Today’s webinar is brought to you byOutsourcing CenterToday’s webinar                                                     ...
Q&ATo ask a question during the Q&A session  Click the question mark (Q&A) button located on the floating tool bar in the ...
Introductions                                                                                   Oscar Sañez          Sec. ...
Context settingWhat is this webinar about?                       Key findings from the Q4 2009 Market Vista report providi...
What is Market Vista?                   General sourcing market                                                     Suppli...
Key Market Developments in Q4-2009:Market Vista Report Briefing               p           gWebinarFebruary 17, 2009
Contents Market overview Location risks and opportunities Supplier landscape                                              ...
Q4 2009 saw continued stabilization of transactionvolume and a significant increase in captive set upIndex of outsourcing ...
Asia accounted for 80% of new captives announced inQ4 2009                                                                ...
American Express and Monitor Group were notablecaptive divestituresAmerican Express – Divests travel services captive in I...
Asia continues to accounts for the majority of newservice delivery centers; Tier-1 cities saw a few morecenters being set ...
Locations | Risk and opportunity dashboard                                                                                ...
A   Locations | Risk and opportunity analysis    In the wake of economic recovery, hiring has once again picked up among  ...
Revenues for the Market Vista Index Suppliers grew2.4% while operating margins improved by 12 bpTop three and bottom three...
Revenue growth for offshore-centric supplierscontinued to outpace that of the traditional suppliers                       ...
Supplier developments analysis | M&A and alliancesM&A activity declined in Q4 2009, while alliance activity increasedM&A b...
Philippine IT BPO Industry:            IT-BPO Public-Private Partnership                 Market Vista Webinar             ...
Philippine Economy        Annual GDP Growth (%)                                    Quarterly GDP Growth (%)8.0%           ...
Philippine IT BPO Industry                                 IT-BPO        Total Employees (000s)                           ...
Awards and Distinctions   Offshoring D ti ti   Off h i Destination of the Year:                        f th Y   Philippine...
Development ofWorld Class Talent     450,000     college    graduates      a year     World     Class     Talent
Reliable and Redundant                        Connectivity                                                                ...
Competitive                            Investment IncentivesIncome Tax Holiday (ITH) f 4 years, extendable t 8 yearsI     ...
Philippine Cyber Corridor    Centers of Excellence1. Metro Manila2. Metro Cebu       Next Wave Cities1. Metro Laguna2.2 Me...
Strong Government Support     Department of T d and Industry     D     t     t f Trade d I d t     provides investment inc...
Thank You!
Experience Excellence:The Philippine AdvantageOscar R. SañezPresident and CEOMarket Vista WebinarFebruary 17, 2010
Philippine IT-BPO: over US$7 billion in revenue in 2009           IT-  Revenues                   Direct employment  US$ b...
Established excellence in voice to growing non-voice capability                                           non-  Revenues  ...
Why the Philippines: the Philippine IT-BPO proposition                                    IT-Number of college degree     ...
Why the Philippines: the Philippine IT-BPO proposition                                    IT-  Business processing offshor...
Roadmap 2010 focuses on four broad themes                  Key issues in 2006/2007Suitable and      • Need to spread aware...
Roadmap 2010 focuses on four broad themes                  Key issues in 2006/2007                  • Need to recruit over...
Philippine IT-BPO: US$12 billion in revenue by 2011           IT-  Revenue                Revenue                         ...
Q&A  Attendees will receive an email with a link to download today’s webinar presentation. To access a  recorded audio ver...
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Key Market Developments in Q4-2009: Market Vista

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Everest Group research analysts will highlight the findings of the Q4-2009 Market Vista report, providing an overview of key trends in the outsourcing and offshoring market.

Leaders Filipino Commission on Information and Communications Technology (CICT) and the Business Processing Association of the Philippines (BPA/P) will present the latest trends in the Filipino BPO industry and outlook for the future.

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Key Market Developments in Q4-2009: Market Vista

  1. 1. Today’s webinar is brought to you byOutsourcing CenterToday’s webinar Upcoming webinarsKey Market Developments in Q4-2009: Market Vista Recruitment Process Outsourcing (RPO) – MovingReport Briefing Beyond the Pioneer StageEverest research analysts will highlight the findings of Date and time:the Q4-2009 Market Vista report, providing an overview Tuesday, February 23, 2010of key trends in the outsourcing and offshoring market. 9:00 a.m. CST / 10:00 a.m. ESTLeaders of the Filipino Commission on Information and Presented by:Communications Technology (CICT) and the Business Katrina Menzigian, Vice President – Research,Processing Association of the Philippines (BPA/P) will Everest Grouppresent the latest trends in the Filipino BPO industry and Rajesh Ranjan, Research Director, Everest Groupoutlook for the future.About Outsourcing CenterOutsourcing Center is the world’s most prominent internet portal for authoritative information on outsourcing. TheCenter sCenter’s mission is to build the industry by helping people understand how to create value through outsourcing. Weserve the outsourcing community through: Trusted and objective third-party perspective Database of over 81,000 opt-in subscribers Relevant media including editorials, research, whitepapers, and the annual Outsourcing Excellence AwardsFor more information, contact Peter Bowes at pbowes@everestgrp.com. 1 Proprietary & Confidential. © 2010, Outsourcing Center
  2. 2. Q&ATo ask a question during the Q&A session Click the question mark (Q&A) button located on the floating tool bar in the bottom right of your screen. Thi will open th Q&A Panel This ill the P l Be sure to keep the default set to “send to a Panelist” Then, type y , yp your q question in the rectangular field at the bottom of the Q&A box and click the send g button to submit 2 Proprietary & Confidential. © 2010, Outsourcing Center
  3. 3. Introductions Oscar Sañez Sec. Ray Anthony Roxas-Chua III President and CEO Chairman Business Processing Commission on Information and Association of the Communications Technology Philippines (BPA/P) Eric Simonson Anand Ramesh Managing Principal, Research Research Director, Global Sourcing Everest Group Everest Group esimonson@everestgrp.com aramesh@everestgrp.com 3 Proprietary & Confidential. © 2010, Outsourcing Center
  4. 4. Context settingWhat is this webinar about? Key findings from the Q4 2009 Market Vista report providing a Q4 2009 market view on key developments in the quarter trends Discussion on key transaction and captive trends, location dynamics, supplier developments, and implications for stakeholders in the global sourcing industry Perspective on key initiatives enabling growth in the Filipino Perspective on offshore BPO market Philippines Insight on policy, government initiatives and industry actions to support continued growth 4 Proprietary & Confidential. © 2010, Everest Global, Inc.
  5. 5. What is Market Vista? General sourcing market Supplier landscape Detailed analysis of trends by Updates on supplier industry vertical and geography market share, Report of transaction volume, capabilities, and size, and momentum performance Perspective on events with Supplier profiles, significant industry impact (e.g., including data on: M&A) Transactions Implications of regulatory Location footprint changes M&A activity Location data and dynamics Processes and models Data on market activity in Process-level trends key offshore geographies Captive set ups, Political divestures, and overall Macroeconomic trends Promotion incentives Fact based Fact-based insights on Trends in wage inflation, adoption of emerging attrition, and arbitrage pricing models Data and perspectives on new opportunity areas Supplier Location Breaking Location Insights AnalystQuarterly Report Primer capability database viewpoint e-newsletter consultation profiles 5 Proprietary & Confidential. © 2010, Everest Global, Inc.
  6. 6. Key Market Developments in Q4-2009:Market Vista Report Briefing p gWebinarFebruary 17, 2009
  7. 7. Contents Market overview Location risks and opportunities Supplier landscape 7 Proprietary & Confidential. © 2010, Everest Global, Inc.
  8. 8. Q4 2009 saw continued stabilization of transactionvolume and a significant increase in captive set upIndex of outsourcing transactions1 Index of offshore captive health1Number Number Quarterly Captive announcements average for Captive divestures 2008: 439 455 422 418 40 28 22 4 4 3 Q4 2008 Q3 2009 Q4 2009 Q4 2008 Q3 2009 Q4 2009 The captive market gained significant momentum this quarter with 40 new captive announcements The outsourcing market remained steady in terms of transaction volumes although ACV increased by 72% from previous quarter, mainly due to some large deals signed in Q4 2009 1 Includes only data that has been publicly disclosedSource: Everest Research Institute Transaction Intelligence Database 8 Proprietary & Confidential. © 2010, Everest Global, Inc.
  9. 9. Asia accounted for 80% of new captives announced inQ4 2009 Rest of Asia: 18 new captive announcements Europe: JPMC plans to open a customer care and card 6 new captive announcements services division in Cebu (Philippines) NYSE plans to open a new satellite Novartis opened its Pharma Technology Co. office in Belfast (Northern Ireland) for R&D activities in Suzhou (China) BP opened a new European service GE plans to set up a global healthcare R&D center in Budapest (Hungary) center in Incheon (South Korea) ( ) Aviva plans to centralize its 12 European operations in Dublin (Ireland)Latin America:1 new captive India:announcement 14 new captive announcements Mahle set up a new Société Générale plans to expand its Global d st but o center distribution ce te in Solution Center in Bangalore Toluca (Mexico) Allianz Insurance opened its third facility, at Thiruvananthapuram for ITO and BPO services Africa: InterContinental Hotels group set up a captive 1 new captive announcement center in Gurgaon for F&A and KPO work Huawei established its telecom Credit Suisse set up its second KPO in Mumbai R&D center in South Africa 1 Includes expansion plans of existing captive operations Note: All references to captives include only offshore captivesSource: Everest Research Institute analysis 9 Proprietary & Confidential. © 2010, Everest Global, Inc.
  10. 10. American Express and Monitor Group were notablecaptive divestituresAmerican Express – Divests travel services captive in India to EXL EXL Service Holdings acquired American Express’s travel services captive in India for US$30 million. The captive performs global back-office activities, including account reconciliation, airline settlements, customer specific value- added services, such as market intelligence and analytics As A part of the transaction, EXL will provide outsourcing services t A t f th t ti ill id t i i to American E i Express f eight years under a US$160 for i ht d million contract Approximately 800 employees at the captive center will transition to EXLMonitor Group – Divests its captive unit, Grail Research, to Integreon Monitor Group sold its research and decision support unit, Grail Research, to Integreon. Monitor also signed a five- year contract for research services from Integreon Grail Research provides market intelligence and strategic services in technology, consumer products, and life sciences and employs 200 people globallyEssar Group – Plans to merge Essar Information Technology Holdings (EITH) with its BPO firm Aegis Essar Group plans to merge EITH (which provides F&A, HR, and payroll services across the Essar Group) with Aegis, the BPO arm of the group The planned merger will help the group expand its third-party service offeringsSony Ericsson – Plans to close product development sites Sony Ericsson plans to consolidate its product development operations by closing sites in the U.S. (Research Triangle Park, Seattle, Miami, San Diego), Kista (Sweden), and Chennai (India) The company also plans to move its North American headquarters from North Carolina to Atlanta, Georgia This decision is expected to affect 1,600 jobs globally and will leave the company with four R&D centers in Lund (Sweden), Tokyo (Japan), Beijing (China), and Redwood Shores (U.S.)Source: Everest Research Institute analysis 10 Proprietary & Confidential. © 2010, Everest Global, Inc.
  11. 11. Asia continues to accounts for the majority of newservice delivery centers; Tier-1 cities saw a few morecenters being set up than Tier-2 cities Q4 2008 Q4 2009 2009 Quarterly averageMarket activity across geographies Market activity across Tier 1 and Tier 2 locationsNumber of service delivery centers set up Number of service delivery centers set up 26 25 21 21 19 18 17 16 15 8 8 6 6 6 6 Asia Europe and Africa1 Latin America Tier 1 Tier 2 Asia continued to capture the largest share of offshore centers established in Q4 2009, much higher than the quarterly average for 2009. Latin America and Europe have also seen market activity in Q4 2009 Players set up centers in both Tier 1 and Tier 2 locations such as Bangalore, Chennai, and Hyderabad in India, Manila in the Philippines, and Córdoba in Argentina 1 Africa region saw one delivery center established in the fourth quarter of 2009Source: Everest Research Institute analysis 11 Proprietary & Confidential. © 2010, Everest Global, Inc.
  12. 12. Locations | Risk and opportunity dashboard Legend Significant risk factor requiring attention Potential near-term risk; may need monitoring Positive change since last assessment D Increase in cost arbitrage in C key offshore locations (e.g., Changes in EU VAT India, Philippines, Brazil, regulations may Poland) in 2009 compared impact business to 2008 case for offshoring A B Increased hiring trend in India Tax incentives among market players due to proposed in Buenos economic recovery Aires are lik l t Ai likely to reduce operating costs for IT companiesSource: Everest Research Institute analysis 12 Proprietary & Confidential. © 2010, Everest Global, Inc.
  13. 13. A Locations | Risk and opportunity analysis In the wake of economic recovery, hiring has once again picked up among the Indian suppliers Hiring trends for TWITCH1 companies Net addition of employees in (QoQ) 23,000- 3,000 25,000 Supplier Net addition in Q3 ‘09 18,647 Tech Mahindra 1,033 Wipro -630 Infosys 1,548 6,498 6 498 TCS 300 Q2 09 Cognizant 4,000 Q1 09 Q3 09 2010 HCL 227 -1,880 In Q2 2009, many Indian firms went slow on hiring, primarily due to weakening project pipeline and longer lead time in conversion of sales opportunity. In fact, there was a net retrenchment of workforce among the Indian players Hiring has once again picked up since Q3 and is likely to increase in Q4 2009 and 2010 Global majors are also gearing up for increased hiring from key offshore geographies such as India. IBM recently announced that it would expand its Indian BPO business by hiring ~5,000 y p y g , additional people in 2010. Similarly, Accenture plans to hire ~8,000 workforce during the same period, most of which would be in India However, on a negative side, increased hiring has also impacted attrition rates and wage inflation, both of which are likely to increase going forward 1 D Denotes Tech M hi d Wi t T h Mahindra, Wipro, I f Infosys, TCS Cognizant, and HCL – six major I di suppliers TCS, C i t d i j Indian li Note: Annual reports of suppliers have only provided actual hiring figures to Q3 2009. Figures for 2010 are estimated based on announcements made by Infosys and TCS only Sources: Everest Research Institute analysis; Supplier websites 13 Proprietary & Confidential. © 2010, Everest Global, Inc.
  14. 14. Revenues for the Market Vista Index Suppliers grew2.4% while operating margins improved by 12 bpTop three and bottom three suppliers in terms of sequential financial growthBy sequential growth in revenues (Q3 By sequential growth in operating margins12009 vs. Q2 2009) (Q3 2009 vs. Q2 2009)Percentage Basis points (bps) EXL 13.5% Convergys 1,580 , Convergys Highest growth in Q3 2009 12.0% EXL 380 WNS 11.7% Unisys 350 2.4% Total Market Vista Index Suppliers 12-5.9% Capgemini -610 Accenture -1.1% ACS Least growth in Q3 2009 -230 ACS -0.4% Atos Origin -160 WNSTop events in Q4 2009Top outsourcing transactions by deal Top suppliers by number of transactionsvalue announced Top supplier M&A by deal size Essex County Council-IBM: US$8,769 IBM: 35 deals HP-3Com: This acquisition, valued at million (8 years) CSC: 12 deals US$2.7 US$2 7 billion strengthens HP’s networking HP s Zurich Financial Services-CSC: Infosys: 12 deals solutions offering in China US$2,900 million (10 years) IBM-SPSS: IBM’s US$1.2 billion acquisition UBS-Cognizant: US$442 million (5 years) strengthens its predictive analytics Saab Group-Mahindra Satyam: US$300 capabilities million (5 years) Cognizant-UBS captive: Valued at US$75 million, the acquisition adds to Cognizant’s financial services expertise 1 Normalized operating margins; excludes Atos Origin and Capgemini, as information is not availableSources: Company disclosures; Web sites; press releases; Everest estimates 14 Proprietary & Confidential. © 2010, Everest Global, Inc.
  15. 15. Revenue growth for offshore-centric supplierscontinued to outpace that of the traditional suppliers Traditional suppliersComparison of supplier financial performance Offshore-centric suppliers(based on Q3 2009 results) *Size of bubble represents quarterly revenue 15% EXL WNS Convergys 10% CognizantRevenue growth vs. Q2 2009 HP ES AG- completed Hewitt Tech Mahindra 2 5% CSC HCL Accenture TCS Infosys Wipro 0% Perot IBM GS Genpact e ACS Unisys -5% -10% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% Operating margin In a trend contrary to that witnessed in previous quarters, all suppliers had positive operating margins Note: Analysis excludes Atos Origin and Capgemini as data on operating margins is not availableSources: Company Web sites; financial releases; press releases; Everest analysis and estimates 15 Proprietary & Confidential. © 2010, Everest Global, Inc.
  16. 16. Supplier developments analysis | M&A and alliancesM&A activity declined in Q4 2009, while alliance activity increasedM&A by supplier category Alliances by supplier categoryNumber of acquisitions Number of alliances 39 36 Offshore-centric 8 16 suppliers 13 Traditional global 28 Offshore-centric 10 suppliers pp 23 4 suppliers 3Traditional global 9 suppliers 7 Q3 2009 Q4 2009 Q3 2009 Q4 2009 M&A declined in Q4 2009 compared to Q3 2009. While overall activity fell, captive divestitures continued to be a key feature of the activity, with two of the three offshore-centric suppliers’ acquisition in this space. Capability expansion in existing areas was the key driver for acquisitions Alliance activity stepped up in Q4, driven by offshore-centric suppliersSources: Company Web sites; press releases 16 Proprietary & Confidential. © 2010, Everest Global, Inc.
  17. 17. Philippine IT BPO Industry: IT-BPO Public-Private Partnership Market Vista Webinar 17 February 2010 Secretary Ray Anthony Roxas-Chua IIICommission on Information and Communications Technology
  18. 18. Philippine Economy Annual GDP Growth (%) Quarterly GDP Growth (%)8.0% 7.1% 6.0% 6.1% 4.6%6.0% 4.0% 4.2% 2.9% 5.1% 5.4% 3.9%4.0% 1.8% 3.8% 2.0%2.0% 0.8%0.0% 0.9% 0.0% 0.6% 0.4%-2.0% -2.0% 4 0%-4.0% -4.0%-6.0%-8.0% -6.0% 6.0% 2004 2005 2006 2007 2008 2009 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409Source: National Statistical Coordination Board
  19. 19. Philippine IT BPO Industry IT-BPO Total Employees (000s) Annual Revenue (US$B)500 442450400 372350 300300250 236200 163150 101100 50 0 2004 2005 200 2006 2007 200 2008 2009Source: Business Processing Association of the Philippines
  20. 20. Awards and Distinctions Offshoring D ti ti Off h i Destination of the Year: f th Y Philippines Top 10 Outsourcing Cities in Asia Pacific: #3 Manila Top 50 Emerging Outsourcing Cities: #1 Cebu 31 New Emerging Destinations: Davao Iloilo
  21. 21. Development ofWorld Class Talent 450,000 college graduates a year World Class Talent
  22. 22. Reliable and Redundant Connectivity TGN-IATransmission Backbone Networks LAOAG BALLESTEROS AAG VIGAN TUGUEGARAO PLDT Digital Fiber Optic Network CAUAYAN (DFON) SFLU DAGUPAN BAGUIO SOLANO URDANETA Globe Telecom Fiber Optic TARLAC CABANATUAN CANERO EAC SUBIC SAMPALOC AURORA Backbone Network (FOBN) ERMITA BACOOR MAKATI TelicPhil (BayanTel) Nationwide APCN2 NASUGB U BATANGAS PAGBILAO NAGA PILI Digital Transmission Network MAMBURAO LEGASPI C2C DONSOL (NDTN) SAN JOSE MASBATE SORSOGON CALBAYOG ROXAS TACLOBAN ORMOC Cable Landing Stations ILOILO CADIZ BANATE SAN REMIGIO TALISAY LILOAN LAHUG BACOLOD MAASIN TALISAY Ballesteros, C B ll t Cagayan MARIBOJ OC TAGBILARAN DUERO DAUIN CABADBARAN Tanza, Cavite CDO BUTUAN MANTICAO Nasugbu, Batangas PAGADIAN ILIGAN Bauang, Bauang La Union ZAMBOA COTABATO DAVAO NGA GEN. SANTOS
  23. 23. Competitive Investment IncentivesIncome Tax Holiday (ITH) f 4 years, extendable t 8 yearsI T H lid for t d bl toAfter the ITH period, special 5% tax on gross income in lieu of allnational and local taxesExemption from duties and taxes on imported capital equipment,spare parts, supplies, and raw materialsDomestic sales allowance of up to 30% of total salesExemption from export taxes, wharfage dues, imposts and feesExemption from Value Added Tax (VAT) on allowable localpurchases such as telecom, power, and water billsAdditional deduction of 50% of total manpower training cost underthe special 5% gross income tax regimeSource: Philippine Economic Zone Authority
  24. 24. Philippine Cyber Corridor Centers of Excellence1. Metro Manila2. Metro Cebu Next Wave Cities1. Metro Laguna2.2 Metro Cavite Centers of Excellence Next Wave Cities3. Iloilo4. Davao5. Bacolod6. Pampanga Central7. Metro Bulacan8. Cagayan de Oro9. Central Bulacan10. Lipa
  25. 25. Strong Government Support Department of T d and Industry D t t f Trade d I d t provides investment incentives Technical Education and Skills Development Authority provides training for potential recruits Commission on Information and Communications Technology promotes the industry and develops “Next Wave Cities”
  26. 26. Thank You!
  27. 27. Experience Excellence:The Philippine AdvantageOscar R. SañezPresident and CEOMarket Vista WebinarFebruary 17, 2010
  28. 28. Philippine IT-BPO: over US$7 billion in revenue in 2009 IT- Revenues Direct employment US$ billion estimate billion, FTE, FTE estimate ON-VOICE 34% NO 37% 7.2 442,000 1.5 OICE 100,500 69% 63% VO 69% 64% 2004 2009 2004 2009 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved
  29. 29. Established excellence in voice to growing non-voice capability non- Revenues Direct employment FAO, HRO, LPO US$ billion estimate billion, FTE, FTE estimate equity research, ON-VOICE analytics, supply management, 34% procurement, industry- NO 37% specific services (health, 7.2 442,000 telecoms, energy) Creative services NON-VOICE ITO, ESO, design processes 1.5 100,500 Medical transcription 68% 62% Legal transcription N 69% 64% Customer interaction and VOICE support, telemarketing, 2004 2009 2004 2009 advisory d i Copyright ©2010: Business Processing Association of the Philippines. All rights reserved
  30. 30. Why the Philippines: the Philippine IT-BPO proposition IT-Number of college degree 2008 “Of 100 graduates of the correct degree, how manygraduates could you employ if you had demand for all?”Medical and natural sciences, 125,005 Engineeringallied fields Poland 50 Hungary 50Business, accounting, and related 98,120fields Philippines 20 China 10Social and behavioral sciences, 75,819 India 25 Brazil 13education Finance/AccountingEngineering and architecture 50,770 Poland 30 Hungary 50IT-related and mathematics 40,894 Philippines 30 China 15Fine tFi arts, masscom, h humanities iti 11,242 11 242 India 15 Brazil 13TOTAL Tertiary level 444,810 GeneralistAnnual growth 4%Source: CHED Poland 15 Hungary 30 Employment rate % Philippines 30 China 3 India 10 Brazil 8 Graduates and others 10 Source: McKinsey Global Institute With basic training (100 hours) 70 With 3 to 6 months’ training 100 Copyright ©2010: Business Processing Association of the Philippines. All rights reserved Source: BPAP
  31. 31. Why the Philippines: the Philippine IT-BPO proposition IT- Business processing offshore market by Factor input Cost destination (2007), 100%=US$19 to 21 B (US$) Ireland, 7% Hourly cost of labor (total, 2007)1 1.00 Others, 7% Others 7% China, 3% Hourly cost of labor (total, 2012)2 1.35 Philippines,  Office rental, CBD prime <15.00 C&EE 5% 21% (sq m/month, 2010)3 Inbound/Outbound voice service 0.03 (per minute, 2010) 4 E1 lines to the US (per month) 5 1,500.00 India, 51% Total operating cost per FTE 17,000 17 000 to (per year, 2008)6 20,000 Source: Based on Everest Research Institute data, excluding Canada 1 EIU , lowest among key offshore services suppliers 2 Ayala Corporation 3 Jones Lang LaSalle, lowest among key offshore English competence among % services suppliers for Tier I CBDs Philippine college graduates (2008) 4 Globe Telecom 5 Board of Investments, Republic of the Philippines Thinks in English 60 6 Everest Research Institute Speaks English 72 Writes in English 83 Copyright ©2010: Business Processing Association of the Philippines. All rights reservedSource: Social Weather Stations
  32. 32. Roadmap 2010 focuses on four broad themes Key issues in 2006/2007Suitable and • Need to spread awareness of career opportunities in IT-BPOabundant • Need to attract rich pools of medical professionals, accountants, and lawyers for BPOtalent • Need to inform investors and stakeholders of availability of talent in Next Wave Cities Talent • Provide information on best sites for IT-BPO operations outside NCR and Metro CebuOperational • Sustain competitiveness relative to established players (e.g., India) and emerging players (e.g.,performance Vietnam) • Need to drive operational excellence, scale, and migration to high-value services Next Wave Cities™ • Provide information to developers on best locations for new developmentsQuality – Help identify and market best developments for IT-BPO operationsinfrastructure – Provide information on long-term sustainability of the industry and projections for growth • Provide information on availability of prime office space outside the Makati CBD Business • Ensure that current incentive regime continues to sustain competitiveness environment i tConducive • Help cities prepare to be good IT-BPO hosts; work with CICTbusinessenvironment • Ensure fully resourced association to drive initiatives • Good investor support in pre-investment phase; potential to improve in execution phase BPAPRisk • Address persistent issues around critical risk factors that affect outsourcing decision (e.g., IPmanagement protection, data privacy) Team 2010Copyright ©2010: Business Processing Association of the Philippines. All rights reserved 32
  33. 33. Roadmap 2010 focuses on four broad themes Key issues in 2006/2007 • Need to recruit over one million new people into the industry to reach 10% market shareSuitable and • High percent of top talent in emerging areas outbound to other markets (e.g., nurses,abundant engineering, accountants)talent • Mismatch in location density between providers and labor. Smaller labor pools not Talent • tappedpressures emerging, reflecting accelerating growth and lack of transparency on Wage wagesOperational • Competitiveness relative to established players (e.g., India) and emerging players (e.g.,performance Vietnam) at-risk • Wage appear to be growing faster than billing rates, creating imperatives for operational Next Wave Cordillera IlocosCagayan Valley • Availability emerging as major issue value services excellence, scale and migration to high Cities™ – NCR rental space only available to reach 68% of revenue target l l il bl Luzon Angeles/Cl f Central hQuality Ma Tagalog Southern arkinfrastructure nila – Given market uncertainty, facilities being built only on commitment, slowing time-to- Bicol market Eastern Visayas • Rentalto ensure that current incentive regimeBusiness District Business • Need rates rising sharply in Makati Central continues to sustain competitiveness Western Visayas g pConducive C environment i t • Most locators concentrated in NCR; other cities may not be O&O-ready Central Visayas ebbusiness Northern Mindanao u • Under resourced industry association Western Mindanao Southern Mindanaoenvironment Central Mindanao Davao • Good investor support in p pp pre-investment phase; potential to improve in execution p p ;p p phase BPAPRisk • Persistent issues around critical risk factors that affect outsourcing decision (e.g., IPmanagement protection, data privacy) Team 2010Copyright ©2010: Business Processing Association of the Philippines. All rights reserved 33
  34. 34. Philippine IT-BPO: US$12 billion in revenue by 2011 IT- Revenue Revenue OUTLOOK 2010 US$ billion US$ billion • 1H: Rapid build up 12.0 • Greater diversity of 26% service offerings • Full service offerings Full-service • US demand recovers • Market diversifies 6.1 CHALLENGES 48% • Perception still off; need better country brand 1.5 • Internal awareness better but … • Need to refocus 2004 2007 2008 2011 government support Copyright ©2010: Business Processing Association of the Philippines. All rights reserved
  35. 35. Q&A Attendees will receive an email with a link to download today’s webinar presentation. To access a recorded audio version of this webinar, please contact: Mark Williamson, mark.williamson@everestgrp.com For advice and assistance in outsourcing and offshoring, please contact Everest: Eric Simonson, esimonson@everestgrp.com Anand Ramesh, aramesh@everestgrp.com For background information on Everest, please visit: www.everestresearchinstitute.com www.everestgrp.com Thank you for attending todayTo ask a question during the Q&A session Click the question mark (Q&A) button located on the floating tool bar in the bottom right of your screen. This will open the Q&A Panel Be sure to keep the default set to “send to a Panelist” Then, type your question in the rectangular field at the bottom of the Q&A box and click the send button to submit 35 Proprietary & Confidential. © 2010, Outsourcing Center

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