Global Sourcing of Services & Philippines

Secretary Ray Anthony Roxas-Chua III Commission on Information and Communications Technology April 16, 2008 The Philippine Offshoring and Outsourcing Industry

Industry Overview

Industry Growth Source: Business Processing Association of the Philippines Total Jobs (000s) Revenue ($B)

Segment Breakdown Source: BPAP, CICT, Department of Trade and Industry 2007 Breakdown by Revenue 2007 Breakdown by Employees Software 9% Contact Center 74% Back Office 8% Transcription Engineering Animation Software 10% Contact Center 66% Back Office 13% Transcription Engineering Animation 4.9B USD 300K Employees 6% 3% 2% 4% 3% 2%

Philippine Cyber Corridor Cities with Operators Bacolod Bacoor Baguio Batangas City Cagayan de Oro Cainta Camarines Sur Prov. Cebu Clark/Angeles Davao Dumaguete Iloilo Legaspi Lipa Manila NCR Sta. Rosa Other Ready Cities Cabanatuan Dagupan General Santos Leyte Prov. Subic/Olongapo Urdaneta Cities with Operators Other Ready Cities

Awards and Distinctions Offshoring Destination of the Year: Philippines Top 10 Asian Cities of the Future: #7 Quezon City #8 Cebu #10 Davao Top 50 Emerging Outsourcing Cities: #4 Cebu #23 Pasig #36 Baguio Top 10 Outsourcing Cities in Asia Pacific: #2 Manila

Critical Success Factors

Abundant Talent Source: Commission on Higher Education Manila NCR Rest of Phils. Total 2006 Graduates 104,858 435 5,145 727 86,394 7,167 4,990 330,646 956 8,265 1,318 245,706 44,443 29,958 435,504 1,391 13,410 2,045 332,100 51,610 34,948 Baccalaureate Total Doctorate Master’s Post-Baccalaureate Pre-Baccalaureate Technical-Vocational

Quality Human Capital

Abundant labor force of 32 million

English proficiency

Cultural adaptability

Strong customer service orientation

Large pool of accounting and business graduates

Highly trainable

Cost effective

High level of commitment and loyalty

World Class Infrastructure

Telecommunications

$10B high-bandwidth fiber backbone and digital network

Redundant international connectivity

Deregulated telecommunications industry

Power

Reliable electricity with excess capacity over current demand

Real Estate

Low rental rates with favorable terms

Dedicated IT parks in urban areas

Government Support

Investment Incentives

Income tax holiday

Duty free importation of capital equipment

Training

PhP350M (USD8M) in training scholarships allocated to O&O industry

Promotion

Philippine O&O competencies highlighted during trade missions

Cost Effective Labor Source: McKinsey Global Institute, 2006 Labor Cost Index (USA = 100)

Service Oriented People

Significant Overseas Filipino Worker (OFW) population

8 million Filipinos worldwide

Remittance of USD14.4B in 2007

Includes nurses, doctors, sailors, musicians and IT professionals

O&O industry allows Filipinos to provide services globally without leaving the country

Socio-Economic Benefits

Creates Jobs Source: BPAP Total Offshoring and Outsourcing Jobs (000s)

Provides High Incomes O&O Salaries Quintile 1 st 2 nd 3 rd 4 th 5 th

Supports Related Businesses O&O Industry TAXES

Brings Work to the People Source: National Statistics Office and BPAP Population Breakdown O&O Jobs Breakdown Manila NCR Manila NCR Rest of Phils. Rest of Phils.

Challenges

Challenges Ahead