Staying ahead in software outsourcing

Philippine software industry eyes new targets in global outsourcing

Dubbed as the best kept secret of global brands in software outsourcing, the Philippines eyes new targets to further fuel the growth of the country’s exports of software products and services.

“The industry is projecting an increase in software exports of 33% or 272 million dollars for 2006,” said Mon Villar, executive director of the Philippine Software Industry Association (PSIA). “Aside from growing the domestic market, we hope to increase our collaboration with foreign companies, either through cross-selling, resource pooling or sub-contracting.” Industry reports said that software exports rose by 20% from 2004 to 2005, equivalent to 204 million dollars.

Still, with competition from neighboring countries, Villar said that the industry plans to grow the domestic market, increase software exports, and focus on quality and domain expertise.

To date, PSIA members generate over a billion pesos in sales from the local market. There are about 17 software companies in the countries that are certified or about to be certified in CMM or CMMI. Likewise, 41 companies have been ISO 9000 and ISO 17799 certified already.

“In today’s global market,” Villar added, “there is a premium on business process knowledge as very few providers have it. This leads to our sustainable advantage over competitor countries like China and Vietnam. We want to focus on our process and technical expertise in finance, HR, gaming, and manufacturing.”

This June 28-30, the Philippines will be bringing several of its leading software development outsourcing players in the 15th Software Development Expo and Conference in Tokyo, Japan. These companies are ADTX Systems, Alliance Software, Astra Philippines Inc., Berthaphil Business Park, N Pax Cebu Corporation, Pointwest Technologies, and Tsukiden Software Philippines Inc. The Philippine participation to Sodec is organized by the Center for International Trade Expositions and Missions (CITEM), the export promotion arm of the Department of Trade and Industry.

“SODEC is an opportunity to highlight our capabilities beyond software development. We hope to strengthen the Philippine position as a destination of choice not just for software outsourcing but also for business processes and other value-added services like online ticketing, medical imaging and mobile applications,” said Trade Assistant Secretary Fe Agoncillo-Reyes, also head of CITEM.

A software powerhouse, the Philippines is home to multinational brands and players in the global software industry, Accenture, Hewlett Packard, IBM Solutions, Sun Microsystems, Headstrong, RCG-IT, and Software Ventures International. Some of the leading Japanese companies who are in the Philippines are Canon, Fujitsu, and WeServ to name a few. In a survey of overseas transactions in July 2004, the Philippines was one of the top ten offshore destinations preferred by Japanese software companies.

The Fly High Program

The software industry is a vital part of the Philippine economy. To further boost the growth of this sector, the PSIA together with the Commission on Information and Communications Technology (CICT) have mapped out a five-year plan for the sector known as, FLY HIGH: Philippine Software 2010.

To date, there are over 28, 000 software developers in the Philippines. “The software industry has exported a total 156 million dollars (8.1 billion pesos) in professional software services to the foreign market in 2005,” said Villar.

Of this figure, 23 million dollars is attributed to the local market. The industry, added Villar, had an estimated 50% growth rate in terms of manpower from 2004 to 2005. PSIA projects this figure to grow by 33% in 2006, with support from the government. Under President Arroyo’s “Training for Work Coupon” program, the software industry hopes to augment its current workforce through training of near-hires through accredited centers using PSIA-approved curriculum. “We are keen on recruiting talent and boost more opportunities for our creative software personnel.”

Prospects

Japan represents a large potential market for software outsourcing. Japan’s information services industry sales in 2003 amounted to 129 billion dollars, based on statistics obtained from the Japan Information Service Industry Association (JISA).

Statistics also showed that outsourced software development work in Japan rose to 445 million dollars in 2003 and could reach 3.5-5.8 billion dollars. “The industry intends to form industry clusters which will focus on niche markets, in which the Philippines is well suited to compete in the global market. These may include mobile/wireless applications, animation and gaming software or even geographical markets like Japan,” said Villar.

Last year’s Philippine participation to SODEC generated 8 million dollars in sales. For information about the Philippine participation to SODEC, please contact please call CITEM’s IT Services and Electronics Division at telephone nos. 832 5044; 831 2201-09 local 212, 251, or 278 or e-mail itservices@citem.com.ph