41K ~7K ~16K ~3K ~16K ~4K ~11K ~22K ~57K
Metro Clark
Expansion into Next Wave Cities and towns has increased with ~150,000 FTEs spread across Tier-2/3 towns across the country Rapid growth in employability across Next Wave CitiesTM has increased pool of talent supply in the Philippines
TM
#FTEs (~000) Global share
240 5%
Next Wave TM Cities
Sources: Everest Group and Outsource2Philippines (2012)
Bacolod
Sta Rosa
Others*
In an industry road map commissioned by the Information Technology and Business Process Association of the Philippines under the auspices of the former Commission on Information and Communications Technology (CICT), now reorganized as the Information and Communications Technology Office (ICTO) under the Department of Science and Technology (DOST), and developed by Everest Group and TeamAsia, IT-BPM industry growth was forecast to reach up to US$25 billion in revenue and direct employment of 1.3 million in 2016. However, Road Map 2011-2016 stipulated that a number of conditions should be met to achieve this target. These include government support, particularly in the area of remedial training and educational reform at all levels, granting of investor incentives, and providing visibility for the industry internationally as well as locally. Two years following the development of the road map, the Philippine IT-BPM industry continues to expand at a robust rate. The industry grew 25 percent in 2010 and 24 percent in 2011. The Philippine government, through the Technical Education and Skills Development Authority (TESDA), has provided substantial funding for remedial training for applicants to the industry in many key sectors, including animation, customer relationship management, software development, healthcare information management, and game development. Funding for skills development has also enabled special remedial training for trainers throughout the Philippines. A number of schools already offer animation courses. The Animation Council of the Philippines, Inc. (ACPI) has already established linkages with educational institutions and helped formulate an industry-based curriculum. Meanwhile, the Game Developers Association of the Philippines (GDAP) designed three courses for the technical and vocational education. Although talent supply remains a critical concern among industry executivesaccelerating substantially from a top priority for 23 percent of respondents in a 2009 survey to 49 percent in a 2012 surveythese efforts appear to have contributed to at least some amelioration in forecast talent shortages. Investor incentives have remained consistent and professionally administered by the Philippine Export Zone Authority and the Board of Investments, both promotional and regulatory agencies with authority to facilitate investment. These agencies operate under the Department of Trade and Industry. The Department of Science and Technology-Information and Communications Technology Office (DOST-ICTO) has provided broad-based support for the industry. DOST-ICTO supports a comprehensive range of programs covering industry development, human resource development, countryside development, research, marketing, among others, with the aim of leveraging the benefits of ICT use for national development.
* Others includes inter-alia cities of Metro Cavite, Baguio, Cagayan de Oro, Davao, Dumaguete, Iloilo, Lipa and Malolos
Sources: IBPAP, Everest Group analysis (2011)
Globally, the Philippines is competitively positioned in terms of talent, costs, and risks relative to established and emerging offshore destinations. This augurs well for broad-based growth for the IT-BPM and GIC industry, and provides opportunities for the Philippines to continue its expansion outside established services segments (Graph 1). More precisely, the Philippines is poised for growth in the value-driven non-voice, complex services segments of the industry. The Philippines is a Top-3 location for talent according to analysts, both at the aggregate graduate pool level as well as among professionals in the finance and accounting areas and in other non-voice, complex services. From a cost perspective, the Philippines is competitively placed to provide the required arbitrage that new and mature buyers of IT-BPM services require. The industry also benefits from an enabling policy environment with impressive government and private-sector support for investors.
Road Map 20122016
Chapter 1
The Philippine IT-BPM and GIC Industry: Current State and Positioning
The information technology and business process management (IT-BPM) and global in-house center (GIC) industry in the Philippines is characterized by its strong voice sector; rapidly expanding non-voice, complex services sectors; a large and talented English-speaking labor pool; and strong affinity with Western culture and business processes.
Sectors
Over 20 voice and non-voice, complex services sectors comprise the Philippine IT-BPM and GIC industry according to the results of quarterly industry surveys conducted by the Information Technology and Business Process Association of the Philippines (IBPAP), formerly the Business Processing Association of the Philippines (BPAP), and Outsource2Philippines (O2P). The surveys, conducted between December 2009 and September 2012, provide snapshots of the expanding range of IT-BPM and GIC services delivered from the Philippines.
Still leading in Voice Services

The voice sector posted 21-percent growth in 2011. For 2012, employment is expected to grow from 416,000 in 2011 to 493,000. Its large pool of talented workforce helped the voice sector increase its revenues from US$7.4 billion in 2011 to a projected US$9 billion in 2012. In 2013, employment is expected to increase to 567,000 and revenues to US$10 billion. Figures provided by the Contact Center Association of the Philippines (CCAP) showed that the contact center industry is still the largest sector within the Philippine IT-BPM industry. It makes up 64 percent of the industrys total number of direct employees and over 67 percent of total revenues.
Growing Non-Voice Sector

Results of the BPAP and O2P surveys in September 2009 and August 2012 confirm early but encouraging signs of a maturing shift identified in the IT-BPM Road Map 20112016 from rapid growth primarily in voice servicesin which the Philippines is the acknowledged number one provider globallyto faster growth in non-voice, complex services (Graph 2). The more rapid development of non-voice, complex services is in response to a number of factors, including satisfaction with the quality of voice services, market demand as firms worldwide seek to outsource a range of processes to increase competitiveness, and the overall attractiveness of the Philippine labor pool. The O2P-BPAP surveys also show consistent confidence among existing IT-BPM services providers and GICs in terms of prospects for growth. An industry-wide survey conducted in July 2011 revealed that 85 percent of respondents expected to increase their workforce within a year from the survey, with the majority anticipating growth between 6 percent and 50 percent. High confidence levels were apparent among executives in both very large (10,000+) and smaller firms.
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45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

nd N on -V oi ce at ) a En Se gi rv ne ic er es in g Se rv ic Fi es Ena L nc ea ia rn lK in g PO IT Se Se In rv rv du ic ic es st es ry & Su In pp fr a l ie M r an Le ag ga em lK PO en t Se Le rv ga ic lT es ra ns M cr ar ip ke tio tin n g M Se ed r ic vi al ce Tr M s an ed ic sc al rip KP tio O n Se rv Pr ic od e s uc tS Pu up bl po ish r in t g Se So rv ft w ic es ar So e ft Se w rv ar ic e es D ev el op m Te en ch t W Su eb pp D or ev t el op m en t O th er s ph ic s KP O nd nd s s vi ce vi ce bo u bo u rI nb ou
Graph 3. Growth of IT-BPM workforce over past five years Graph 2. Growing Non-Voice Sector
525,182 422,940 638,319
371,965
50% 40%
ra ffi ce Se r ut
298,953
Se r
ut
30% 20% 10%
27% 24% 14% 24%
ffi ce
Ce n
ic es (
io n
ck
tis
te
dv er
ni m at
Ce n
rI n-
-o
Ba
ck
ct
te
Ba
ta
ct
Co n
Ce n
ta
Co n
ct
Co n
Cu st
om er
Ca
ta
re
&
Se
rv
22%
in g
te
rO
&
-o
&
September 2009
August 2012
Source: O2P-BPAP Periodic Survey (August 2012)
2007
2008
2009
2010
2011
2007
2008
2009
2010
2011
Considered one of the most promising sectors of the IT-BPM industry, the healthcare information management (HIM) sector posted a 172 percent growth in 2011. In 2012, its projected revenue is at US$433 million, employing about 43,000 Filipinos. The HIM sector also aims to reach employment of around 100,000 by 2016, according to the Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP). Knowledge process outsourcing (analytics, business intelligence, financial services, human resources, logistics, others) was the third-fastest growing segment. It grew by 24 percent in revenues from US$1.7 billion in 2010 to US$2 billion in 2011. It also increased by the same rate in employment: from about 104,000 employees in 2010 to about129,000 in 2011 in both third-party providers and GICs. The Game Developers Association of the Philippines (GDAP) reported that the countrys game development sector is still in its infancy, with only about 60 firms as of December 2011. Despite this, the local gaming sector aims to get a big slice of the industry and increase its 0.2 percent share in the global game development market. In 2011, the industry had less than 3,000 employees and earned US$12 million in revenues, an increase of 13 percent from 2010. With advancements in the PC and game consoles industry, the industrys revenue is expected to hit US$72 million by the end of 2012. Engineering services provided by third-party providers and in-house groups serving global offices and customers were estimated to have grown by about 5 percent in 2011 from US$163 million in 2010 to US$172 million. The segment also added about 4,000 jobs in the same period. This reflects a slowdown from a high 23 percent growth rate in 2010, a year of recovery from negative growth in 2009. Because of tight competition with China and India, the Animation Council of the Philippines, Inc. (ACPI) reported in 2011 a decline of 10 percent, posting US$128 million in revenues. The animation industry, however, maintained its headcount of more than 8,000 employees in the same period. Meanwhile, the Philippine Software Industry Association (PSIA) posted a revenue growth of 37 percent growth or US$993 million with employment of about 49,908 for 2011. By 2013, PSIA projects industry revenues to reach US$1.5 billion and aims to employ around 80,000 Filipinos.
Source: IBPAP (2012)
Growth rates
FTEs: 2007-2011
In the same O2P and BPAP surveys of 2009 and 2012, 92 percent of respondents (companies of different sizes and portfolio offerings) said they planned to increase their employee base; with most planning to increase by under 5 percent to as much as 50 percent (Graph 4).
Graph 4. Projected growth over 12-month period*

25% 20% 15% 10% 5% 0% -11% or more -610% -15% No change 05% 610% 1115% 1625% 2650% 5175% 76100% 101200%
September 2009
August 2012
92% of respondents expect to increase employee base between 0-5% and more than 200% 63% of respondents expect to increase employee base between 6% and 50% * As of September 2012 Source: O2P-BPAP Periodic Survey (August 2012)
Projected Growth
The Philippine IT-BPM workforce grew at an average of 21 percent annually between 2007 and 2011 (Graph 3). In 2009, the growth rate dropped from 24 percent to 14 percent in the wake of the global financial crisis but quickly recovered in 2010 back up to 24 percent. The number of employees in the industry has more than doubled, from about 298,953 in 2007 to about 638,319 in 2011.
10
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11
The non-voice segment presents greater opportunities for IT-BPM growth. To take advantage of these opportunities, the Philippine IT-BPM industry needs to reposition itself to highlight its capability in non-voice BPM. The country's voice BPM industry also needs to increase its market share to maintain Philippine dominance in this sector. For continued growth, Philippine IT-BPM must diversify its market by expanding in the UK, Europe, Australia, New Zealand, and the Asia Pacific (APAC) region. IT services, specifically, can be offered to more APAC-based companies. Philippine IT-BPM companies can also target the vast small- and medium-enterprise market in the US. The 2010 version of Road Map 2016 projected that the Philippine IT-BPM and GIC industry could grow an average of 14.5 percent a year to US$20 billion by 2016 if conditions remained basically unchanged from what they were in 2010 (Base Case 2016) (Graph 5). If conditions worsened (incentives were removed or the environment became more rigid and less business friendly, for example), a Low Case 2016 scenarioslowing to 9 percent annual average growthwas projected. The Accelerated Case 2016 projected a high average annual growth rate of 19 percent on the condition that the industry (private sector) and government strengthen their partnership in supporting industry development and growth. With this strengthened public-private partnership, it is envisioned that the industry would earn US$25 billion in revenues and employ 1.3 million and 3.2 million Filipinos directly and indirectly. At this size, the industry could account for about 8 percent of Philippine GDP.
People
Top executives of global companies with recognizable brands consistently commend the availability of highly professional experts in the Philippines. They also remark on the great ease of working with these professionals, a very positive experience they find unique to the Philippines. Many of these global executives have overseen the growth of their companies in the past decade and bear witness to the rapid growth of the Philippine IT-BPM and GIC industry as a whole. High regard for the Filipino workforce would matter little to investors, however, if they were in short supply. Fortunately for the Philippines and investors alike, the Philippines has a large, highly educated, English-speaking workforce. Data provided in the IT-BPO Road Map 20112016 shows the Philippines has the third-largest talent availability among the worlds top IT-BPM service centers, after India and China, and leading Poland, Mexico, Egypt, and Malaysia in annual tertiary graduates (Graph 6). For specialized segments such as animation or software development, for example, decades-long experience in providing services and products for global clients has established Filipino talent to be at par or better in creative and technical work than their counterparts in other countries. The large young skilled labor pool that allows hiring at significant scale at competitive costs has sustained these specialized sectors over two to three decades.
Graph 5. Philippines' IT-BPM and GIC Industry Revenue Targets for 2016
IPPP CAGR:
US$ Billions
CAGR:
19%
25.0
20.0 13.4 8.9 11.0

CAGR:
Graph 6. Annual talent pool, select global IT-BPM locations
Annual tertiary graduate pool 2010, 000s
Annual supply of F&A/ business graduates 2010, 000s

India China Philippines Poland Mexico Egypt Romania 127 107 107 560
Annual supply of technical talent for IT 2010, 000s

China India Philippines Malaysia Poland Mexico Egypt 634 510 85 68 53 50 39
India China Philippines Poland ~500 ~500 371 330 131
3,500 2,000
29%
7.1 3.2
22%
CAGR:
11%
CAGR:
17%
Mexico
68 66 33
2006
2009
4.2% 423K 1.1M
2010
2011
2012e
Base Case 2016
Accelerated Case 2016
Sources: Commission on Higher Education; global industry data; Everest Group analysis (2011)
Egypt Malaysia
% of GDP Direct employment Indirect employment
2.6% 240K 600K
4.5% 525K 1.3M
4.9% 638K 1.6M
5.6% 772K 2.0M
6.2% 900K 2.3M
7.8% 1.3M 3.2M
F&A = finance and accounting
The positive attributes, available and renewable supply, and proven capabilities of the Filipino IT-BPM and GIC workforce have resulted in a near tripling of its size from 236,000 direct employees in 2006 to 638,000 in 2011.
Culture
A talent index developed by O2P and Everest Group for the IT-BPO Road Map 20112016 shows that the Philippines is well-positioned among global IT-BPM services providers in four key human resource indicators: scalability, experienced talent pool, quality of English accent (and cultural affinity with the US), and size of graduate pool (Graph 7). Among these indicators, the Philippines is number one globally in terms of quality of English and cultural affinity with the United States. This result can be explained in part from the historical and cultural ties and close economic relations between the US and the Philippines for over a century. Affinity between Filipinos and other cultures has also deepened and broadened in more recent years as Filipinos embraced the Internet and social networking. The Philippines, according to socialbakers (www.socialbakers.com), is Facebook's eighth-largest market.
Sources: IBPAP data; IBPAP, Everest Group, and Outsource2Philippines analysis; World Bank and IMF projections for GDP (2012)
In 2011, the Philippine IT-BPM and GIC industry earned US$11 billion in revenues and employed about 638,000 Filipinos. IBPAP estimates that by the end of 2012, revenues would have grown by 22 percent to US$13.4 billion and employment would reach around 772,000. If this level is achieved, the industry would surpass the original Low Case 2016 scenario and to reach the Base Case 2016 scenario, it would have to grow by an average of 11 percent a year. To reach the Accelerated Case 2016 target of US$25 billion, the industry would have to grow by an average of 17 percent from 2013 to 2016.
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13
Graph 7. Cumulative Talent Competitiveness Index for IT-BPM
3.05 Scalability 2.20 Experienced talent pool Quality of English accent (cultural affinity with U.S.) Size of graduate pool India Philippines China Egypt Malaysia Mexico Poland Romania
Figure 4. Locations of the Philippines' Top 10 Next Wave CitiesTM 20102011 and Established IT-BPM Hubs
Higher scores imply greater competitiveness

1.56 1.46
1.30 0.95 0.75 0.64
Baguio City METRO CLARK Malolos
METRO MANILA
Key takeaways for the Philippines Top-3 global location in graduate pool size Third-largest talent pool in delivery of voice, finance and accounting, and IT services Among the largest experienced talent pools globally
Metro Cavite Santa Rosa Lipa City
Sources: IBPAP and Everest Group analysis (2010)
Professional and business practices are closely aligned with best practice in the United States. As a result, voice and non-voice IT-BPM services providers and GIC workers seamlessly integrate with Western project and development teams without the hurdles normally associated with cross-cultural management. When a North American clients customer makes a reference to the New York Knicks, Lady Gaga, or upcoming federal elections, the Filipino knowledge worker always relates. Even in highly specialized fields, such as health care, Filipino professionals are valued for their cultural alignment with the United States and their familiarity with medical terms and procedures used in the American healthcare system.
Iloilo City
Bacolod City METRO CEBU
Dumaguete City Cagayan De Oro City Davao City
The Next Wave CitiesTM

To achieve its US$25 billion revenue target by 2016, the Philippine IT-BPM and GIC industry must develop and sustain a workforce of 1.3 million. In the first wave of growth of the Philippine IT-BPM industry, from the late 1990s to 2010, three major hubs emerged: Metro Manila, Metro Cebu, and Metro Clark. It is clear, however, that the next wave of growth must necessarily involve alternative locations. The best of such locations, or what IBPAP and DOST-ICTO call Next Wave Cities (NWC), for 20102011 are, by rank: Davao City, Santa Rosa City (Laguna), Bacolod City, Iloilo City, Metro Cavite (Bacoor, Dasmarias City, Imus), Lipa City (Batangas), Cagayan de Oro City, Malolos City (Bulacan) , Baguio City, and Dumaguete City (Figure 4).
*Established Metro areas are in bold Sources: IBPAP; DOST-ICTO (2011)
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Competitiveness
The Philippines is a competitive destination for the IT-BPM and GIC industry because of attributes related to its scalable educated talent pool, distinctive Filipino workforce characteristics, cost competitiveness, excellent infrastructure, government support and public-private partnership, and proven track record (Table 2).
Cost competitiveness. The Philippines remains one of the mostand close to the mostcost-competitive locations in the world for voice (Graph 8) and non-voice BPM as well as information technology outsourcing (ITO). In each of these sectors, the Philippines is generally at parity with India, and more cost-effective than other global services locations, despite the high quality of talent pool available. However, the appreciation of the Philippine peso in 2012 coupled with the depreciation of the Indian rupee widened the gap somewhat between these global leaders in IT-BPM (Graph 9).
Table 2. Why the Philippines is a Top Offshore IT-BPM Location

Scalable Educated Talent Pool
- 3rd-largest English-speaking country, 12th-most populous country - 90+ million population, 39+ million workforce - 500,000+ college graduates per year; 93% literacy rate - Western-based legal and accounting curriculum and certification
Graph 8. Direct operating cost1 per full-time employee for English voice work (average exchange rate)
2012; US$ 000 per annum per FTE
MARKET AVERAGES
70-72
Reflective of market averages. Range could vary depending upon Tier-1 vs. Tier-2 cities Suppliers vs. Captives Scaled operations vs. mid-size operations
Filipino Workforce
- Service Culture - Adaptability - Compassionate and caring by nature - Loyalty

29-32
Cost Competitiveness
- Labor costs for English-speaking professionals among lowest in the world - All-in costs among lowest in the world - Predictable and manageable inflation
26-28
26-28 20-22 15-16 12-14
Excellent Infrastructure
- Abundant low-cost and high-quality real estate in several urban areas - Reliable, redundant, low-cost telco infrastructure - Reliable power and building 100% - 200% back-up as a standard - Available 24/7 low-cost transportation
US Tier-2
Mexico City
Krakow
Kuala Lumpur
Cairo
Metro Manila
Delhi/NCR
Philippines is one of the lowest cost destinations for English voice work and comparable to India
Government Support & PublicPrivate Partnership
- Government support in education (TESDA, CHED), locator support (PEZA, BOI), industry development (ICTO) - Income tax holiday (4-8 years), 5% tax on gross income post holiday, VAT exemption - Comprehensive Industry Road Map 2016 to achieve 20% YOY growth - No. 1 in Voice: customer care, tech, financial services, sales, collections - Mature/growing industry-specific and cross-industry capability: IT, F&A, HR, Healthcare BPM, Procurement, Banking, Utilities, Telco, Media - Primary English-based services plus other Asian and European languages - Analytics & KPO capabilities
1 Ongoing costs only; excludes margins/mark-ups, centralized corporate overheads, initial investment, set-up costs, and travel costs Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 18 months from 1-Jan-2011 to 30-July-2012
Proven Track Record
Graph 9. Direct operating cost1 per full-time employee for English voice work (current exchange rate)
2012; US$ 000 per annum per FTE
MARKET AVERAGES
70-72

Slight de crease
Talent pool. The IT-BPM and GIC industry is undertaking a series of visibility initiatives to highlight the rewarding career opportunities available to Filipinos. As the industry has grown rapidly, so has the demand for a skilled workforce. IBPAP is working with industry and government partners to address the skills-and-jobs mismatch as well as to develop and sustain the talent pool. Leading outsourcing firms operating in the Philippines offer multi-service delivery in consulting, IT and engineering, financial, manufacturing, customer engagement, public services and health care, facility management, security, real estate, and support services, among others.
US Tier-2
in cost
Slight de in cost
29-32
25-27
26-28 19-21 15-17 11-13
Mexico City
Krakow
Kuala Lumpur
Cairo
Metro Manila
Delhi/NCR
Because of the nature and complexity of these services, the Filipino talent pool must be equipped with top skills needed in the IT-BPM and GIC industry, including leadership, strategic thinking, and English-language skills. IBPAP has developed to date about 13 certification, training, and HR development programs with partner associations providing components for specialized skills. It works closely with government training and education departments, local governments, and private organizations and institutions to plan, design, and implement these wide-ranging programs to transform the country's supply of employable talent.
Philippines is one of the lowest cost destinations for English voice work and comparable to India
1 Ongoing costs only; excludes margins/mark-ups, centralized corporate overheads, initial investment, set-up costs, and travel costs Note: Exchange rates for local currencies with respect to the U.S. Dollar have been taken as of December 11, 2012
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The ITO sector grew 37 percent in 2011 to almost US$1 billion in revenues and employed close to 50,000 Filipinos. Although the Philippines is not generally viewed as a leading ITO location particularly when compared with India and China, the reality of investment in the sector since 2010 is that investors increasingly recognize the attributes of the Philippines as a reliable, high-quality provider of ITO services. As IT-BPM and GIC services providers expand outside Metro Manila to Next Wave CitiesTM and other suitable locations offering large, stable talent supplies, this cost advantage increases (Graph 10). It is notable that since 2010, Davao in particular has become an increasingly attractive and popular location for IT-BPM investors as a result of a sound and strong business-friendly environment, adequate educational infrastructure, and increasing leisure and lifestyle opportunities.
Figure 5. State-of-the-art voice and data infrastructure throughout the Philippine archipelago
TGN-IA
AAG: Asia-America Gateway
BALLASTEROS
Graph 10. Cost of business among major Philippine hubs
APCN2: Asia-Pacific Cable Network 2 C2C: City-to-City TGN-IA: Tata Global Network-Intra Asia ASE: Asia Submarine-Cable Express EAC: East Asia Crossing SJC: South-East Asia Japan Cable SeaMeWe3: South East Asia Middle East Western Europe 3
AAG
8,404 7,560 6,500 5,874
SFLU
LAOAG VIGAN
TUGUEGARAO
CAUAYAN
6,180
DAGUPAN TARLAC
BAGUIO SOLANO URDANETA CABANATUAN CANERO
5,390
5,000
5,380 4,250
EAC SeaMeWe 3 APCN2 C2C
SUBIC
SAMPALOC ERMITA BACOOR
AURORA MAKATI
ASE
DAET NAGA PAGBILAO PILI LEGASPI DONSOL SORSOGON MASBATE CALBAYOG
NASUGBU BATANGAS MAMBURAO
Monthly Non-Agriculture Minimum Wage () (as of January 2009) Metro Cebu
Monthly Average Rental Rate (/10 sq m)
Monthly Average Power Rate (/1,000 kwh)
SAN JOSE
Metro Manila
Davao City
SJC (JUNE 2013)
ROXAS CAD BANATE ILOILO ORMOC
TACLOBAN
Sources: IBPAP and TeamAsia (2012), Next Wave Cities (2010-2011)
BACOLOD
SAN REMIGIO TALISAY LILOAN LAHUG TALISAY DUERO MAASIN
Excellent infrastructure. The IT-BPM and GIC industry is primarily served directly by two major domestic telecommunications firms, PLDT and Globe Telecom, ensuring business continuity. These firms offer independent, nationwide data networks, and have announced significant new investments in infrastructure to support domestic demandprimarily mobile voice and data servicesas well as commercial requirements. Telecom infrastructure is available throughout the archipelago. The high-speed networks maintained by PLDT and Globe (and a smaller third-party provider, Bayan) are illustrated in the succeeding page, along with landing stations for international submarine cables (Figure 5). The infrastructure has connections to Asia, Europe, North America, and Australia. Several urban areas across the Philippines also offer a wide array of low-cost and high-quality real estate, including a number of high-rise buildings with residential and commercial spaces. While most investors typically turn to bigger cities for their investments, there are other ideal locations for real estate investment. These locations are comparatively less crowded and offer a better quality of life for people living there. The Next Wave Cities report lists down 10 cities that investors may benchmark when they plan to invest outside the metro cities. Power and transportation are also key considerations in doing business in the Philippines. Majority of metro cities have a reliable power supply and provide backup in case of power interruptions. Accessibility is not an issue since most outsourcing hubs have low-cost public transportation available 24/7.
Sources: Industry data (2012), www.submarinecablemap.com
MARIBOJOC TAGBILARAN DAUIN CABADBARAN
CDO MANTICAO ILIGAN PAGADIAN
BUTUAN
COTABATO DAVAO ZAMBOANGA
GEN. SANTOS
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Chapter 2
The Global Market: The Role of the Philippines
By 2016, the Philippine information technology and business process management (IT-BPM) and global in-house center (GIC) industry can grow to US$25 billion in revenue, employing more than 1.3 million Filipinos directly, and contributing about 8 percent of GDP.
Government support. This industry enjoys the support of the Philippine government, from no less than President Benigno S. Aquino III. In October 2011, President Aquino announced that the government was allocating 500 million (about US$12 million) in funding for training of potential employees ("near hires") in multiple sectors of the Philippine IT-BPM industry through TESDA. Another 125 million was allocated by CHED to integrate industrydeveloped courses into degree programs and to develop the capability of faculty in state universities and colleges and private higher education institutions to teach these courses. Significant scale has been achieved according to IBPAP, which oversees administration of the grants and develops training and certification programs. By mid-2013, more than 65,000 prospective employees will have received remedial training, with approximately 70 percent expected to be employed as a result. More than 8,000 trainers have also benefitted from the programs. TESDA has allocated 900 vouchers amounting to 18 million for Trainers Methodology (TM) Plus, the first trainers training program for IT-BPM offered by the skills development agency. TM Plus was jointly developed by TESDA and IBPAP. In addition, a budget of 7.2 million for 804 vouchers will be used for Trainers Methodology 1, a firstgeneration version of the TESDA course also intended to enhance training skills. At present, the TESDA programs cover training of potential employees for call centers, programming, transcription, game development, and animation or trainers for courses in these segments. Industry leaders have acknowledged that these programs help to address the high demand for skilled workers in all these fields. There are plans to develop more courses to cover skills in more fields such as finance and accounting, and human resources for ITBPMs. The DOST-ICTO, as part of its mandate to ensure the sustained growth and competitiveness of the ICT industry, has undertaken with its stakeholders including industry the implementation of key programs, such as Talent Development, Stepping Up the Value Chain, Next Wave CitiesTM, Smarter Countryside, Domestic ICT Industry Development, ICT-Enabled Creative Industries, and ICT Industry Marketing and Research. Proven track record. The Philippines overtook India in voice BPM in 2010 in both employment and industry revenue. Non-voice services have gained increasing traction and interest in recent years and now account for substantial revenues and employment. Growth in non-voice services is expected to outpace growth in voice BPM, sometimes by very significant margins, such as in the case of ITO and healthcare information management outsourcing. Largely as a result, most IT-BPM and GIC executives view the Philippines as a less-risky location for the provision of IT-BPM and GIC services (Graph 11).
Global industry
The global offshore services market is growing at a healthy pace, despite the lingering impact of the global financial crisis that began in 2009. Demand for IT-BPM and GIC services is expected to more than double by 2016 to approximately US$245 billion of which about US$122 billion is demand for BPM alone. As the market grows, the composition of the BPM market is expected to evolve dramatically, with non-voice, complex services as the fastestdeveloping segments (Graph 12).
Graph 12. Global offshore market size for business process management (BPM) services (excluding information technology)
Industry-specific services are expected to constitute a larger percentage of the non-voice BPM market by 2016
100% = 44-48 120-124 Global offshore opportunity in non-voice BPM 2016; US$ billion 100% = 70-73 Non-voice BPM
52%
58%
Horizontal (F&A, HR, KPO, Procurement) ~27-29 35-40% 60-65%
Graph 11. O2P and BPAP survey respondents comparative risk rating of Philippines and India
48%
Voice BPM
42%
56% of Respondents say the Philippines is less risky or much less risky than India
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Much More Risky More Risky About The Same September 2009 Less Risky August 2012
Much Less Risky
2011
2016E
Industry-specific ~ 42-44
Voice BPM work is likely to grow; however non-voice is likely to become increasingly significant Within non-voice BPM, the opportunity is likely to shift towards more complex and vertical-specific work (e.g., insurance claims processing, credit underwriting)
As non-voice, complex BPM service assumes the role of principal engine of growth for the industry, demand for industry-specific services is expected to increase. When it does, industry-specific services will grow into a larger percentage of the non-voice BPM market by 2016. Prominent industry verticals will include banking and financial services, insurance, health care, media, engineering, and creative services.
The Philippine forecast

According to Everest, the Philippines is a mature location for IT-BPM services (Figure 6). If the global forecast for the industry holds true, accompanied by a nurturing investment environment in the Philippines and improved
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educational support from the Philippine government as well as the private sector, the Philippine IT-BPM and GIC industry can expand to US$25 billion in annual revenues. If that goal is attained, the industry will employ more than 1.3 million direct employees, and contribute about eight percent of GDP, becoming the second-largest source of foreign exchange for the country.
Figure 6. Philippines among mature global IT-BPM locations (2011)
Mature
Credible
Emerging
Eastern Europe: Established nearshore destination
China: Domestic and APAC centric scale and capabilities
Figure 7. Range of IT-BPM services in the Philippines
Voice BPM
416,000
Game Development 1,391
7,400
8
Animation TOTAL FTEs 638,319 Non-Voice BPM/KPO
8,640 128
Philippines: #1 in voice BPM 416K FTEs #2 in non-voice BPM 220K+ FTEs
128,650 2,058
Mexico, Brazil, Columbia, Chile, and Argentina: Evolving rapidly as near-shore base to drive penetration in North America
Engineering Services
11,036
Information Technology Outsourcing
9,030 172
49,908 993
Healthcare Information Management
India: Industry leading scale and capabilities Voice: 400K+ FTEs Non-voice BPM: ~1.6M FTEs Egypt, Morocco, and South Africa: Significant gvernmentbacked push to target UK and Europe
24,700 277
Full-Time Employees Revenue (US$M)
1-2 key offshore locations from each region identified for competitive benchmarking as relevant
Source: Everest Group analysis (2011)
Number one in voice; number two in non-voice, complex services

IBPAP is aware that non-voice is where the value is being created, and supports all efforts in promoting the Philippines capabilities in this area. As the growth of non-voice, complex services outpaces growth in voice services, the Philippines will build a more visible presence in emerging segments. In fact, the IT-BPM and GIC industry first sprang up as a non-voice industry when large accounting firms and other multinational firms such as Caltex, Shell, and Fluor Daniels set up facilities in the Philippines to deliver services to their global operations. Software development, animation, medical transcription, and data processing for global (mostly American) clients have been delivered from the Philippines over the last three decades or more. Fluor Philippines for example, a company that provides detail and process engineering, logistics, procurement, maintenance, project management, and construction, began operations in the Philippines in 1987 or a quarter century ago, and in 2012 employed more than 2,200 Filipinos. According to executives of the firm, the Philippine facility is one of the fastest-growing in its global network. The Philippine company was founded as a global execution center that provided support services to Fluor facilities around the world. Today, the Philippine operations provide a high-value array of services, including engineering, global procurement, construction management, and project management services. Fluor's Philippine operations remain global and are no longer limited to supporting the company's projects. Instead, it conceptualizes, develops, and manages engagements in regions such as Middle East and South America, as well as countries such as Australia, Malaysia, Singapore, China, and the Philippines. In recent years, the impressive growth in voice services has captured the attention of both industry executives and analysts. But throughout the impressive voice growth of the last decade, non-voice services segments in industry-specific verticals have grown steadily in the banking, shipping, civil engineering, software, media, and legal industries. Executives in one multinational bank with more than 10,000 employees in the Philippines serving global operations have said that 90 percent of their work is non-voice. The industry has also started to diversify its services focus and geographic base (Figure 7).
Twenty-three percent of 2011 industry revenues were generated by non-voice services, which accounted for 35 percent of industry employment. The O2P-BPAP surveys also revealed that about 65 percent of respondents have clients in North America, a level that remained constant between two survey periods: 2009 and 2012 (Graph 13). While fewer respondents had clients in the EU, Asia, and other locations, the rise in the percent of those with clients in these areas over three years was evident. This indicates that the market of Philippine IT-BPM and GIC services is diversifying geographically, while maintaining significant presence in North America (primarily the United States).
Graph 13. Clients by geographic location
70%
60%
50%
40%
Respondents
30%
20%
10%
0 North America EU Asia Others
September 2009
August 2012
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Chapter 3
The Role of IBPAP
The Information Technology and Business Process Association of the Philippines (IBPAP), formerly the Business Processing Association of the Philippines (BPAP), is the enabling association for the information technology and business process management (IT-BPM) and global in-house center (GIC) industry in the Philippines. IBPAP serves as the one-stop information and advocacy gateway for the industry. With approximately 300 industry and support-industry members, including five associationsthe Animation Council of the Philippines, Inc., Contact Center Association of the Philippines, Game Developers Association of the Philippines, Healthcare Information Management Outsourcing Association of the Philippines, and the Philippine Software Industry AssociationIBPAP plays a pivotal role in sustaining rapid growth of the IT-BPM and GIC industry by working to ensure an enduring supply of high-quality labor, supporting service innovation, and providing country visibility. IBPAP assists investors in setting up operations easily and quickly in the Philippines. Relevant research, introductions to key government and industry officials, and a series of briefings at each step of the investment procedure ensure a seamless development process. Ongoing support is provided through a wide variety of initiatives, including programs for HR development, business development, and ongoing knowledge sharing and networking. Achieving the US$25 billion goal requires IBPAP to drive favorable outcomes across multiple areas, including: addressing lack of human capital through public-private partnerships; strengthening the Philippines attractiveness as an investment destination; building and promoting the country brand; leading cross-sectoral efforts; and introducing innovation (Figure 8).
Figure 8. Areas where IBPAP plays a role
Thought Leadership
Country Branding
Innovation
Talent
Ecosystem
Talent: Efforts, results, and goals

Although the Philippines enjoys an attractive talent pool, the industry hires just five to 10 percent of all applicants, generally as a result of inadequate education and training suitable to a career in the IT-BPM and GIC industry. From the more than 500,000 college graduates produced by the countrys formal tertiary institutions, only 20 percent are capable or qualified to assume jobs in the industry. Perhaps most alarming is that while only 30 percent of our tertiary graduates consider a career in the industry, the relatively huge proportion (70 percent) of the graduates and those who are deemed to have great influence on their career decisions may not be fully aware of the career opportunities in IT-BPM and GICs in the country. The industry and government are moving to address these issues, which is the subject of a subsequent section of this report.
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Achieving the US$25 billion Accelerated Case target by 2016 requires increasing the talent pool to 1.3 million FTEs. This translates to total talent demand of over 1 million hired (for expansion and to replace attrited employees) over the next five years (Graph 14). With the estimated annual talent supply of 80,000 to 105,000 qualified and willing new hires every year, this would leave a gap in the talent supply of over 500,000 between 2012 and 2016.
Figure 9. Address the Supply Gap schematic
Graph 14. Demand and supply projections of entry-level industry talent in the Philippines, 20062016
Total talent demand (Accelerated Case) Effective addressable talent supply (as is) Actual and projected supply with industry and government talent programs
Demand Others SMP Career Marketing GCAT
IT-BPM thousand full-time employees 243
I-TWSP Supply
215 213 194

2011
2012
2013
2014
2015
2016
184
155 137 103 84 83 2006 87 2007 2008 88 2009 2010 2011 2012f 2013f 2014f
Effective addressable supply
Figure 10. Imperatives and desired outcomes
Imperatives
105
80K-105K @2.5% growth rate
Grow talent base
Improve relevance of education
Impart employability skills
Attract more to the sector
Up-skill & retain
2015f
2016f
Source: IBPAP and Everest Group analysis (2012)
Desired outcomes
Increase installed in higher education Increase enrolment in IT-BPM relevant streams in tertiary Increase throughput institutions from secondary Identify and impart Minimize drop-outs remedial measures for from tertiary systems university students Tap alternative talent pools Increase yield of trainable pool into the workforce Bridge gap between college and industry by imparting work readiness Increase propensity of graduates/school leavers to consider IT-BPM Reduce migration out of the country Attract students to invest in educating themselves to take up jobs in the sector Encourage reverse migration
The Road Map laid down the need for an integrated talent development approach with objectives that progressively lead to growing the talent and addressing the talent supply gap (Figures 9 and 10).
Up-skilling experienced staff on all aspects of managerial development Impart domain skills
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To address this challenge, IBPAP and its partner associations set out to attract over 1 million people to join the ITBPM and GIC workforce within five years through an end-to-end approach to talent development. Historically, talent supply has exceeded demand. But since 2010, demand has consistently risen faster than supply. Public-private partnerships (PPPs) for talent development and recruitment have to be intensified to help close the gap. PPPs are important catalysts in achieving the US$25 billion revenue goal by 2016. By 2012, PPP talent development initiatives (Figure 11) resulted in concrete gains (Table 3). The Philippine government, through the Department of Budget and Management, infused about US$12 million for the Industry-based Training for Work Scholarship Program (I-TWSP) led by the Technical Education and Skills Development Authority (TESDA). The program offers scholarships for industry-approved courses on animation, software development, medical transcription and voice. I-TWSP is expected to add 250,000 people to the talent pool over five years. Studies show that seven out of 10 I-TWSP scholars get employed. As of October 2012, 41,000 had been trained and 20,000 employed under the I-TWSP. Trainers' training has also been expanded under the program.
Table 3. Other industry programs: 2013 targets
Program Emerging Services
Target 2013 Complete development planning for the following: Corporate Services: finance and accounting, human resources, procurement, logistics Engineering services, information technology outsourcing, health care, cloud processed outsourcing Lean/Six Sigma, analytics, knowledge process outsourcing Grades 11 & 12 content in K to12 curriculum Modelling with schools starting school year 2013-2014 (June 2013) Complete development planning Initial curriculum developed with University of the Philippines-Information Technology Development Center (UP-ITDC) Complete Executive Development program
Service Management Program K to 12 Service Technology Management
Figure 11. Talent development initiatives

Executive Development
Marketing
Country, Career, IBPAP, Programs
Industry Standard Voice Assessment
Similar to Global Competitiveness Assessment Tool, complete study of voice assessment standard Complete development planning Initial curriculum developed with UP-ITDC Multi-media campaign across initiatives Career Caravans / Conventions with state universities and colleges Complement teacher-led interventions with eLearning solutions to achieve better scale, reach and standardized delivery of instruction
Assessment
GCAT: Global Competitiveness Assessment Tool Voice Assessment Teacher/Trainer Certification Future: Skills Certification
Intervention
Industry-based Training for Work Scholarship Program (I-TWSP) Basic English Skills Training (BEST), electronic Advanced English Preemployment Training (eAdEPT), Expanded Learning on IT-Enabled Services (ELITES) Service Management Program (SMP) Train the Trainers (T3) Emerging Services Executive Development Lean/6-Sigma, Analytics, Knowledge Process Outsourcing (KPO)
Career Education and Job Placement

GCAT Information Bank IBPAP Career Portal (Work Abroad, Live Here) Practicum Job Fairs AcademesCompanyIBPAP MOAs
Career Marketing
Electronic Learning
Existing training and educational programs have also been scaled up to benefit over 100,000 students, over 8,000 teachers and trainers who, after certification, can further teach over 50,000 students annually. IBPAP is working to have 70 percent of the present I-TWSP scholars to be employed by the industry after the program. To sustain these initial gains, IBPAP identified the need to continue investing to scale up these PPPs in the following ways: Additional 60,000+ scholars to yield over 40,000 employable talent, with additional funding for marketing, and systems and capability development. Additional 15 SUCs to be industry-enabled to teach IBPAPs programs and yield 5,500 more trained teachers who, in turn, can teach over 50,000 students annually. 15 public high schools to introduce industry training programs during Grades 11 and 12, to yield 5,500 trained K to 12 teachers who, in turn, can teach over 50,000 students annually. The Commission on Higher Education (CHED) has already approved the 21-unit Service Management Program (SMP) course jointly developed by the IT-BPM industry and academe. Four schools and 46 industry practitioners are already part of the program. In 2013, the industry expects to receive funding from the Asian Development Bank (ADB) and CHED to train teachers from identified state universities and colleges (SUCs). The ADB-funded project will be managed by IBPAP in partnership with the University of the Philippines Open University and the Asian Institute of Management (AIM).
Funding
Accelerates development & scaling up of programs to become mainstream
Source: BPAP (2012)
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For Basic English Skills Training (BEST) and Advanced English Pre-employment Training (AdEPT), the TESDA Train the Trainers (T3) run in 2012 includes two higher education institutions (HEIs) in Metro Manila and four SUCs and local colleges and universities (LCUs) in Quezon Province. Eleven schools identified by the Department of Science and Technology-Science Education Institute, and 13 SUCs and HEIs that signified interest will be included in the T3 run for BEST and AdEPT in 2013. New talent development programs will be rolled out in 2013, including the Service Technology Management designed for team leaders and managers. IBPAP and its partner associations also aim to design programs for finance and accounting outsourcing and healthcare information, and more programs for information technology. Other initiatives are an industry-relevant program for Grades 11 and 12, an executive development program, and industrystandard voice BPM assessment. IBPAP has also been working to spread better awareness among fresh graduates and career shifters of the good careers that can be had in the IT-BPM and GIC industry. Career marketing activities have revolved around the theme of "Work Abroad, Live Here" to position IT-BPM and GIC careers as a good alternative to overseas employment. The program is supported with a strategic media campaign for print, online, and other media funded by IBPAP and covering all industry sectors. An online portal, www.workabroadlivehere.com, was set up as a repository of information on careers in the industry and as a resource hub with links to other online career websites. The portal is supported by a Facebook page and Twitter accountalso called Work Abroad. Live Here." Aside from the brand visibility campaign, IBPAP, member companies, and government agencies are undertaking a number of initiatives to increase the size of the labor pool. The program, managed by TeamAsia, is a campaign to acquaint graduates and professionals for them to consider a career shift with the Philippines vibrant IT-BPM and GIC industry, which spans more than 20 different functional and vertical segments. IBPAP has also forged a partnership with TESDA to launch a trainers training program conceived to support talent development in the IT-BPM and GIC industry. TM Plus is one in a series of educational programs developed under the 500-million funding for I-TWSP. The entire program is divided into two parts: the first covers IT-BPM orientation and instruction through classroom and e-learning sessions; and the next is allotted for internship, where trainees co-facilitate TM Plus in an IT-BPM facility. Trainees are assessed using tools developed by the Philippine Society for Training and Development (PSTD) as well as TESDAs TM 1 National Assessment and are certified when assessed as qualified. IBPAP aims to add 200,000 full-time employees to the talent supply over the next five years through its highereducationbased interventions including its Global Competitiveness Assessment Tool (GCAT, an online assessment test to measure the skill gaps and areas of improvement which guides schools and companies in designing appropriate interventions); SMP, a CHED-mandated and IBPAP-developed 21-unit specialization track for business administration and IT college students intending to go into the IT-BPM and GIC industry; AdEPT, a two-week crash course on improving English proficiency for university students and individuals already in the industry; Emerging Services, an upcoming program to develop courses for corporate services and other specialized fields; and e-Learning programs.
Building and promoting a country brand

Industry associations, companies, and government agencies have joint and separate initiatives to promote the country as an IT-BPM and GIC destination. Annual events with foreign speakers and participants, trade missions to events in market locations, speaking engagements, working with international analysts and research firms, online marketing, and some public relations releases have been used to some effect. Some of these efforts are discussed in more detail in succeeding chapters on the specific sectors in this report. As a first step to developing a strategic external marketing strategy, IBPAP led a brand identity workshop to map out the Philippine IT-BPM and GIC industrys core and extended identities (Figure 12). The output will serve as basis for developing the value proposition, key messages, and external strategic marketing strategy.
Figure 12. Philippine IT-BPM industrys core and extended identities
Extended Identity
Cultural Affinity with U.S. Service culture Loyalty
People and Expertise
Core Identity
Low-cost structures Scalable Englishspeaking talent pool Low-risk profile High Quality
Work Abroad, Live here
High productivity
Superior quality of life
Instructiontaking mindset Exotic leisure opportunities
Alignment with global best practices
Low inflation
Language Skills Philippines Country Brand Its more fun in the Philippines
Source: Adapted by TeamAsia from Dr. David A. Aaker
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The marketing strategy will involve multiple channels and activities (Figure 13).
context of increasing globalization and liberalization, advanced information and communication technology, and the Constitutional mandate for equal employment opportunities and protection against employment discrimination. In terms of tax and regulatory incentives, the Philippines remains to be an attractive destination with a comparable, if not compelling, incentives package. Local governmentsespecially those of Next Wave Citiesare also offering additional incentives to further promote their cities as alternative destinations.
Figure 13. Channels to educate and engage the market

Continue and strengthen broad-based efforts to educate the market
Relevance and outcomes may vary by channel
Channels Events
Type Participation in Outsourcing Events Hosted Events
Examples
Sourcing focused events in target countries Major industry conference Hosted events in source markets
Helps raise awareness in target markets and generates leads Involves coordination across multiple associations to ensure appropriate representation Ensures ability to measure effectiveness/ROI
Road Map 2016 showed how the government incentive schemes have resulted in returns from corporate and personal taxes collected that are four to five times the amount of the foregone taxes from the incentives from 2005 to 2011 (Graph 15). Government granted about a total of US$1.1 billion to US$1.4 billion in incentives to IT-BPMs and GICs in those years. In that same period, a total of 540,000 direct jobs and between 1.1 million and 1.6 million indirect jobs were added to the Philippine workforce by this industry. During this period, companies that were set up or expanded as a result of the growing IT-BPM and GIC industry that were not under a financial-incentive scheme paid US$1.1 billion to US$1.4 billion in corporate taxes to the Philippine government. In addition, direct and indirect employees had taxes withheld from their paychecks in the amount of US$1.7 billion to US$2.1 billion and VAT collected from increased consumption totalled US$1.6 billion to US$1.9 billion. Total tax revenues to the government from the growth of the IT-BPM and GIC industry therefore were between US$4.4 billion to US$5.4 billion, or four to five times the amount of incentives granted to IT-BPMs and GICs.
Media
PR/Mass Media Online Media/ Newsletter Advertisements
Articles and Features News coverage Website, blogs, social media Newsletters Print/TV and social media Research reports showcasing capabilities IT-BPM leaders at key researching and consuming firms Prominent Filipinos in source markets
Helps create awareness and raise profile Requires a pragmatic approach and orchestration in communication
Indirect channels
Thought Leadership Analysts
Important to move investors from evaluation to decision making Essential to drive focused investments by identifying platforms to own
Graph 15. Philippine incentives, ROI for economy

Impact assessment (2005-2011) (in millions)
Number of additional jobs2
Ambassadors
Incremental jobs created 2005 ~63,000
Direct
~0.5
Indirect1
1.1 - 1.6
Strengthening the ecosystem

IBPAP has also led efforts to strengthen the ecosystem for IT-BPM and GIC investors, from pushing for the passage of favorable laws to expressing industry support for continued tax incentives. In August 2012, Republic Act No. 10173 (Data Privacy Act) was enacted into law. The law, which had been pending for years, is based on standards set by the European Parliament and aligned with the Asia Pacific Economic Cooperation (APEC) Privacy Framework. Among others, it criminalizes breaches of confidential personal data and provides stiff penalties for these acts. It is IBPAP's view that the law will increase confidence among international investors and companies that outsource business processes to the country because it brings the Philippines to international standards of privacy protection. In September 2012, Republic Act No. 10175, known as the Cybercrime Prevention Act of 2012, was signed into law. It is meant to provide the resources and legal framework to identify, prevent, and impose punishment for Internetbased crimes and safeguard users online information from unauthorized data collectors. Because IT-BPM firms use the Internet and computer technology as the principal channel for communication processes, the industry will benefit from provisions covering system and data protection, device security, and penalties for computer-related offenses. The anti-cybercrime law will aid the industry in sustaining growth and global leadership. This new law validates the strong partnership the industry continues to build with the public sector as well as recognizes the industrys significant contribution to the economy. In addition to this, the Congress of the Philippines also passed an amendment to the Labor Code provisions on night work. As it stands, the law now allows night work, especially for women, subject to the establishment of mandatory facilities and workplace programs. The Department of Labor and Employment (DOLE) considered the changes in the
2006 2007 2008 2009 2010 2011 Total
~73,000 ~63,000 ~73,000 ~51,000 ~102,000 ~113,000 ~538,000

Corporate tax revenue (US$)3 1,100 - 1,400
Total incentives provided on new jobs: US$1,100 million US$1,400 million
Personal tax revenue (US$)4 VAT revenue (US$)5 Resultant total tax revenue (US$)
800 - 1,000
900 - 1,100
400 - 500 1,200 -1,500
1,200 -1,400 3,200 - 3,900
4X return on incentives
1 x amount of direct revenue in IT-BPM industry leads to 1.63x indirect revenue for the economy (ERD Working paper by Asian Development Bank) 2 For every direct job in the IT-BPM industry, 2-3 indirect jobs created 3 Considers tax revenue loss of 5% post tax holiday in the industry assuming all companies in the industry are under PEZA; considers corporate tax revenue of 30% from indirect employment 4 20% on employee salaries across all industries 5 12% VAT rate assumed with -50% of consumption from direct employment contributed by the industry
Everest Group (2012) Sources:Sources: IBPAP BPAP andand Everest Group (2012)
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Chapter 4
Next Steps
Going forward, the Information Technology and Business Process Association of the Philippines (IBPAP), formerly the Business Processing Association of the Philippines (BPAP), as an organization should continue evolving to drive stakeholder support for programs designed to reach industry goals. Stakeholders such as the government and the private sector, including vendors and enablers, should set their priorities from a range of ongoing initiatives.
Figure 14 presents the convergence of stakeholders per objective.
Industry thought leadership

Industry stakeholders have emphasized the importance of thought leadership as part of a strategic, IBPAP-led country branding and marketing initiative. To establish the country as a global thought leader for IT-BPMs and GICs, IBPAP and the government, through the DOST-ICTO, have invested heavily in research products: Quarterly industry surveys and CEO briefings, which tackle timely industry issues Annual International Outsourcing Summit, which brings international focus to the Philippines as a premier IT-BPM hub Next Wave CitiesTM, an annual publication that rates alternate and emerging IT-BPM hubs all over the Philippines based on talent availability, cost, infrastructure and business environment and risk management. Investor Primer, which summarizes the Philippines value proposition for investors (http://www.bpap.org/ publications/research/investorprimer2012) The IT-BPM and GIC Road Map 2016, which sets the Philippines goals and strategies for meeting these objectives IBPAPs partner associations have also invested in talent-related initiatives and annual events to market to potential clients and investors (not exhaustive): ACPI holds Animahenasyon, an annual animation competition with learning sessions and promotions CCAP holds the International Contact Center Conference and Expo (ICCCE) every year, the largest contact center event in the world with over 8,000 participants GDAP holds the Philippine Game Development Festival every year which features competitions, learning events, and promotions HIMOAP organizes the Healthcare Information Management Outsourcing Services Congress (HIMOSC) every year to galvanize the sector as it evolves and prepares for rapid growth PSIA organizes targeted marketing missions and has launched a program to gain global recognition for Philippine software development capability through a focused campaign to develop and market original software products
Widen and deepen human capital by scaling industry public-private partnerships (IPPPs)
Attract and train 1.1 million talent base over 5 years Scale talent development programs Make IT-BPM careers aspirational
Figure 14. Stakeholder objectives
Strengthen Philippine attractiveness as an investment destination through advocacy activities

Favorable legislative and regulatory environment Competitive and predictable fiscal incentive regime Competitive cost structure Ecosystem
Talent
Road Map 2016
Innovation
According to a Corbett and Associates study, outsourcers view innovation rather than cost as a key strategic benefit of outsourcing. Companies are looking for ways to reduce costs; hence, they outsource. But outsourcing is more than just a response to shrinking budgets. Organizations have shifted their focus from merely reducing cost to improving research and development to create better products and services. The Warwick Business School has devised a framework made up of six steps to guide executives in their quest for innovation in outsourcing. The Warwick Business School says outsourcing companies need to consider these key steps: strategize innovation, design measurement instruments, assess vendors innovative capability, design a contract for innovation, build relationships, and measure innovation. To support and enhance the countrys value proposition, the sectors of the IT-BPM and GIC industry are exerting efforts to be consistently on top of their respective industries by being more agile and capable of responding to the rapidly changing needs of their markets. The voice sector has been looking into diversifying its services from customer service management to areas such as technical support, back-office processing support, and IT help desk. The healthcare outsourcing sector maintains its impressive growth by participating in international conferences to keep abreast of trends in the industry. Stalwarts in animation and game development, on the other hand, are pushing for the creation of original content. The software sector has programmed the discovery and development of original software products that can be marketed globally.
Achieve Road Map 2016 goals by leading cross-sectoral efforts
Role of IBPAP
Marketing and Branding
Build PHL IT-BPM brand globally through marketing programs

CRM strengthen market leadership, attain leadership in UK, EU, ANZ markets HIM, F&A, HR, CP IT, Multilingual global market, Engineering Services: double market share
Harness, lead, and harmonize cross-sector involvement and investment in Road Map 2016 programs Lead design and program management of IPPPs Official credible voice of the industry
Sources: IBPAP, Everest Group, and Outsource2Philippines (20102012)
Talent
One of the most important drivers for growth in the global outsourcing industry is talent. The Philippines has risen aggressively to claim a strong position on the global offshore services mapand the IT-BPM and GIC industry realizes that a large part of this success is because of its talent pool. To grow the talent pool, the industry and the government need to actively collaborate by focusing on key priorities (Figure 15). These priorities should include: 1) expanding employability by setting industry standards to create hiring pull-through; and 2) increasing available talent pool through internal marketing to potential employees and their influencers.
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Figure 15. Stakeholder priorities - Talent

Talent
IBPAP/Industry PPP Immediate priorities Other priorities Introduce IT-BPM-focused short-term training and scholarship programs Government Academia/other enablers
Marketing
Because of the limited resources for external marketing, IBPAP has had to prioritize participation in foreign expositions to those that deliver results in terms of business acquisition. At a recent focus group discussion participated in by SMEs, major vendors, captives, and IBPAP representatives, participants raised the need to build a country brand and develop an international marketing strategy to support this, in addition to business acquisition initiatives. A representative from a major U.S. bank with presence in the Philippines said that unlike vendors, captives do not benefit from trade missions. However, a marketing strategy that intensively communicates the countrys IT-BPM value proposition will convince headquarters to outsource more processes to the Philippines, as well as attract other captives to set up local operations. As the inputs from the focus group discussion suggested, IBPAP should lead a multi-stakeholder initiative to build a distinctive IT-BPM brand for the Philippines. IBPAP has been able to develop a clear, consistent channel strategy to communicate propositions by: Aggressively promoting the Philippines proposition in new service lines and geographies, such as the Next Wave Cities, where employment was estimated at 150,000 at the end of 2011 Driving focus and higher ROI in international trade missions and road shows Presenting an integrated face across partner associations and stakeholders In a recent branding workshop, BPAP developed the following key messages for the IT-BPM and GIC industry: Global: IT-BPM companies and GICs in the Philippines are creating high-paying, prestigious jobs serving international markets. Diverse: IT-BPM companies and GICs operate in more than 20 industries including information technology, engineering, finance and accounting, marketing, health care and media. Rewarding: IT-BPM companies and GICs provide many compelling benefits to Filipino jobseekers, apart from fulfilling international careers. These key messages should be strategically cascaded to stakeholders such as the private sector and the government and should be constantly used in all marketing promotions activities. As a short-term goal, IBPAP needs to implement a targeted international branding program for IT-BPM vendors and GICs to diversify its portfolio and target markets. There is clearly a need to align the messaging to make sure that all stakeholders are communicating the same content in all marketing activities.
Scale key talent initiatives IBPAP National assessment tool Training for work scholarship Introduce industry-recognized standards and accreditations Testing for students Quality accreditations for teachers and training providers Create hiring prioritization for accredited talent Undertake internal marketing to raise awareness and dispel myths Enable structural changes (e.g.greater autonomy in curriculum design) to rollout talent interventions
Scale management and specialist training for experienced talent Build talent capacity in high-end/niche skills through training Expedite K to12 initiatives
Direct and introduce training programs for alternate pools (e.g. underprivileged home-makers, differently-abled)
Enhance capacity in tertiary education (open new universities, increase seals in existing ones, introduce new courses for industry) Introduce campaigns to attract overseas Filipino workers to the industry
Scale industry-academia research partnerships
To make sure it achieves its target for 2016, the IT-BPM and GIC industry, led by IBPAP, should continue to create synergies through industry public-private partnerships (IPPPs). The following short-term goals should happen by 2013: Training for another batch of at least 60,000 scholars and trainers under the I-TWSP, with resources allocated for marketing, systems, and capability development. This will yield employment for at least 40,000 individuals. 15 more public high schools to introduce industry training programs during Grades 11 and 12. This will yield 5,500 K to 12 teachers trained and an annual run rate student throughput of more than 50,000. Widen and deepen human capital by scaling industry public-private partnerships (IPPPs) through: Attracting and training 1.1 million talent base over 5 years Scaling talent development programs Making IT-BPM careers aspirational The IT-BPM industry should also continue to intensify nationwide awareness campaign to drive interest in IT-BPM training and education programs for potential employees, students, teachers, and trainers. Other priorities for talent development in the industry, together with other stakeholders such as government and academe, should include, among others: Direct and introduce training programs for alternate pools (e.g., nurses, accountants, engineers, career shifters) Enhance capacity in tertiary education Introduce campaigns to attract overseas Filipino workers (OFWs) to the industry Scale industry-academia research partnerships
Ecosystem
From 2011, IBPAP has been hard at work on immediate priorities such as continuing fact-based Next Wave CitiesTM research and acquiring anchor tenants to catalyze investor setup in emerging segments. For its part, the Philippine government has been providing incentives and policies for IT-BPM and GIC investors such as tax holidays, enabling legislations, and an investor-friendly regulatory environment (Figure 16). Sustained government support and collaboration will help raise investor confidence, and provide industry marketers with a stronger value proposition for selling to new geographical markets and verticals. To support and enhance the various objectives for the industry in talent, marketing, and ecosystem, IBPAP and DOST-ICTO aim to undertake various research projects and activities, among them the development of a road map for IT-BPM sectors with high growth potential, research and assessment of the Next Wave CitiesTM, a skills inventory and analysis report, in addition to ongoing initiatives, such as this road map.
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Figure 16. Stakeholder priorities - Ecosystem

Ecosystem (Infrastructure, Capital, Incentives, and Regulations)
Immediate priorities IBPAP/Industry PPP Other priorities Proactively communicate IT-BPM attractiveness to public/private capital markets Government Academia/other enablers
Chapter 5
The Voice BPM Sector
Since 2010, the Philippines has been the global leader in providing voice services. Maintaining this leadership is a serious mandate for the industry as new service areas and market opportunities continue to open up. The Contact Center Association of the Philippines (CCAP) is the lead association for voice BPM in the Philippines. CCAP reported that the Philippine voice sector posted 21 percent growth in 2011 with 416,000 employees providing US$7.4 billion in services to the world. By end-2012, growth was 21 percent with 502,000 Filipinos employed in the contact center industry and revenues at US$8.6 billion. CCAP also reported that job opportunities in the voice industry are expected to double in the coming years, creating 862,000 jobs (Graph 16) and bringing in US$14.7 billion in revenues by 2016 (Graph 17).
Continue fact-based Next Wave CitiesTM research (e.g. , local talent development) Acquire anchor tenants to catalyze investor setup in emerging segments
Create investor-firm marketplaces and forum Support firms to better prepare for fund-raising Build BPM-ready hard/soft social infrastructure
Develop local real estate and telecom ecosystem to meet needs
Continue tax holidays Align local government with National impetus Create enabling legislation Fine-tune labor laws and pratices to meet industry requirements Create dedicated Department of ICT to provide greater status and autonomy
Enable creation of domestic outsourcing market to catalyze interest in Next Wave Cities Enable interactions between local industry and BPM set-ups Enhance investor education and awareness on the industry Equity Analyst reach-outs Research support to industry/market analysts
TM
MoUs with Stock Exchanges Create industry-directed development funds (e.g., banks, family offices, expatriate Filipinos) Scale industry-academia research partnerships Build IT-BPM hubs through directed investments in talent strength areas
Voice BPM market

Voice BPM markets in the UK and APAC are expected to grow between 17 percent and 19 percent, higher than that of global industry from 2009 to 2016. However, due to its existing large base and opportunity, the US market is expected to remain the biggest market in terms of geographic segments. The US voice BPM market size, as reported by Gartner (2012), is between US$23 billion and US$27 billion, and thus the US will continue to get the biggest share of the Philippine voice industry. However, growth of the Philippine voice BPM sector will also be determined by success outside the US market. UK will show higher global market growth between 2011 and 2016 and will expand its voice BPM market size between US$18 billion and US$22 billion. Meanwhile, Asia Pacific and Australia will have a market size between US$4 billion to US$8 billion.
Micro, small and medium enterprises (MSME) also show great potential. Majority of the companies in the ITBPM sector are Filipino-owned MSMEs. MSMEs in the industry will also benefit from government's support to not only improving access to finance and expand market access, but also in strengthening their productivity and competitiveness as well as their linkage with large companies and value chain networks, as outlined in the Micro, Small, and Medium Enterprise Development Plan for 2011-2016. In addition, there is also a bigger client market of MSMEs that can be tapped and matched with like MSME providers. To level the playing field for these MSMEs, they need to be provided with support to address the prohibitive cost of international marketing and to develop and implement training and marketing strategies. For 2013, IBPAP will make sure that an MSME development perspective is integrated in its sector-specific programs to enable hundreds of largely Filipino-owned MSMEs across the country to compete and grow in global IT-BPM industry. Government and industry support for the Filipino MSMEs in IT-BPM could be invested in the following activities: research and Road Map development to develop vibrant MSME in IT-BPM international marketing of Philippine-original software products outbound/inbound business matching missions MSME development and mentorship program
Graph 16. The Philippines' Voice BPM Growth: Employment 2006-2016 (in thousand full-time employees)
2012 CAGR 21% 567 502 416 CAGR 20% 280 239 183 160 344
CAGR 15%
862 750
652
2006
2007
2008
2009
2010
2011
2012e
2013e
2014e
2015e
2016e
Source: CCAP (2012)
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Graph 17. The Philippines' Voice BPM Growth: Revenues 2006-2016 (US$ billion)
14.7 12.8 CAGR 18% 9.7 8.6 7.1 6.2 5.7 4.1 3.3 2.6
Graph 18. Global voice BPM market size
2006 - 2009, 2016; US$ billion
Growth 10%-15%
50-51
Current voice BPM distribution 2009; US$ billion 100% = 21-22 Others 14% India 24% 10%
11.1
12 -13
15 -16
17-19
21 22
CEE
Canada
28%
24% Philippines
2006
2007
2008
2009
2010
2011
2012e
2013e
2014e
2015e
2016e
2006
2007
2008
2009
2016 (E)
Source: CCAP (2012)
Source: CCAP (2012)
As global voice BPM market size (Graph 18) continues to expand, CCAP aims to sustain the Philippines global leadership in voice business process management services and to increase global market share from 27 percent in 2012 to 29 percent by 2016.
According to the Bangko Sentral ng Pilipinas (BSP) IT-BPO Survey 2010, North America was the largest market of the Philippine voice sector at 89 percent. The Philippines strong cultural affinity with the United States makes it easier for the Filipino talent pool to relate with American customers. For North American clients, Filipino accents are easier to work with and accent neutralization programs require a shorter duration.
Competitive advantage: Filipino call center agents

As the number-one destination in the world for voice services, the Philippines takes pride in the competitive advantages of its Filipino talent pool. A study early in 2012 conducted by GlobalEnglish Corporation revealed that the Philippines is the worlds best country in business English proficiency, ahead of the United States. CCAP also reported that languages supported by the Philippine voice BPM diversified in 2012 (Graph 19). However, American English still occupies a large share of the market, followed by UK English.
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Graph 19. Languages supported by the Philippines voice BPM (2011-2012)

1.7 12.3 3.7 1.3 0.2 14.7 8.2 0.2
The market still provides opportunities for growth in the voice sector in certain areas. Shifting toward better customer experience, the contact center industry holds various forums on managing the customer and acquiring skills across multiple channels and delivery locations. Speech and web-enabled self service solutions are now more tailored to industry-specific needs and multi-channel contact centers are gaining traction with the explosive growth of social networking. Contact center agents are also being trained in new channels of communication, especially in social media. There is also a growing adoption in emerging verticals. Health care, media, and telecom have become verticals of importance from a voice BPM perspective over the past few years. An increasing trend towards governmentinitiated services with requirements for wide network of voice-support systems is also on the horizon for the voice sector. CCAP reported that industries supported by the Philippines voice industry continue to expand (Graph 21). Banking, finance, and insurance are still growing verticals while demand in the health care and gaming sectors has emerged.
82.5
75.2
American English UK English Australian English Asian European 2011
American English UK English Australian English Asian European 2012
Graph 21. Voice BPM FTEs by Industry (2011-2012)
Gaming 2012 Health Care Shipping and Logistics Airline, Travel, Hospitality Banking, Finance, Insurance Services Retail/Consumer products Telecommunications 2011
Source: CCAP (2012)
According to CCAP, a call center's ability to sustain the growth and development of its workforce is equivalent to sustaining business competitiveness and success. To ensure the competence of existing and potential voice sector employees, CCAP, with IBPAP, have partnered with government agencies to standardize training programs. They have also forged partnerships with academic institutions to allow students to intern in partner IT-BPM companies.
Market opportunities
There is a significant untapped opportunity and limited demand-side constraints given the current momentum. To increase current market share, the Philippines has to maintain and grow voice market share to continue its dominant position in the global outsourcing industry. The country also has to expand to mid-market and other untapped verticals, including media and healthcare (Graph 20).
Graph 20. Global market opportunity against Philippine presence (Voice BPM)
While the U.S. will continue to be a large part of the market, growth will also be determined by success outside the U.S.
Philippines voice BPM portfolio Map of global market opportunity against current PHL presence Size of 2016 global market Voice BPM (x, y): (Global growth, PHL share)
0%
5%
10%
15%
20%
25%
30%
35%
40%
Percentage of FTEs by Industry
Source: CCAP (2012)
High (10%+)
U.S.
US$23 - 27 billion (~10%,32%)
Philippines current market share
US$4 -8 billion (~17%, 18%)
Voice market share to continue dominant position Expand to mid and other untapped verticals (e.g. media, health care)
Low (<10%)
UK & Cont. Europe
US$18 -22 billion (~18%,10%)
Low (<10%)
Global market growth (2011-16)
High (10+%)
Untapped opportunity and limited demand side constraints given current momentum
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Chapter 6
The Software Development and IT Outsourcing Sector
International research firm Everest Group reports that the Philippines is already a mature destination for software development and information technology outsourcing (ITO), joining the ranks of India, China, and Poland. Gartner, a leading information technology research and advisory company, also reports that the country has a growing but underdeveloped IT services market, with a good, skilled, and young labor pool that is scalable at a low cost.
According to the Information Economy Report 2012 on The Software Industry and Developing Countries by the United Nations Conference on Trade and Development (UNCTAD), the total global market for IT service offshoring was estimated at between US$70 billion and US$72 billion in 2011. Of this total, software and engineering services accounted for about US$17 billion and IT services for the rest. India still remains the market leader, followed by Canada and new European Union members. China, Mexico, and the Philippines were each responsible for at least 1 percent of the overall market (Graph 22). UNCTAD also reports that the main developing-country exporters of computer and information services among exporters are all Asian countries and include China, India, Singapore, and the Philippines.
To maintain this leadership, the voice sector needs to address issues and implement required development initiatives. Key industry issues include limited standards and certifications and the quality of teachers for its talent supply; limited understanding of geography among UK clients; lack of funds for scale-up and investment in marketing; and minimal support from banking, angel funds and capital markets (Figure 17). To address talent development issues, CCAP has initiated efforts to standardize testing and remedial training for missing skills in accent, fluency, and communication, as well as collaboration for industry-academia-training to introduce standardization and certification. The industry also implemented a targeted marketing approach in APAC, Australia, UK, and small and medium-sized business firms in the US. In September 2012, CCAP held the annual International Contact Center Conference and Expo (ICCCE). ICCCE is the premier learning and networking event for the contact center industry. It combines an industry conference tackling major industry issues and trends, a training and development program for contact center professionals, and an exhibit of the latest products and solutions. The event, which attracted 8,000 participants, is the largest of its kind in the world and reflects the Philippines global leadership in the contact center sector. With the support of the DOSTICTO, CCAP also hosted in Manila in November 2012 the conduct of the Asia Pacific Contact Center Association Leaders (APCCAL) Expo 2012 to strengthen cooperation and collaboration among contact center associations in the region. CCAP has also developed a social ecosystem and target talent pools in Next Wave Cities to encourage larger voice BPM participation as well as to influence local government legislation to encourage supplier expansion.
Figure 17. Key Industry Issues (Voice BPM)
Graph 22. Global market for IT services offshoring, by destination (2011)
Key industry issues and implications on required development initiatives

Area Talent development
Key Initiatives required
Key industry issues
Talent supply Limited standards and certifications Quality of teachers Limited understanding of geography among UK clients Capital bottleneck Lack of funds for scale-up / investments in marketing Minimal support from banking, angel funds and capital markets
Standardized testing and remedial training for missing skills accent, fluency, communication Industry-academia-training provider collaboration to introduce standardization and certification Targeted marketing in APAC (Australia), UK Targeted marketing to SMB firms in the U.S.
Marketing and positioning
Ecosystem development
Target talent pools in next tier cities Develop social ecosystem in Next Wave Cities TM to encourage larger voice BPM participation Influence local government legislations to encourage supplier expansion Talent development to meet growing demand in voice BPM market Broad-based marketing in U.S. and UK to consolidate dominance and grow presence respectively Lobbying with government
Support in ensuring the availability of employable talent Support for targeted marketing efforts in APAC, UK and other identified markets Support in the conduct of research to, among others, further strengthen the industrys value proposition through the gathering and updating of industry data as well as provide guidance in the form of policy frameworks Support the efforts of other stakeholders, whenever possible and appropriate, in the formulation, development and roll-out of developmental activities in four strategic areas, namely: industry development, talent development, marketing and research
Support from IBPAP
Source: UNCTAD, based on information from the Everest Research Institute (2012)
Role of Government

The Philippine Software Industry Association (PSIA) reported that the Philippine software development and ITO industry grew by 37 percent in revenues from US$725 million in 2010 to US$993 million in 2011. The sector also saw an 11 percent increase in manpower to 49,908 full-time employees in 2011 from 44,962 in 2010. Productivity improved 23 percent from a little over US$16,000 in annual revenue per employee to almost US$20,000. The sector is composed of a few large global IT players such as HP, Accenture, and IBM, and over 170 setups in all. A 2010 survey by the Bangko Sentral ng Pilipinas showed that 78 percent of FTEs in IT services industry serve the North American market, followed by the domestic market at 12 percent (Graph 23). Collectively, Japan, Europe, and Asia Pacific account for nine percent of the global market.
Sources: Everest Group and Outsource2Philippines (2011); Contact Center Association of the Philippines
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Graph 23. Philippines IT services market
Philippines has a small, but rapidly growing IT services industry

US$ million
1,500 993
GR CA 9% 2
PSIA is optimistic about the growth of its sector because it sees that the country has a rich talent pool in software development. The association therefore is investing resources to promote the growth and global competitiveness of the Philippine software industry. However, PSIA is calling for support and intervention from experts within the private sector software industry, as well as from the government. Gartners Market Analysis & Statistics Report, published in June 2011, showed that the Philippines needs to further evolve its IT services and that relationship building is a key ingredient for success in the domestic Philippine market. The Gartner study also suggests that the Philippine government should invest in industry development and in incentives to be given to local companies to embrace and increase the use of IT services. The Philippines should also invest in infrastructure to increase its attractiveness. While basic infrastructure is adequate in primary and tier-two cities, infrastructure is generally inadequate in more remote locations across the archipelago. Industry leaders recognize the need to set achievable goals. It has been suggested that the sector needs to increase employment to over 100,000 from the current 50,000 by growing at least 16.6 percent annually. It is also recognized that industry salaries need to be more competitive to increase employment and discourage computer science and IT graduates from working abroad. Industry experts believe the Philippine software industry needs to go back to science to create an innovative product. Diosdado Banatao, a successful Filipino-American Silicon Valley entrepreneur and chairman of the Philippine Development Foundation (PhilDev), recommends that the Philippines learn to anticipate, envision, maintain flexibility, think strategically, and make changes to create a sustainable future. PSIA aims to bolster and sustain the creation and commercial distribution of software products created in the country through the Software Products Incubation Group of the Philippines (SPrInG.PH). By 2016, SPrInG.PH aims to achieve global recognition for at least 10 Filipino software products and generate approximately US$1 million in annual export revenues. The groups founding members, who are veterans of PSIA, see the need to further improve the visibility of software products throughout the association and ultimately the entire local IT industry. SPrInG.PH supports members through the development of business plans and product pitching to foreign venture capital. The group also sets up marketing subsidies for companies with market-ready products and forged tie-ups with software vendors, infrastructure providers, communications providers, and groups such as PhilDev, the People Management Association of the Philippines, and the Brain Gain Network. In 2012, SPrInG.PH conducted numerous meetings and workshops that addressed various needs and interests; best practices sessions; mentoring sessions by seasoned speakers; and joint academic programs with local and foreign institutions. The group selected its first batch of companies this December after a three-day event called LaunchPad. A second batch of candidates will be selected by the end of 2013. PSIA also aims to boost industry capability efforts through organization development programs such as its SoftWare Enhancement and Excellence program (SwEEP), likewise promote continued global competitiveness of IT companies in the Philippines by achieving globally recognized certifications such as Capability Maturity Model Integration, IT Infrastructure Library for IT Service Management, International Organization for Standards (ISO), among others. Given the global maturity and competitiveness of IT services, a targeted approach is likely to yield greater success (Graph 25). The Philippines still has a low market share in several key IT services areas: four percent in the US$17billion global market for infrastructure outsourcing (IO) and remote infrastructure management outsourcing (RIMO) compared with Indias 70 percent; one percent of the US$62-billion application development and maintenance (ADM) segment compared with Indias 60 percent; and less than one percent of the US$40 billion systems integration consulting market compared with Indias 10 percent to 15 percent.
FTEs serving global markets Industry focus split

Domestic APAC 1% Cont. Europe Japan
3%
Sizeable (25%) focus across APAC and domestic markets
568
12%
272 170
5% 78% North America
2004
2006
2009
2011
2013f
Sources: Everest Group and Outsource2Philippines (2011): BSP IT-BPO Survey 2010
The sectors key strengths and drivers include English skills that support voice-associated IT delivery such as technical help-desk, strong social media penetration that enables content creation, and cultural affinity with US and Asian markets. UNCTAD reports that a contributing factor to the success of countries such as India, Israel, Sri Lanka, and the Philippines in software and IT services exports is their English-language skills. PSIA reports that the software development and ITO industry is evolving and there is a healthy pipeline of business opportunities to achieve the target revenue of US$1.5 billion and employment of over 80,000 full-time employees by 2013. The Philippines is gaining market share, with the ITO sector growing at 29 percent annually compared with the 12 percent growth in the global IT industry. Average global growth rate is expected to reach 16 percent by 2016 (Graph 24).
Graph 24. Philippines IT services global market share
Philippines has a limited, though increasing share of the global market

US$ billion
Growth 11-16%
116 -120
Current IT Industry distribution 2009; US$ billion 100% = 55 - 59 Canada 18%
37 -41
44 -48
53-57
55 59
India
45% 18%
6%
CEE
Philippines (1%)
Others
2006
2007
2008
2009
2016 (E)
Philippines gaining market share

The Philippine ITO sector is growing at 29% annually, much faster than the ~12% global IT industry growth.
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Graph 25. Philippines' IT Services Portfolio (by service area)

Map of global market opportunity against current PHL presence Size of 2016 global market ITO (x, y): (Global growth, PHL share)
APAC and Australia, small and medium businesses (SMBs), and cloud and social media markets are key opportunity areas (Figure 18).
Figure 18. Key opportunities for the IT services industry

Area Description
High (10%+)
APAC / AUS market

India: ~60% share ADM ~US$62 billion (~10%,1%) ~US$17 billion (~17%,4%)
IO/RIMO
India: ~70% share

SI/ Consulting
Low (<10%)
APAC IT services market (outsourced and off-shored): US$100-130 billion 1 Japan constitutes ~70% of the total APAC IT services market Main-frame support services is a significant opportunity. Considered hard to penetrate, yet stable and sizeable market Australia IT services market: ~US$14 billion Consulting, utilities and public sector and key segments Offshore APAC IT services market: ~US$7-10 billion Japan constitutes ~50-60% of offshore APAC IT market Australia constitutes the ~40-50% of offshore APAC IT market BFSI and Manufacturing are sectors with the highest IT spend 75% of all APAC firms expected to belong to the SMB space IT services spend from SMB expected to be ~$30 billion market China, Korea and Australia are the largest SMB marketplaces Limited penetration of offshoring amongst SMBs Platformization and standards essential for penetrating the SMB marketplace Large cloud computing spend expected - to be over US$60 billion currently Software-as-a-service, Platform-as-a-service, Infrastructure-as-a-service to be the largest segments of the market Social media applications market sized at ~US$1.5-2 billion Philippines has over 29 million Facebook users
Low (<20%)
~US$40 billion (~11%, <1%)
India: 10-15% share
High (20+%)
SMB market
Cloud / Social media
In terms of geography, the Philippines only covers 1.1 percent of the US IT services market, estimated to be worth US$55 billion, compared with India's 50 percent (Graph 26). In Europe, Middle East, and Africa, Philippine market share is less than one percent, while in Asia Pacific (APAC) and Australia, the share is at 1.4 percent.
Sources: Everest Group and Outsource2Philippines (2011, 2012)
Graph 26. Philippines' IT Services Portfolio (by market)
According to NASSCOM, the outsourced and offshored IT services market in APAC is estimated to be worth US$130 billion. Mainframe support services are in high demand in the region and in Australia, consulting, utilities, and public sector are important segments.
Size of 2016 global market ITO (x, y): (Global growth, PHL share)
Map of global market opportunity against current PHL presence
Analysis by Everest Group also shows that SMBs account for 75 percent of APAC firms, and that IT spend will reach US$30 billion by 2016. Among SMBs, offshoring still has limited penetration. China, Korea, and Australia are the largest SMB marketplaces, according to Everest Group. There are 29 million Facebook users in the Philippines, based on 2012 data by socialbakers (www.socialbakers. com). The domestic market alone presents a huge opportunity for social media applications and was estimated to be worth US$2 billion in 2010.
High (10%+)
India: ~50% share

US
APAC/AUS
India: ~35% share

Low (<10%)
US$20 -25 billion (~16%, 1.4%)
A number of competing geographies have significant joint government and industry initiatives to develop the sector in their countries (Figure 19). Talent supply, business environment, capital bottleneck remain at the heart of industrys efforts to secure a larger market presence in software development and ITO (Figure 20).
US$50 -55 billion (~8%,1.1%)
US$40 -45 billion (~13%,0.6%)
India: ~45% share
Low (<10%)
EMEA
High (10+%)
Targeted marketing is required in APAC, specifically Australia and Japan, as well as the SMB marketplace. The Philippine software development and ITO sector also needs to reinforce its US brand positioning through unique themes such as cultural affinity for helpdesk or applications testing, among others. Until recently, dominant majority of offshore software development and ITO for Japanese market had been delivered from China mainly because of the availability of Japanese language-capable IT professionals in China. However, due to sharply rising labor cost and serious business risks associated with China's anti-Japan sentiment sometimes fueled by territorial dispute the two countries have, Japanese enterprises (both IT service providers and IT users)
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Figure 19. PPPs in competing geographies

NOT EXHAUSTIVE
India IT finishing schools at engineering colleges to cover IT, communication skills, etc. for 120 hours Establishment of 20 Indian Institutes of Information Technology (IIITs) to increase IT engineering base Collaboration with Dept. of Sci. & Tech. (DST) to create fellowships for PhD scholars in CS/IT China China Software Industry Associations process improvement talent project targeted at software HP collaboration with Qingdao Institute of IT, one of 8 key outsourcing talent training institutes in Shangdong
Figure 20: Key Industry Issues (Software and IT Outsourcing)

Area Marketing and positioning Key industry issues

Build U.S. brand-positioning around unique themes (e.g., cultural affinity for helpdesk) Targeted marketing in APAC (Australia, Japan) Targeted marketing to the SMB marketplace University course content interventions through industry-academia collaborations Institute certification standards in school/ university curriculum Creation of additional technical schools Facilitation with the government to introduce clear legislation on IT/data security Facilitate investment to industry through VC meets, banking sector interventions Government lobby to strengthen industry-directed incentives
Talent supply Quality of teachers Limited standards and certifications
Talent development
Malaysia Industry-Academia collaboration initiative Cisco Industrial Training program MDeC Oracle memorandum Undergraduate skills program conducted by MDeC to train students in J2EE, MS.NET, C++, PHP 5, SQL server, UNIX/LINUX Egypt GrowIT Enterprise capacity building program in cooperation with international consortium IT Academia Collaboration (ITAC) to link industry research with market needs Egypt-IBM nanotechnology research center
Business environment Need for legislation in IT/data security Lack of targeted industry-specific incentives Concerns with labor laws
Capital bottleneck Lack of funds for scale-up / investments in marketing Minimal support from banking, angel funds and capital markets
Support from IBPAP

Lobbying with government for industry directed incentives Synergize global marketing programs to showcase IT capabilities in target geographies Support PSIA with fact-based research Legislation on IT/data security Support on the conduct of research and development activities as well as on gathering and updating of industry data Support for enhanced web/online presence and marketing collaterals Support in exhibition and business-matching events in international software and IT trade shows Support on talent development programs for the individual IT professionals and companies, especially MSMEs
Mauritius ICT Academy to be set up as public-private partnership to offer tailored courses in ICT Fund a programme to train 2,000 HSC and SC people in ICT sector Training includes mandatory traineeship that provides hands-on education
Role of Government
Sources: Everest Group and Outsource2Philippines (2011); Philippine Software Industry Association Source: Everest analysis (2010)
are now looking for alternative offshore destinations more seriously than ever. In addition, rapidly progressing Japanese enterprises' globalization especially focusing ASEAN is giving a positive push to create new opportunities for English-proficient Filipino IT professionals and Philippine-based ITO/Software services providers. PSIA's message to the Japanese market has been consistent in the past few years. The Philippines is the global gateway for Japanese firms software and ITO services. And such message and proposition the Philippines can offer have gradually gained recognition in Japan. Course content intervention, certification standards in university curricula, and development of technical schools are among the initiatives necessary to boost talent development. To help ensure ecosystem development, more industry investment through venture capitalist (VC) meets and banking sector interventions is needed, as well as lobbying for industry-directed incentives. IBPAP and PSIA must also spearhead more original research and global marketing programs that feature software and ITO services capabilities in target geographies.
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Chapter 7
The Animation and Game Development Sector
Animation skills, creative imagination, and passion for gaming are the cornerstones of the animation and game development industry. With a talent pool whose skills are at par with the worlds greatest, animation and game development are two of the most promising sectors in the IT-BPM industry.
In fact, Filipino animators are making waves in top studios such as Pixar, Disney, and Warner Brothers. They are also behind some of the most loved animated films and cartoons released worldwide. Also, game developers, IT professionals, and graphic artists in the Philippines provide support for game management for top games like Farmville and casual games for social networking sites such as Facebook. International research firm MarketsandMarkets reported that the global animation and gaming market is expected to grow from US$122.20 billion in 2010 to US$242.93 billion by 2016. In 2011, the Animation Council of the Philippines Inc. (ACPI) reported that the Philippines earned US$128 million revenues from animation and the Game Developers Association of the Philippines (GDAP) reported that game development earned US$8 million. With over 30 years of experience in providing animation and game development services, the Philippines animation and gaming industry has been growing steadily in terms of size and capability (Graph 27). More than 50 companies have set up operations and employ 10,000 full-time employees serving clients from North America, Canada, Europe, and Japan. Key clients include Disney, Toei, and Marvel, among others. Key growth drivers in the animation and game development industry include established industry capability in global support, renowned international clients, impressive portfolio of local animators, high-quality skills and output, and creative talent pool familiar with Western humor and nuances.
Graph 27. Philippines' Animation and Game Development Market (2011)

US$ million
CAGR: ~14%
136 125 110
FTEs serving global markets Industry focus split Total = 10,000+ FTEs Domestic North America
17%
APAC
55
12%
52%
Cont. Europe
9% 11% UK
2004
2006
2009
2011
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The animation and game development industries have a credible share of the offshore market (Figure 21). India still dominates the industry with 40 percent of the estimated US$1.5 billion global animation and game development market. With more than 300 studios, Korea comes in second with 15 percent global market share. Closely behind is the Philippines with 10 percent global market share. In 2011, the Philippine animation and game development collectively generated US$136 million in revenues.
Graph 28. Offshore and overall global animation and gaming market (2011)
US$ billion 80 -100 APAC
<10%
140-160
Figure 21. Offshore Animation and Game Development Market (2011)

~US$1-1.5 billion
Philippines should target 4x growth (~US$500 million) in order to support overall industry growth to US$25 billion
~60 Europe
30-40% 50-60%
~25%
Rest of the world (US$150 - 300 million)
Includes Singapore (regional hub for EA), Taiwan, Thailand, Eastern Europe and Bangladesh In addition, has an ~US$1 billion industry (200,000+ FTEs) catering to the domestic entertainment market 5,000+ animation studios, 30+ animation industrial bases 300+ studios Additionally, has the third largest domestic animation industry after the U.S. and Japan Over 150 institutions imparting animation education Outsourcing industry growing at 20-25% p.a. 18,000+ FTEs Additional ~US$200 million of work directed at the large domestic entertainment sector Key players/captives (100+ in number)
U.S. 4 1-1.5

~2% ~10%
China (~US$30 million) Philippines (~US$136 million) Korea (~US$200 million)
2009
2016 (exp.)
Global animation and game-dev. off -shored Growth(exp.) 15-20%
Global animation market (2009)
Global gaming market (2009)
U.S. is the largest market APAC (particularly China) is the fastest-growing geography Offshore percentage of development expected to steadily increase
~15%
10%
10 -15%
~40%
India (~US$500 million)
Milestone, Electronic Arts, Arena, DQ Entertainment, Crest Studios, Toonz, Prime Focus, Tata Elxsi, Indiagames, Dhruva, FXLabs
ACPI reported that the sector currently employs an estimated 9,000 Filipinos who provide high-value creative services such as flash animation and web design; graphic and art design; mobile application; 3D gaming both for consoles and PC platforms; interactive games; e-learning modules that require animation and animation training; and full 2D and 3D animation that includes pre- and post-production services like in-betweening, clean-up, digital background through scanning and pre-composting, color styling, special effects creation, and digital ink and paint application. According to GDAP, the Philippines provides a rich stream of talented workforce who are equipped with the skills set to perform character design, game programming, application programming for use in games (such as the creation of chat application for online games), user interface design, motion capture services, game art and animation, voice dubbing and sound production, game porting (translation of existing games into other language formats or into other platforms), game testing, and gamer community support. Economies of scale are currently favoring the smaller game studios because of smaller burn rates and especially with the trend of using newer and more cost-efficient game engines. Prospects are bright for the game development industry as international companies and indie developers are now more keen on crowdsourcing to get their games ideas on the production line. There is a growing offshore opportunity across the value chain and market areas in the animation and game development industry (Figure 22). Key focus areas include content/IP development, pre-production, production, post-production, and distribution. In addition, several opportunity areas have emerged such as content creation for the US$12-billion e-Learning market, maintenance of game engines, 3D production support, and game porting to newer platforms (mobile, online) from PC and console, among many others.
The offshore segment constitutes a small, yet growing percent of the large animation and gaming market (Graph 28). While U.S. remains the largest market, APAC, particularly China, is becoming the fastest-growing geography. In order to support overall Philippine IT-BPM industry growth by 2016, the local animation and game development sector should aim to earn US$500 million in annual revenues by then, or grow about four times its size in 2011.
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Figure 22. Animation and game development value chain

Current off-shoring focus Content/IP development
Figure 23. PPP initiatives in competing geographies

China
Pre-production

Production
Post-production

Distribution
30+ animation high-tech bases 400+ schools teaching certified animation courses 460K students studying in animation programs
Beijing, Shanghai, Changsha, Guangzhou and
Ideation / concept creation Feasibility testing
Preparation of script Character design Storyboard, layout development Game engine support
Development of specifications Frame creation Programming Character modeling, texturing, etc.
Sound recording Color editing Testing of animation/game produced
Promotion, distribution, and release Cinema and TV screening
India
Bangladesh
Huangzhou have high-tech zones specifically to nurture animation
Co-production treaties signed with France and Italy. Efforts to sign similar treaties with other geographies Special Economic Zone being set up outside Thiruvananthapuram for the animation industry Game Developer Summits organized by NASSCOM
World Bank-funded program for the animation industry
Huangzhou - companies paid 1000 Yuan for each minute of their product that makes it to screens Tax support for the animation industry:
Part refund of VAT 2 year full EIT-tax exemption and 3 year half tax
exemption, apart from shorter amortization/ depreciation cycles

Reduced business tax rate of 3%
Constitutes 40 -45% of total animation and game development cost structure
Media and entertainment is the largest source segment. Corporate e-Learning and web design are other key markets serviced offshore.
Philippines
Thailand
Emerging opportunity areas

Content creation for the US$12 billion e-Learning market Content re-purposing for localization Regional/local content creation Maintenance of game engines 3D production support Game porting to newer platforms (mobile, online) from PC, console Distribution deals for select markets Technical/customer support
Setup of Thai Animation Multimedia (TAM) council by Government Grants provided by SIPA (Software Industry Promotion Agency) to new media projects
Support from DOST-ICTO, DTI/CITEM, BOI, BETP, and IBPAP Animation-specific incentives and courses introduced by key local governments (e.g. Naga City)
Korea

Singapore
Government Media Development Authority supports development of the industry through venture funds; has seeded over US$200 million in start-ups since 2003.
150+ university and high school animation departments Tax status changed from services to manufacturing (causing a 20% tax break) Korea Creative Content Agency (KOCCA) established to promote creative industries overseas with over US$10 million funds for industry promotion Government funds animation ventures on a partnership basis 4 international scale animation festivals conducted every year under government sponsorship
Co-production / Co-publishing deals

Sources: Everest Group and Outsource2Philippines (2010) Sources: Everest Group and Outsource2Philippines (2011)
The animation sector currently faces a talent shortage as more and more Filipino artists opt to work abroad. But despite the growing number of artists leaving the country, ACPI remains committed to strengthening the animation sector. Public-private partnerships have allowed the animation and game development industry to market to potential clients and talent. GDAP has designed three courses for technical and vocational education to open doors for a flourishing career in the game development industry for young professionals. ACPI also partnered with educational institutions to implement an industry-based curriculum on animation, which the association helped develop. PPP initiatives are being pursued in several locations to drive the growth of the animation and gaming sector (Figure 23).
ACPI and GDAP also organized their respective industrys annual flagship projects for 2012, with the support of government and other partner institutions. In November 2012, ACPI presented Animahenasyon 2012: 6th Philippine Animation Festival." Animahenasyon, which started in 2007, features the animated works of professional and amateur Filipino animators. The event also serves as a venue to conduct workshops, exhibits, conferences, and screenings of music videos, title sequences, public information, demo reels, and TV series. GDAP, on the other hand, featured the 3rd Philippine Game Development Festival (PGDF) or GameFest '12 in December 2012. Themed The Power to Create, the Power to Rule," PGDF provided a venue for individual game developers and companies to connect, showcase and recognize talent and opportunities in the local gaming industry. The festival featured the latest global trends in game development as well as successes by Filipino talents through a combination of lectures, conferences, and knowledge-sharing by local and international speakers. Scalability challenges, sales bottleneck, and talent supply are key issues in the animation and game development sectors (Figure 24). In terms of marketing and branding, recommendations include the targeted branding of Philippines in select animation and game development events and initiatives with key global investors that will serve as anchor tenants. Industry-specific finishing schools, collaborative development of course content, and certifications will help enhance the talent pool. Meanwhile, industry-directed venture capital fund for the industry, targeted industry incentives for firms, and international events to promote animation and gaming are among the crucial initiatives to support ecosystem development. IBPAP can further sustain the gains made by the sector through sector-specific research, organizational support and momentum for driving development initiatives, and specialized talent programs.
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Chapter 8
Area Marketing and positioning Key Initiatives required

Figure 24. Key Industry Issues (Animation and Game Development)
Targeted initiatives at key global investors to act as anchor tenants to setup Targeted branding of Philippines in select animation and game development events Creation of industry-specific finishing schools to enhance talent pool Introduce industry-certifications to lend credence to talent Development of specific course content in collaboration with industry Creation of an industry-directed venture capital ecosystem/fund for the industry Targeted industry incentives for firms Dedicated government agency to push animation/creative industry legislations Organization of international conferences/ events to promote animation and gaming Government lobbying for incentives Organizational support and momentum for driving development initiatives Specialized talent programs Global marketing at select geographies Support through sector-specific research
The Healthcare Information Management Outsourcing Sector

The prospects for the healthcare information management (HIM) industry in the Philippines remain bright and industry experts are optimistic about its growth. In 2011, the Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP) saw a 172 percent growth in the HIM industry.
Key industry issues
Talent development
Scalability challenges Insufficient scale amongst firms for large projects Insufficient capital to invest in technology and to scale -up talent pool
HIM: Fastest-growing IT-BPM sector

With compound annual growth rate of 40 percent, the industrys total revenue increased to US$277 million in 2011 from US$102 million in 2010. The full-time workforce also increased from 14,000 in 2010 to 25,000 in 2011. Part of this growth reflects a change in the coverage of the data reported by HIMOAP, which in turn was influenced by the sectors evolution from medical transcription to HIM. The Bangko Sentral ng Pilipinas also reported that in 2010, the largest destination market for transcription was still the US at 85 percent (Graph 29). Other markets include Europe and the domestic market.
Talent supply Lack of specialized curriculum for the industry Training localized within firms
Support from IBPAP
Sales bottleneck Currently focused only on the U.S. Minimal sales teams with largely word-of-mouth advertising
Role of Government
Support in marketing original Filipino animation and game development content as well as in increasing the industrys visibility through traditional and new media avenues Support in scaling up talent pool through various talent development programs Support in participation to domestic and international exhibition and business-matching events and attendance to industry festivals, creative markets and trade shows in targeted/identified markets Support on the conduct of research, formulation of policy and other activities including the gathering and updating of industry data to strengthen the industry's value proposition
Graph 29. Philippines healthcare outsourcing market size
2005 - 2011; US$ million

FTEs serving global markets Industry focus split, 2010
CAGR: ~40%
277
Cont. Europe (1%)
APAC Domestic 4% 6%
4%
102 94
UK
48
52%
Sources: Everest Group and Outsource2Philippines (2011); Animation Council of the Philippines, Inc.; Game Developers Association of the Philippines
25
11%
85%
North America
2005
2006
2009
2010
2011
Sources: Everest Group, Outsource2Philippines, and Bangko Sentral ng Pilipinas (2010)
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International market research firm MarketsandMarkets reports that the global healthcare BPM market grows at a compounded annual rate of 21.4 percent. In the US, a healthcare reform law enacted by the Obama administration mandates all citizens to have health insurance coverage by 2014. This law will expand the market of health insurance, which currently covers 256 million Americans. According to HIMOAP, there is tremendous opportunity for the country to seize leadership in the global healthcare sector. By end-2012, HIMOAP expects revenues to increase to US$433 million and employment to about 43,000. The Philippine HIM industry is projecting a 35-percent average workforce growth rate by 2016. By then, it is expected to become a US$1-billion industry employing around 100,000 Filipinos. There is strong competition in the growing healthcare BPM sector (Figure 25). Although the Philippines is only second to India in providing healthcare services, it has the potential to become the destination of choice for healthcare BPM.
Graph 30. Global healthcare provider services market (2010)
Global healthcare provider services market US$ billion 13-17 13-17 Transcription Others
<10% 20%-25%
HIM
40%
~3-4
25%-30%
DOST-ICTO reported that the abundant talent supply of nurses and the care factor as the tipping point add to the countrys competitive advantage in HIM services. At least 100 million people worldwide still live below the poverty line and cannot afford to spend on personal health care. With healthcare cost increasing twice as fast as economic growth in many parts of the world, there is a global clamor to transform healthcare systems.
RCM
~1.5
Global healthcare provider services off-shored
U.S. healthcare provider outsourcing market (2009) ~10%
Figure 25. Healthcare BPM market in Philippines, India, and rest of the world (2010)
Philippines is second only to India in provision of offshore healthcare services
~US$1.5 billion
Growth(exp.)
10-15%
~25%
Rest of the world (~US$400 million)
China key services supported:

Healthcare customer care Network support
Central and Eastern Europe key services supported:

Healthcare customer service and BPM outbound Support for oral and surgical (e.g., ophthalmology) areas
~8%
Philippines (~US$94 million)
HIM outsourcing generally involves organization, maintenance, documentation, and analytics of health information in order to facilitate real-time healthcare delivery and critical health-related decision making for multiple purposes across diverse organizations, settings, and disciplines. Medical institutions are saving on costs and showing better efficiency in their services after outsourcing these requirements. Several trends point to the continued adoption of outsourcing in healthcare provider segment (Figure 26).
100-150 firms with an average size of US$5 -10 million. Key areas include: Medical Transcription:
Estimated at ~US$650 million, employing ~52,000 FTEs
~67%
India (~US$1 billion)
Revenue Cycle Management:

Estimated at ~US$350 million (including coding)
Figure 26. Key drivers in healthcare outsourcing

Key drivers
Claims processing: (emerging activity area)

Major payer process outsourced Sizeable availability of Health Insurance Portability and Accountability Act-trained talent pool
Likely outcome
Off-shore healthcare market
More than 20% of U.S. hospitals have negative operating margin Employee costs rising sharply (~6% annually) Increasing number of hospitals are realizing that IT can help deliver quality outcomes (an increase of ~1.5X in 2009 - 2010) and strategic advantage Higher acquisition activity observed from 1998-2001 is looking to stabilize in the recent years
Cost pressures to impact operating models (and exploration of efficient third party models) to drive higher quality of patient care Focus by large hospitals, who have grown through consolidation, to integrate and improve operations There is a need to improve information technology to attract and retain physicians (and to a lesser extent patients)
Globally, offshoring is a small but rapidly growing segment of the health services market (Graph 30). The increase in healthcare spending is driving countries to create health reforms that will not only ensure additional coverage for citizens but also introduce technology solutions such as electronic health records. These trends are now offering a wide range of opportunities as well as challenges for HIM outsourcing firms. HIMOAP reported that trends in healthcare outsourcing affect three major players in key and emerging markets. These are patients and healthcare organizations, third partyoffshore outsourcing companies, and insurance, legal and financial entities.
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From originally offering careers in medical transcription, the HIM industry is now providing employment in an array of healthcare services, including clinical data management, disease management, revenue cycle management, pharmacy benefits management, electronic medical records, medical claims recovery, patient education, insurance processing, and quality assurance. A range of service areas are likely to drive growth of outsourcing and offshoring in health care, including eligibility services, revenue cycle management, denial management, and healthcare collections (Figure 27). Growth in new segments are seen to be driven by conversion to International Classification of Diseases-10 or ICD-10 and the American Recovery and Reinvestment Act (ARRA) of 2009 electronic health record mandates across geographies. ICD is a medical coding system followed by most countries for healthcare record keeping. In the US, the implementation of ICD-10 in October 2014 is expected to raise the number of medical codes that need processing. Meanwhile, ARRA will boost the number of Americans under healthcare policies and create greater need for a more comprehensive data management.
The HIMOAP and DOST-ICTO partnership has also made possible numerous programs and joint projects, enabling the Philippine HIM industry to support talent development and build investor confidence. Two other notable and successful projects include HIMOAPs participation at the 2012 American Health Information Management Association (AHIMA) Convention and Exhibit held at Chicago, Illinois, and the Medical Coding and Billing Master Trainers Training Program implemented in 2013. HIMOAPs participation in the 2012 AHIMA Convention helped raise awareness of the Philippines HIM strengths and capabilities, build country branding and establish a thought leadership position for Philippine industry players. It also generated business opportunities and served as a venue to promote the International Outsourcing Summit 2012. Figure 28 shows other initiatives required to promote the Philippine HIM industry.
Figure 28. Key Industry Issues (Healthcare Outsourcing) Figure 27. Healthcare outsourcing service areas
Some evidence Established practice Expected outsourcing X% market growth: 2010 -15
Area Marketing and positioning

Healthcare provider value chain -- areas being outsourced Functions Eligibility services Revenue cycle management Denial management Healthcare collections
Targeted marketing in UK and APAC Presence in AHIMA Convention and Exhibit and other significant international trade missions Standardized testing and training to increase the number of certified professional coders (CPCs) in the Philippines Competent trainers to educate coders and billers, thus creating a multiplier effect and increasing the number of qualified HIM professionals
Key industry issues
Talent development
Patient registration Authorization check
Payments tracking Denial patterns/ trends assessment
Collections
Talent Supply
Cash posting Patient follow-up
Processes
Charge capture & Coding Medical billing Claims generations
Denial appeals
Growth in new segments expected to be driven by ICD -10 conversion, ARRA 2009 EHR mandates across geographies
Limited standards and certifications Job skills mismatch Limited understanding of geography amongst UK clients Ecosystem development

Target talent pools in next-tier cities Facilitate with the government to introduce clear legislation on healthcare system and IP/data security
Healthcare system and reforms in target geographies

Improvement of IT systems to retain and attract physicians (as well as patients)
Accounts receivable management Clinical Transformation
Support from IBPAP
14-16%
Capital bottleneck
Lobbying with government for industry-directed incentives Support HIMOAP through sector-specific research Broad-based marketing in UK and APAC markets
Lack of funds for scale-up/ investments in marketing Currently focused only in the US Role of Government
Horizontal Functions
Health Information Management

Medical transcription
16-18%
Release of information
9-11%
HIMOAP cites the countrys unparalleled workforce as the main reason why the Philippines is well-suited to take global leadership in HIM outsourcing. No other country in the world has the sheer volume of healthcare trained professionals than the Philippines; these include nurses, physical therapists, medical technologists, and doctors. To tap this rich resource for the HIM sector, the association launched its medical coding and billing project to increase the number of Certified Professional Coders (CPCs) in the country. These CPCs will be tapped to educate other aspiring coders and billers to exponentially increase the available talent pool for the HIM sector. HIMOAP also strengthened efforts to promote the Philippine HIM industry. In November 2012, HIMOAP and DOST-ICTO organized the biggest healthcare outsourcing event of the year. Themed Taking Healthcare Outsourcing Services to New Heights," the Healthcare Information Management Outsourcing Services Congress (HIMOSC) provided perspectives on the industrys growth, opportunities, diversification, and ways of achieving global competitiveness and leadership; career opportunities and training alignment needs of the industry; and technological developments, innovation, and best practices in HIM.
Support in ensuring a stable and conducive business environment through the provision of appropriate policy framework and competitive investment scheme (national and local) Support in strengthening efforts to promote Philippine HIM industry in national conventions/events and international trade and investment missions Support in HIM sector-specific research and development activities and in updating industry data on companies and activities, employment and revenues. Support in the conduct of talent development programs (i.e. curriculum development, training the trainers, other industry specific certifications, among others) to increase the employability of graduating students in the allied health courses for HIM-related jobs
Sources: Everest Group and Outsource2Philippines (2011); Healthcare Information Management Outsourcing Association of the Philippines
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Chapter 9
The Role of the Government: Transforming Public-Private Partnership
Despite the persistent economic downturn experienced worldwide, the Philippine information technology and business process management (IT-BPM) and global in-house center (GIC) industry remains strong and still continues to grow in double digits. Government and various non-government industry organizations and associations have come to recognize the significant contribution of the IT-BPM and GIC industry to the economy, more transparent of which are the revenues generated and other value and jobs created, directly and indirectly, by this fastgrowing sector.
The government under the administration of President Benigno S. Aquino III believes in good governance characterized by transparency, accountability, and efficiency with an overall objective of revitalizing the country and maximizing its full potential. Pursuing partnerships therefore with the private sector is a necessary step in achieving further growth and development for the industry. The role of government therefore has to be clear in driving initiatives in the IT-BPM and GIC industry and is achieved in the ways described below.
Accelerating Global Leadership

The countrys IT-BPM and GIC industrys strategies and directions to drive to global leadership were updated in 2010 in the Philippine IT-BPM Road Map 2016 (following industrys Road Map 2010 published in 2007 by the Business Processing Association of the Philippines, now known as the Information Technology and Business Process Association of the Philippines (IBPAP). Road Map 2016 was developed by IBPAP and its partner associations with the support of the government through the former Commission on Information and Communications Technology (CICT), now reorganized as the Information and Communications Technology Office (ICTO) under the Department of Science and Technology (DOST). In this road map, the role of the government was further clarified as providing an enabling environment where the industry could continue to be competitive. This role was defined to be critical in supporting the industry in the following ways: Increasing the quality and quantity of talent pool by catalyzing the education and training sector Undertaking internal marketing to help boost awareness of IT-BPM as a career choice Aggressively promoting the Philippine brand in the international scene Providing an environment that enables industry growth (legislation and policy changes) Allocating resources for critical talent and marketing initiatives
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Setting Directions
The government, under the Aquino Administration, has therefore set in place the directions on how it must respond to the needs of the industry. The directions, aimed to provide a framework on government efforts, are pronounced in the following national policy instruments. Philippine Development Plan (PDP) 20112016 (http://devplan.neda.gov.ph/index.php). The impressive performance of the IT-BPM and GIC industry has earned the governments attention so much so that it is considered one of the priority sectors with highest growth potentials. In the PDP 20112016, a strategic framework for industry and services was developed, the vision of which provides for a globally competitive and innovative industry and services sector that contributes significantly to inclusive growth and employment generation. Three goals were identified in the PDP, namely: improved business environment, increased productivity and efficiency, and enhanced consumer welfare. A 10-point agenda was developed to further define strategies (Figure 29).
The PDP also noted the need for government to formulate a comprehensive national strategy that identifies opportunities as well as coordinates and promotes the growth of both the forward and backward linkages in highgrowth sectors. Such a strategy must provide for the review of existing investment schemes, particularly its adequacy and consistency with local regulations as these apply to the IT-BPM and GIC industry, among others. Government must also identify implementable disaster-mitigating measures, sustain socio-political stability, and create necessary conditions that will ensure a safe and peaceful business environment. To help raise and support the competitiveness of the IT-BPM and GIC industry, a set of strategies specific to this industry has been formulated: Enhance investment promotion and industry development through synergized initiatives and programs of both the government and the private sector Improve productivity and efficiency by harmonizing the educational system to the needs of the industry advocating talent development through training and opportunity building improving awareness of the jobs and careers available and offered by the industry focusing on expanding the talent pool Sustain government commitment through fiscal and non-fiscal incentives as well as facilitate industry-focused road shows abroad Improve the long-term risk perception and overall business environment, i.e., passage of the Data Privacy and Anti-Cybercrime Bill Expand the development of Next Wave Cities in partnership with the private sector Philippine Digital Strategy (PDS) 20112016. Aligned with PDP, the Philippine Digital Strategy (http:// www.icto.dost.gov.ph/index.php/philippine-digital-strategy) is a five-year strategy for national information and communications technology (ICT) development which views ICT as an enabler and a critical tool in all aspects of the government, education, economy, employment, industries, and small businesses. The strategy revolves around the role of the private sector as partners with the government in developing the country using all elements of ICT. Developed through an inclusive process that involved a broad spectrum of stakeholders including government, private sector, and civil society, and incorporating best practices in the use of ICT by other countries, the strategy is envisioned to create a digitally empowered, innovative, globally competitive, and prosperous society where everyone has reliable, affordable and secure information access in the Philippines; a government that practices accountability and excellence to provide responsive online citizen-centered services; and a thriving knowledge economy through public-private partnership. To move the country forward in achieving such a vision, four strategic thrusts were developed as follows: Transparent Government and Efficient Services recognizes how ICT can help transform the delivery of services by government to its citizens and businesses, particularly in ensuring that these are more responsive, available, accessible, and efficient. Internet Opportunities for All People incorporates the development of the required infrastructure to address the connectivity deficit in the Philippines and to increase broadband coverage, with the end in view of improving digital inclusion and opportunities for all and increasing the demand for broadband, affordability issues and services, content, and applications available through this infrastructure. Investing in People: Digital Literacy for All underscores the fact that for our country to reap the rewards of a full-fledged digital economy, human capital development must keep pace with advances in technology and innovation. There is therefore a need to continue in investing in our people and ensuring that they are equipped with the skills to make them productive and engaged citizens. ICT Industry and Business Innovation for National Development addresses the needs of the private sector, including among others an enabling environment, skilled workforce, and coherent national brand and positioning of the country as a leading destination for ICT, IT-BPM, and GICs. This thrust also focuses on improving the environment for innovation and investment in ICT-related research and development, promoting the micro, small, and medium-sized businesses; all of these in view of generating economic growth and job creation.
Figure 29. Strategic Framework for Industry and Services
Globally Competitive, and Innovative Industry & Services Sector contributing to inclusive growth and employment generation
Improved Business Environment
Increased Productivity and Efficiency
Enhanced Consumer Welfare
Improve Governance
Intensify the Culture of Competitiveness

Develop Human Capital
Ensure consumer products and services satisfaction

Identify consumer education/advocacy
Promote a consistent, predictable and responsive policy environment including Structural Reform, Anti-Smuggling, anticorruption, ART and integrity initiatives
Support Market-Driven Education Training
Promote mutually-agreed upon work arrangements
Intensify consumers protection and trade regulation
Strengthen Tripatiate Councils
Develop standards for products and services
Streamline bureaucratic procedures and foster transparency
Focus Interventions in Key Industry Areas

Implement investment promotion, industry development & incentives in job generating areas Implement export development activities in competitive industries with high-growth potential
Improve supply chains of basic and prime commodities
Promote e-commerce and ICT-enabled automation
Encourage partnerships with the private sector
Enhance Firm-level support to MSMEs

Provide Business Development Services
Strengthen Economic Zones

Provide access to Financing
Strengthen National Brand/Identity Awareness
Develop livelihood programs into sustainable micro-enterprises
Promote entrepreneurship among overseas Filipinos

Strengthen Science, Technology and Innovation for local competitiveness
Expand Industry Cluster Development Increase Market Areas
Source: Philippine Development Plan 20112016
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All these thrusts are interconnected and work together to achieve the vision of the PDS. An improved and available broadband infrastructure will support and facilitate the use of ICT in education and training; help more businesses use online transactions and allow government to deliver more efficient and accessible services to its citizens. Road Map 20112016. To achieve the goals of Road Map 2016, a targeted and more determined effort through public-private partnership participation, collaboration, and initiatives in three key aspects is required. Specifically, the industry seeks assistance from the government on the following: Talent development Enable structural changes to roll out talent interventions (for example, greater autonomy in curriculum design); expedite K to 12 initiatives and enhance capacity in tertiary education (introduction of new courses specific for the industry) Marketing and branding Allocation of resources for international marketing tools and events Ecosystem Continuation of tax holidays; aligning of local government with national impetus; creation of enabling legislations (that is, labor laws that meet industry requirements, legislation of data privacy and anti-cybercrime bill); putting up of BPM-ready hard and soft social infrastructure and providing funding from banks and development institutions for IT-BPM Industry Quality Road Map. The growth of the IT-BPM industry needs to be sustained, and competitiveness likewise must be ensured. To this end, the industry, through IBPAP, and government, through DOST-ICTO, developed a quality road map that aimed to describe a desired end-state for the countrys IT-BPM and GIC industry in the area of process excellence capability as well as milestones, timelines, and a plan for attaining the proposed objectives. Published in 2011, the Road Map covered the following: overview of the Philippine IT-BPM industry; quality and quality initiatives in the global IT-BPM industry; quality in the Philippine IT-BPM industry (current state study); and recommendations, among others. The study established that in the Philippines, operational excellence is leveraged by the following drivers: talent management, process management, and effective stakeholder collaboration can drive operational excellence at both company and industry levels.
Figure 30. Government agencies that can provide support to address key issues of industry
DTI (PEZA, BOI, etc.) DOST-ICTO NEDA LGUs Legislative (Senate, Congress)
Possible reduc tion on scal incentives High cost of doing business Need a more stable and predictable policy and business environment High concentration of jobs in NCR PPP not fully exploited
Relevance of curriculum to industry standards Inadequate resources on learning environment Shortage of mid- level managers and supervisory executives High turnover rates and low hiring rates
CHED DepEd DOLE DOSTICTO TESDA
BSP, DOF, NEDA, etc. DOE DOST-ICTO DTI-PEZA LGUs OP
Appreciating Philippine peso Rising wage rates High power costs Numerous nonworking holidays Charging local fees Increasing SSS contributions Vulnerability to natural disasters
KEY ISSUES
Limited awareness on Philippine capabilities Diused nature of visibility on overall proposition outside the US Increasing threats from emerging locations Less positive perception on industry
DFA and PH embassies and consulates DOST-ICTO DOT DTI (BOI, FTSC, BETP, etc.)
Develop Key and Strategic Initiatives

The formulation of targeted programs and initiatives are anchored on the broad strategies and directions established in the previous section. The process of creating policies, plans, and directions have and continue to be inclusive, in that all stakeholders are encouraged to contribute their individual expertise and resources as may be required. This is also the same process that the industry and government aim to use in the area of developing key and strategic initiatives. IBPAP acknowledges that the support the industry is receiving from the national government, under the leadership of President Benigno S. Aquino III, has been vital in scaling its talent development programs as well as in strengthening the ecosystem and promoting the country brand. Key issues of the industry are further clarified and summarized in the areas of business environment and policy framework, talent, cost and risk management, and branding and marketing (Figure 30). Specific government agencies have also been identified to extend the support necessary in addressing these issues.
BSP CHED DFA DOLE DOST-ICTO
Bangko Sentral ng Pilipinas Commission on Higher Education Department of Foreign Affairs Department of Labor and Employment Department of Science and Technology-Information and Communications Technology Office
DOT DTI LGUs NEDA OP
Department of Tourism Department of Trade and Industry Local Government Units National Economic and Development Authority Office of the President
Sources: Government and Industry Data
The dynamic collaboration between government and industry was therefore forged into what is called an "Industry Public-Private Partnership (IPPP)." This cemented the continued commitment and support of government to the industry. This IPPP has led to the implementation of programs in the following areas: Talent in an effort to significantly increase the size and improve the employability of the talent pool, the following are being undertaken: Implementation of the K to 12 Basic Education Program 21-unit Service Management Program (SMP) a joint program with CHED Trainers Methodology Plus (TM Plus) an IBPAP- and TESDA-administered program which provides the means for trainers to develop competencies required to deliver training based on IT-BPM standards Train the Trainers (T3)
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Marketing and Branding This aims to strengthen the Philippine brand and create greater awareness on the IT-BPM and GIC industry locally and internationally. Awareness building on the career opportunities in this industry will be pursued, alongside the campaign to generate more investments from targeted markets abroad, among these include the US, Asia-Pacific, and Europe. Some of the initiatives include: Conduct of roadshows in the Next Wave Cities Participation to international trade missions and events in the United States, Australia, Japan, and select countries in Europe Conduct of annual industry conferences and exhibitions such as the International Outsourcing Summit, International Contact Center Conference and Exhibit, Healthcare Information Management Outsourcing Services Congress, Animation Festival (or Animahenasyon), Philippine Game Development Festival, SoftCon.PH National ICT Confederation of the Philippines Summit Ecosystem A conducive environment to investments and businesses must be established, both at the national and local levels. These could be strengthened through the following areas:
A more detailed, sector-specific road map is also being developed, funding of which is being secured at the time of this publication. This road map aims to increase the countrys share of global sourcing in the following services sectors such as voice BPM, healthcare information management, finance and accounting and insurance, human resources, creative processes (that is, animation and game development), IT, engineering services, and multilingual BPM.
Improving competitiveness. Promoting coherent, cohesive, predictable, and responsive policy environment by addressing the competitiveness indices where the Philippines is deemed lagging behind. Of particular significance to the industry are the continued implementation of income tax holidays, improving governance, and strengthening economic zones. Government, for its part, could also help spur the growth of the IT sector by increasing its propensity to invest in IT. Likewise, the ongoing effort on enhancing the government's procurement process to include ICT can help ensure a more transparent and efficient process in the selection and identification of providers, including those of software products and services, with the end in view of leveling the playing field. Managing and reducing risks. One area where the IPPP could be enhanced is in the area of improving the countrys susceptibility to natural disasters. The industry needs closer coordination with government in becoming more equipped, particularly on disaster-related information, in order to manage more effectively natural disaster situations. Managing cost. A strong currency, increasing wage rates, high power costs, numerous non-working holidays, local fees, increasing SSS contributions, and other regulations that lead to rising costs need to be addressed by government. These trends erode the cost competitiveness of the Philippine IT-BPM and GIC industry compared with its many competitors. Promoting the implementation of quality initiatives. Industry-driven related initiatives in this area include the recent creation of the Quality Council within IBPAP and the inclusion in the International ICT Awards of The ICT Quality Program of the Year, which recognizes the growing importance of implementing structured approaches within an organization to improve its overall quality and efficiency.
Although efforts with government, among them the Philippine Quality Award, and of the other stakeholders have yet to be introduced, there is a proposed program between IBPAP and DOST-ICTO to pilot the Six Sigma Certification Program among companies. Research The availability of up-to-date and relevant information and research is essential in rolling out the aforementioned programs and projects. These are also considered crucial as data and related statistics are used to measure competitiveness, both from the view of the country in general and the industry in particular. Some of these publications and studies include: Next Wave Cities Report ICT Industry Mapping Study Inventory of Skills/Competency of Graduating Students and Entry-Level Workers of the IT-BPM Industry: An Analysis of Supply-Demand of Skills Preliminary Study on the Corporate Services Segment of the IT-BPM Industry
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Conclusion
The fastest-growing industry in the Philippines, the information technology and business process management (IT-BPM) and global in-house center (GIC) industry is forecast to generate revenues of US$25 billion by 2016, provide direct employment to 1.3 million Filipinos, and support 3.2 million indirect jobs. If the forecast materializes, which appears likely, the industry will account for about 8 percent of the Philippines GDP, making it the nations second-largest source of foreign exchange.
Since 2010, the Philippines has been the acknowledged leader in voice BPM and the second most-preferred destination for non-voice, complex services in the world. Globally, it is competitively positioned in terms of talent, costs, and risks relative to both established and emerging offshore destinations. The industry is serious about maintaining its leadership in an environment in which competing global players are eyeing a larger stake in the expanding IT-BPM and GIC market as new service areas and market opportunities emerge. As demand for existing and emerging services grows, the Philippine IT-BPM and GIC industry is expected to increase its global share of non-voice, complex services. Gartner forecasts five-year compound annual growth (through 2016) for the global market of 5.5 percent. However, the Everest Group and Outsource2Philippines forecast that the Philippines will grow faster than the global market at 20 percent year-on-year, at least in the mid-term. Over the last decade, the growth of the Philippine IT-BPM and GIC industry has outpaced the global offshore services market. The effort to sustain Philippine leadership and expansion is multisectoral. In the private sector, the Information Technology and Business Process Association of the Philippines (IBPAP) and its partner associationsthe Animation Council of the Philippines, Inc. (ACPI), Contact Center Association of the Philippines (CCAP), Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP), Game Developers Association of the Philippines (GDAP), and the Philippine Software Industry Association (PSIA)work is focused on talent development, the business environment, and visibility of the industry among investors, industry clients, and prospective employees. The public sector has been an aggressive supporter of the industry, providing attractive investment incentives, funding for talent development initiatives, and support for research and visibility initiatives that contribute to communicating the Philippine IT-BPM and GIC value proposition. Industry public-private partnerships with government agencies, including the Department of Science and Technology-Information and Communications Technology Office (DOSTICTO), Board of Investments (BOI) and other agencies of the Department of Trade and Industry (DTI), Commission on Higher Education (CHED), and the Technical Education and Skills Development Authority (TESDA), among many others, have enabled the industry to achieve its goals on many fronts, including talent development.
Opportunities and challenges

As the global market expands, its composition is also expected to evolve dramatically. Non-voice, complex services, including software development and IT outsourcing, animation, game development, and healthcare information management (HIM) outsourcing, are developing at an impressive rate. The Philippine IT-BPM and GIC industry is composed of more than 20 sectors that range from marketing and advertising services to complex, civil engineering project management. Generating over US$8 billion in revenues in 2012, voice BPM remains the largest sector in the Philippine IT-BPM and GIC industry. Although North America (mainly US) remains the primary market (79 percent) and American English the top language supported (75.2 percent), the voice sector is increasing efforts to penetrate markets outside the US. Presence in the UK market (up to US$22 billion in market size) and APAC and Australia (up to US$8 billion in market size) will most likely define the successful expansion of the Philippine voice BPM. New channels of communication, including social media, are also an opportunity for the voice BPM sector to expand services and penetrate emerging verticals including health care, media, and telecom. If it is successful in developing these opportunities, the sector will be well positioned to achieve its 2016 targets of US$14.7 billion in revenues,
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employment of 862,000 Filipinos, and maintaining its status as the top voice BPM destination with a 29 percent global market share. Although considered a mature destination for software development and IT outsourcing, the Philippines has a relatively small IT services sector. Visibility of and demand for the sector continues to expand as IT services sector focuses on increasing its share of the global market, currently at just 1 percent. The United Nations Conference on Trade and Development reports that Asian countries, including the Philippines, will become key exporters of computer and information services. The sector also sees opportunity within Asia. The APAC (up to US$130 billion) and Australia (US$14 billion) markets, small and medium businesses market (US$30 billion), and cloud or social media applications (up to US$2 billion) are attractive, emerging opportunities. With these areas for growth, the software development and ITO sector is forecasting revenues of US$1.5 billion in 2013, and providing employment to a rich talent pool of 80,000 competent software developers and IT professionals. It aims to double its global market share to 2 percent and achieve up to 25 percent growth by 2016. Filipino animators and game developers are some of the most talented in the world. According to Tholons, Filipino animators are known for their creativity and innovativeness which are looked upon in high regard by international clients, particularly those from the US. Their impressive portfolio, familiarity with Western humor and nuances, and high-quality creative work make the sector uniquely suited to providing services to international markets. With market share currently at 10 percent, the sector and government are investing in talent development to meet demand and expand services, which include original content or intellectual property (IP) development, preproduction, production, post-production, and distribution services. Although significant progress has been made in developing talent for the animation and game development sectors, supply continues to be an issue in large part due to international demand for Filipino talent. This therefore underscores the need for a favorable environment and understanding of the sector domestically, which will encourage artists and developers to pursue careers at home rather than overseas. Despite this challenge, the animation and game development sector is poised to capture up to 18 percent of the global market to become the top-three offshore geography with revenues of US$500 million by 2016. Considered the fastest-growing sector in the Philippine IT-BPM and GIC industry, healthcare information management (HIM) outsourcing is expected to continue to expand at a compound annual rate of 40 percent to become a US$1-billion industry employing 100,000 Filipinos by 2016. The growing HIM sector provides an attractive career opportunity for the countrys oversupply of nursing graduates, who have found fulfillment in an array of HIM services including medical transcription, clinical data management, disease management, and electronic medical records management, among many other services. Areas of opportunity for the Philippine healthcare BPM to increase market share to 13 percent by 2016 include dramatic expansion of the health insurance market as the Patient Protection and Affordable Care Act goes into full effect in the US, US hospitals negative operating margins, conversion to International Classification of Diseases-10, and the demand for IT-supported hospital operations. The number of providers entering this space in the Philippines in the past two years is impressive, and include some of the worlds largest services providers. The Philippines advantage is its large pool of highly qualified medical professionals with their high levels of professionalism and service orientation. Corporate services, including finance and accounting (F&A) and human resources (HR), are also some of the fastemerging sectors of the outsourcing industry. In the Philippines, these sectors are expected to capture up to 14 percent of the global market to make the Philippines the top-two global geography for F&A and HR services.
lobbied for a range of industry public-private partnerships to build the Philippine IT-BPM and GIC brand globally and strengthen the countrys value proposition as an attractive investment destination with a supportive businessfriendly policy. Together with industry stakeholders, IBPAP has launched initiatives to address other issues that impact the attractiveness of the Philippine IT-BPM and GIC industry such as technology, infrastructure, and talent pool. The industry, however, realizes the importance of protecting its most important asset: its estimated 772,000-strong workforce as of December 2012 (projected). Beyond cost, quality, and innovation, the qualities of Filipino talent including excellent English-language skills, authenticity in customer service, adaptability, affinity to Western culture, creativity, and commitment to excellence, among othersare intangible key differentiators in the competitive ITBPM and GIC space. To ensure a reliable supply of talent, IBPAP continually expands and develops its partnerships with the government, academe, and the private sector to ensure talent development programs are in place throughout the Philippines, including the nations Next Wave CitiesTM. The Philippines produces half a million university graduates every year. Talent development initiatives and this expanding pool of job seekers ensure the Philippine IT-BPM and GIC industry of a steady supply of talent that is entry-level qualified and can be quickly trained for complex jobs.
The Road to 2016

The goal for 2016 is not merely to increase market share but to also achieve diversity in portfolio services and markets that IT-BPM companies and GICs in the Philippines serve worldwide. The challenge for all industry stakeholders is to find innovative ways to maximize the benefits of intense collaboration to achieve development goals, enabling the industry to continually refine its competitive advantages. Multi-sectoral efforts are required to address key issues in talent, marketing and branding, and strengthening the ecosystem. Road Map 20122016 illustrates how the Philippine IT-BPM and GIC industry has attained leadership in the global outsourcing and shared services market and how this dynamic industry plans to achieve its 2016 targets for revenue, employment, market share, GDP, and global position. Given its strong historical growth, collaborative partnerships, and unique value proposition, IBPAP is confident that the industry will continue to expand rapidly while moving up the value chain in existing and emerging target segments and geographies in the next three years and beyond.
Priority Areas
IBPAP assists investors in setting up operations in the Philippines, providing support through a wide variety of initiatives, including programs for HR development, business development, and ongoing knowledge sharing and networking opportunities. Leveraging the significant contribution of the government under the administration of President Benigno S. Aquino III to the IT-BPM and GIC industry, including the impressive support of key government agencies such as DOSTICTO, CHED, TESDA, DTI and its attached agencies such as BOI and PEZA, among others, IBPAP has effectively
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Annex
List of Figures
Title Figure 1. Key Global Sourcing Trends Figure 2. Size distribution of the Philippines IT-BPM industry FTEs Figure 3. Industry expansion beyond National Capital Region Figure 4. Locations of the Philippines' Top 10 Next Wave CitiesTM 20102011 and Established IT-BPM Hubs Figure 5. State-of-the-art voice and data infrastructure throughout the Philippine archipelago Figure 6. Philippines among mature global IT-BPM locations (2011) Figure 7. Range of IT-BPM services in the Philippines Figure 8. Areas where IBPAP plays a role Figure 9. Address the Supply Gap schematic Figure 10. Imperatives and desired outcomes Figure 11. Talent development initiatives Figure 12. Philippine IT-BPM industrys core and extended identities Figure 13. Channels to educate and engage the market Figure 14. Stakeholder objectives Figure 15. Stakeholder priorities - Talent Figure 16. Stakeholder priorities - Ecosystem Figure 17. Key Industry Issues (Voice BPM) Figure 18. Key opportunities for the IT services industry Figure 19. PPPs in competing geographies Figure 20. Key Industry Issues (Software and IT Outsourcing) Figure 21. Offshore Animation and Game Development Market (2011) Figure 22. Animation and game development value chain Figure 23. PPP initiatives in competing geographies Figure 24. Key Industry Issues (Animation and Game Development) Figure 25. Healthcare BPM market in Philippines, India, and rest of the world (2010) Figure 26. Key drivers in healthcare outsourcing Figure 27. Healthcare outsourcing service areas Figure 28. Key Industry Issues (Healthcare Outsourcing) Figure 29. Strategic Framework for Industry and Services Figure 30. Government agencies that can provide support to address key issues of industry Page 1 3 4 13 17 20 21 23 25 25 26 29 30 33 34 36 42 47 48 49 52 54 55 56 58 59 60 61 64 67
Annex
List of Graphs
Title Graph 1. Rapid Growth of the Philippine IT-BPM industry Graph 2. Growing Non-Voice Sector Graph 3. Growth of IT-BPM workforce over past five years Graph 4. Projected growth over 12-month period Graph 5. Philippines' IT-BPM and GIC Industry Revenue Targets for 2016 Graph 6. Annual talent pool, select global IT-BPM locations Graph 7. Cumulative Talent Competitiveness Index for IT-BPM Graph 8. Direct operating cost per FTE for English voice work (average exchange rate) Graph 9. Direct operating cost per FTE for English voice work (current exchange rate) Graph 10. Cost of business among major Philippine hubs Graph 11. O2P and BPAP survey respondents comparative risk rating of Philippines and India Graph 12. Global offshore market size for business process management (BPM) services (excluding information technology) Graph 13. Clients by geographic location Graph 14. Demand and supply projections of entry-level industry talent in the Philippines, 20062016 Graph 15. Philippine incentives, ROI for economy Graph 16. The Philippines' Voice BPM Growth: Employment 2006-2016 (in thousand full-time employees) Graph 17. The Philippines' Voice BPM Growth: Revenues 2006-2016 (US$ billion) Graph 18. Global voice BPM market size Graph 19. Languages supported by the Philippines voice BPM (2011-2012) Graph 20. Global market opportunity against Philippine presence (Voice BPM) Graph 21. Voice BPM FTEs by Industry (2011-2012) Graph 22. Global market for IT services offshoring, by destination (2011) Graph 23. Philippines IT services market Graph 24. Philippines IT services global market share Graph 25. Philippines' IT Services Portfolio (by service area) Graph 26. Philippines' IT Services Portfolio (by market) Graph 27. Philippines' Animation and Game Development Market (2011) Graph 28. Offshore and overall global animation and gaming market (2011) Graph 29. Philippines healthcare outsourcing market size Graph 30. Global healthcare provider services market (2010) Page 5 8 9 9 10 11 12 15 15 16 18 19 21 24 31 37 38 39 40 40 41 43 44 44 46 46 51 53 57 59
List of Tables
Title Table 1. IT-BPM Market Five-Year Compound Annual Growth Rate (CAGR) by Process Domain Segment Table 2. Why the Philippines is a Top Offshore IT-BPM Location Table 3. Other industry programs: 2013 targets Page 2 14 27
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About The Publishers

Department of Science and TechnologyInformation and Communications Technology Office (DOST-ICTO)
The Information and Communications Technology Office (ICTO) is a government agency under the policy, technical and administrative supervision of the Department of Science and Technology (DOST). It is tasked to lead and harmonize initiatives on ICT using a multi-stakeholder approach. Its primary thrusts include ICT Industry Development, eGovernment, ICT policy development, Internet for all and Cybersecurity. In the area of ICT industry development, the ICTO is tasked to formulate, recommend and implement an appropriate policy and program framework that will promote the rapid development and improved global competitiveness of the countrys information and communications technology (ICT) industry, including the IT-BPM industry. Towards this end, the ICTO implements and coordinates strategic and targeted programs in the areas of industry capability development; marketing and research; and workforce development for said industry. The programs will also support the national governments objectives of sustained economic development through the generation of investments and creation of jobs from the ICT industry.
Information Technology and Business Process Association of the Philippines (IBPAP)

The Information Technology and Business Process Association of the Philippines (IBPAP), formerly the Business Processing Association of the Philippines (BPAP), is the enabling association for the IT-BPM and GIC (global inhouse center) industry in the Philippines. IBPAP serves as the one-stop information and advocacy gateway for the industry. With approximately 300 industry and support-industry members, including five associationsthe Animation Council of the Philippines, Inc., Contact Center Association of the Philippines, Game Developers Association of the Philippines, Healthcare Information Management Outsourcing Association of the Philippines, and Philippine Software Industry AssociationIBPAP plays a pivotal role in sustaining rapid growth of the IT-BPM and GIC industry by working to ensure an enduring supply of high quality labor, supporting service innovation, and providing country visibility. IBPAP assists investors in setting up operations easily and quickly in the Philippines. Relevant research, introductions to key government and industry officials, and a series of briefings at each step of the investment process ensure a seamless development process. Ongoing support is provided through a wide variety of initiatives, including programs for HR development, business development, knowledge sharing and networking opportunities.
TeamAsia
TeamAsia is an award-winning strategic marketing communications firm that develops place, corporate, and personal brand strategies, creative concepts, and marketing communications programs and campaigns incorporating events, public relations, and online marketing tools for its clients. Its core businesses include design services; public relations, editorial, copywriting, and SEO services; media relations; event management; online campaign management; and web development. The agency also offers workshops and seminars primarily related to its core communications businesses. TeamAsia has received industry awards from the Web Marketing Association in the United States and the International Association of Business Communicators in the Philippines.

It-Bpm and Gic Road Map 2012-2016

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Publishers Department of Science and TechnologyInformation and Communications Technology Office Hon. Mario G.

Road Map 20122016

Road Map 20122016

Figure 1. Key Global Sourcing Trends

Source: NASSCOM Strategic Review (2012)

Road Map 20122016

Road Map 20122016

Process Domain Segment

CAGR (%) 2011-2016

5.5 5.0 4.1 4.9 7.7 4.6

Number one in voice, number two in non-voice

Figure 2. Size distribution of the Philippines IT-BPM industry FTEs

> 10,000 14%

5,001-10,000 2,501-5,000 501-2,500 251-500 51-250 < 50

FTEs = full-time employees

Sources: IBPAP, Everest Group, and Outsource2Philippines (2011)

Road Map 20122016

Road Map 20122016

Graph 1. Rapid Growth of the Philippine IT-BPM industry

Impact over 6 years

Figure 3. Industry expansion beyond National Capital Region

4.8 3.2 -50%

~246K (83%) ~489K (77%)

#FTEs (~000) Global share

Next Wave TM Cities

Sources: Everest Group and Outsource2Philippines (2012)

Road Map 20122016

Still leading in Voice Services

Growing Non-Voice Sector

Road Map 20122016

Road Map 20122016

45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

30% 20% 10%

27% 24% 14% 24%

Source: O2P-BPAP Periodic Survey (August 2012)

Graph 4. Projected growth over 12-month period*

Road Map 20122016

Road Map 20122016

20.0 13.4 8.9 11.0

Graph 6. Annual talent pool, select global IT-BPM locations

Annual tertiary graduate pool 2010, 000s

Annual supply of F&A/ business graduates 2010, 000s

Annual supply of technical talent for IT 2010, 000s

India China Philippines Poland ~500 ~500 371 330 131

Base Case 2016

Accelerated Case 2016

% of GDP Direct employment Indirect employment

2.6% 240K 600K

4.5% 525K 1.3M

4.9% 638K 1.6M

5.6% 772K 2.0M

6.2% 900K 2.3M

7.8% 1.3M 3.2M

F&A = finance and accounting

Road Map 20122016

Road Map 20122016

Graph 7. Cumulative Talent Competitiveness Index for IT-BPM

Higher scores imply greater competitiveness

1.30 0.95 0.75 0.64

Baguio City METRO CLARK Malolos

Metro Cavite Santa Rosa Lipa City

Sources: IBPAP and Everest Group analysis (2010)

Bacolod City METRO CEBU