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Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
Increasing our IT-BPO Market Share in Europe
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Increasing our IT-BPO Market Share in Europe

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Gartner confirms the 2008-09 financial crisis has triggered widespread adaptation of BPO and shared services by European countries and corporations. Presentation for the Shared Services and …

Gartner confirms the 2008-09 financial crisis has triggered widespread adaptation of BPO and shared services by European countries and corporations. Presentation for the Shared Services and Outsourcing Exchange in Europe.

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  • 1. The Philippines: The Location of Choice for IT-BPO and Shared Services 6th Shared Services and Outsourcing Exchange BrainWeave Session 10:00 a.m.-11:00 a.m., 17 September 2012 Prague, Czech RepublicAlejandro P. Melchor IIIDeputy Executive Director for ICT Industry DevelopmentDepartment of Science & TechnologyInformation and Communications Technology Office
  • 2. Outline• Philippine economic scorecard• Policy directions• Philippine Advantage• Government Support
  • 3. PHILIPPINES AT A GLANCE Land Area: 300.000 km2 Population: 94.2 million 41% working group from ages 20-44 16% working group from ages 45-64 Capital City: Metro Manila Political Structure: Democratic (Presidential System) National Language: Filipino, Official Language: English Religion: 93% Christian Believers of which 83% are Catholic 2011 GDP : US$224.8 BillionSources: 2011 Per Capita Income: $2,223 Bangko Sentral ng Pilippinas National Statistical Coordination Board and 1 National Economic and Development Authority
  • 4. PHILIPPINE ECONOMIC SCORECARD GNP/GDP Quarterly Growth Highlights (2010-2012) 12 GNP GDP growth of 7.6% in 10 GDP 2010, highest in 31 years 8 7.3 BOP record surplus of 6.9 6.1 6.3 US$10.2B in 2011 6 5.6 6.3 5.1 4.9 4.5 5.1 Inflation at its lowest in 21 4 3.6 years 2.2 4.0 3.5 Stable and low interest 3.2 2 2.4 rate environment 0 Gross international reserves (GIR) peaked at $75.3 million in 2011Sources: Bangko Sentral ng Pilippinas National Statistical Coordination Board and National Economic and Development Authority
  • 5. PHILIPPINE ECONOMIC SCORECARDConsumption-driven economy + Nearly $80M Gross Int’l Reserves100%80%60%40%20% 0% 2003 2004 2005 2006 2007 2008 2009-20% Pvt. Consumption Govt. Consumption Investments Net Exports = Resistance to external shocks. Positive GDP growth rate for 52 consecutive quarters since 1999 + Prudent fiscal management + Sound economic policy
  • 6. HSBC, The World in 2050: • “Attention will increasingly turn to the ‘new emergers’ as the world economy undergoes a seismic shift…” • “We highlight the following: The striking rise of the Philippines, which is set to become the world’s 16th largest economy, up 27 places from today.”• “Who will deliver thefastest growth enrouteto 2050?”https://www.research.hsbc.com/midas/Res/RDV?ao=20&key=hCmm8WiQC0&n=317638.PDF
  • 7. Ruchir Sharma, Morgan Stanley • TIPs, poised to upstage BRICs • Turkey, Indonesia, Philippines • “Aquino is delegating power to competent technocrats…”World Economic Forum:• Philippines leapfrogged 20 places inglobal competitiveness in the 2 years ofthe Aquino Administration.Jim O’Neill, GoldmanSachs:• Philippines one of the“Next 11”—the nextBRICs.
  • 8. 2012 economic performance lives up to billing #2 in Asia, 1Q 2012 #3 in Asia, 2Q 2012
  • 9. POLICY DIRECTIONS• A more responsive government and a business-friendly environment• Continued fiscal consolidation• Increased infrastructure spending• Clear agenda for competitiveness• Broad-based expansion led by services• Prioritizes creation of jobs that empower the people• ASEAN masterplan for ICT development http://www.aseansec.org/22073.htm• National development plan for rapid economic growth• Inclusive agenda for national ICT development http://devplan.neda.gov.ph/index.php ilearn.gov.ph/PhilippineDigitalStrategy2011-2016.pdf
  • 10. President Benigno S. Aquino III supports the IT-BPO Industry “The BPO sector has successfully showcased the skills of Filipinos to the world.”“By the time I step down in 2016, we are looking atrevenues that will have more than doubled to $25 billionand 4.5 million jobs — 1.3 million directly as a result ofthe BPO sector and 3.2 million indirect jobs.”
  • 11. Philippine IT-BPO Industry:The country’s premier sunrise industry Total Employees (000s) Annual Revenue (US$B) 700 $12.0 643 $11.0 600 $10.0 525 $8.9 500 442 $8.0 $7.1 400 372 $6.1 $6.0 300 $4.9 300 236 $4.0 $3.3 200 163 $2.2 101 $2.0 $1.3 100 0 $0.0 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011Source: Business Processing Association of the Philippines (BPAP)
  • 12. The Philippine talent value proposition:large pool of young, English-speaking talentNumber of college degree graduates 2010  Abundant labor force of 38 millionMedical and natural sciences, allied 119,378  Over 450,000 college graduates per yearfields  Large pool of accounting and businessBusiness, accounting, and related 117,339 graduatesfields  English proficiencySocial and behavioral sciences, 68,811  Affinity with Western cultureeducation  Customer service orientationEngineering and architecture 50,734  Highly trainableIT-related and mathematics 47,928  Cost effectiveFine arts, masscom, humanities 12,269  High level of commitment and loyaltyTOTAL Tertiary level 481,862 Pop Labor force Unemp rate Literacy World 7,021M 3,264M 9.1% 83.7% India 1,205M 488M 9.8% 61.0% China 1,343M 796M Suitability rates are empirically based on a total of >80 interviews 6.5% 92.2% with HR professionals working in each country Brazil 206M 105M 6.0% 88.6%Source: CHED 2012; CIA World Factbook 2012; Philippines 92M 41M 7.4% 92.6% NSO 2012 12
  • 13. Philippines has abundant human and natural resources— world’s 5th richest store of natural resources
  • 14. Philippines is currently among the most-competitive destinations for IT-BPO services MARKET AVERAGESDirect operating cost1 per FTE for English voice work ENGLISH-LANGUAGE VOICE EXAMPLE2010; US$ ’000 per annum per FTE Reflective of market averages. Range 70-72 could vary depending upon  Tier-1 vs. Tier-2 cities  Suppliers vs. captives  Scaled operations vs. mid-size operations 29-32 24-26 19-20 16-17 15-16 14-15 US Tier-2 Mexico City Krakow Kuala Lumpur Cairo Metro Manila Delhi/NCR 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 12 months from Oct. 1, 2009 to Sept. 30, 2010 Source: Everest analysis
  • 15. Likewise, The Philippines is among thelowest cost locations for non-voice BPOworkDirect operating cost1 per FTE for F&A transactional work2010; US$ ’000s a year per FTE MARKET AVERAGES FAO EXAMPLE 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 12 months from Oct. 1, 2009, to Sept. 30, 2010 Source: Everest analysis Copyright ©2011: BPAP, CICT, Everest Global, O2P. All rights reserved.
  • 16. …and for IT Services Direct operating cost1 per FTE for IT Applications Development and Maintenance (ADM) 2010; US$ ‘000s per annum per FTE MARKET AVERAGES ADM EXAMPLE 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 12 months from Oct. 1, 2009, to Sept. 30, 2010 Source: Everest analysisCopyright ©2011: BPAP, CICT, Everest Global, O2P. All rights reserved.
  • 17. RELIABLE AND REDUNDANT CONNECTIVITY TGN-IA Transmission Backbone Networks BALLESTEROS  PLDT Digital Fiber Optic Network AAG LAOAG VIGAN TUGUEGARAO (DFON) CAUAYAN  Globe Telecom Fiber Optic SFLU BAGUIO SOLANO ASE DAGUPAN URDANETA Backbone Network (FOBN) TARLAC CABANATUAN CANERO EAC  TelicPhil (BayanTel) Nationwide SeaMeWe-3 SUBIC SAMPALOC ERMITA AURORA MAKATI Digital Transmission Network BACOOR APCN2 NASUGB U NAGA (NDTN) BATANGAS PAGBILAO MAMBURAO PILI LEGASPI C2C DONSOL MASBATE SORSOGON SAN JOSE CALBAYOG Cable Landing Stations ROXAS TACLOBAN ORMOC SJC ILOILO CADIZ BANATE SAN REMIGIO TALISAY LILOAN  Ballesteros, Cagayan (June 2013) BACOLOD LAHUG TALISAY MAASIN DUERO MARIBOJ  Tanza, Cavite OC DAUIN TAGBILARAN CABADBARAN  Nasugbu, Batangas CDO MANTICAO BUTUAN ILIGAN  Bauang, La Union PAGADIAN COTABATO DAVAO  Daet, Camarines Norte ZAMBOA NGA GEN. SANTOS
  • 18. World class, IT-BPO designed, infrastructureLowest rental rates in the region; dedicated IT parks right in the center of business districts METRO MANILA Eastwood City Cyberpark Ortigas Center, Mandaluyong City/Pasig City Quezon City Bonifacio Global UP-Ayala Technohub, City, Taguig City Quezon City McKinley Hill Taguig City Makati City Northgate Cyberzone Muntinlupa City
  • 19. COMPETITIVE INVESTMENT INCENTIVES  4 to 8 years Income Tax Holiday (ITH)  Special 5% tax on Gross Income  Other tax and duties exemptions*  Domestic sales allowance of up to 30% of total sales  Additional deduction on total manpower training cost 1 Exemption from duties and taxes on imported capital equipment, spare parts, supplies, and raw materials 2 Exemption from export taxes, wharfage dues, imposts and fees 3 Exemption from Value Added Tax (VAT) on allowable local purchases such as telecom, power, and water bills 4 Additional deduction of 50% of total manpower training cost under the special 5% gross income tax regimec
  • 20. GOVERNMENT SUPPORT ICT & BPO Industry Development ProgramsiPPP PROGRAMS GOALS PROJECTS Stepping-Up the ICT: a $50B industry by 1 – Research & Road Value Chain 2016: Mapping • IT-BPO $25-27B • All other ICT: $23-25B 2 – Training & Education i-TalentDev.PH Global leadership in multiple high growth 3 – Organizational segments Development & Next Wave Cities/ Capability BuildingSmarter Countryside Countryside development 4 – Advocacy and through ICT & BPO Marketing i-Creative.PH Increase size & 5 – IT-preneurship & employability of talent pool Technology Business Indicators Develop knowledge 6 – Policy Framework, ICT Marketing & workers with Research st Century Skills Business Environment 21 Investment Incentives
  • 21. Stepping Up the Value Chain Program We are #1 in call centers and we Voice BPO intend to become market leader in UK & Australia Healthcare Information Management Outsourcing We intend to Finance & Accounting Outsourcing attain worldleadership in 4 more HR Outsourcingfast growing services Creative Process Outsourcing ICT-enabled Creative Industry Development We intend to IT Outsourcing double our market Engineering Servicesshare in 3 other fast Philippine Technological Outsourcing Council growing services Multilingual BPO
  • 22. Development of World Class Talent Knowledge Workers with 21st Century Skills for the Global Knowledge Industry specific Government Economy curriculum support to training development, and development assessments & of ICT-industry certification workers World Educational reforms for mutual 450,000 college graduates annually Class recognition of qualifications and Talent degrees
  • 23. Next Wave Cities Program provides access to talent throughout the Philippines
  • 24. An InvitationDiscoverthePhilippineAdvantage!For more details, visit:www.icto.dost.gov.phwww.dti.gov.phwww.peza.gov.ph http://www.bpap.org/publications/research/investorprimer2012 Department of Science and Technology- Information and Communications Technology Office

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