IT AND BPO SERVICES

I. INTRODUCTION 1. About the Industry The Department of Trade and Industry (DTI) defines BPO as the delegation of servicetype business processes to a thirdparty service provider. The industry is generally divided into the following sectors: contact centers, back office services, data transcription, animation, software development, engineering development and game development. The Philippines gained considerable traction as a BPO location based on the availability of professionals with the required language skills, cultural affinity with the US (the main BPO market), and strong customer service orientation of its workforce. This government openly acknowledged the industry as key driving force for growth and employment in its Medium-Term Philippine Development (2004-2010). Companies outsource because they would rather focus on their core business functions while outsourcing or sending non-core and routine tasks for others to accomplish. Its growth can be attributed to two main drivers 1. From the demand perspective, the globalization intensified BPO activities with the lowering of barriers to trade. This allowed companies to explore alternative locations to lower operating costs without sacrificing the quality of service. From the supply standpoint, rapid advancements in information and communication technology (ICT) made deliver services via the internet in a cost efficient and timely manner. Thus, while outsourcing and offshoring have long been part of tactical strategies of companies, it increased dramatically in the past decade with the depth and coverage of services evolving into higher value offerings.

2. Local and Global Scenario 2

Figure 1: Global Offshore Services Market Size (US$ billion)

The global offshore services market is growing at a healthy albeit slower pace, and will more than double by 2016. Companies now regard outsourcing far more as a means to reduce costs for business operations. Overall, the outlook for Asia/Pacific's BPO market remains positive with the Philippines aiming for 10% of the total BPO market or about US$25 billion.

1
2

Ceferino S. Rodolfo, Center for Research and Communication Foundation, The Philippine Business Process Outsourcing (BPO) Sector and the Global Financial Crisis, April 2009, page 1 BPAP Roadmap 2016, Everest Research Group, 2010

The year 2011 saw the industry attain about $11 billion revenues while full-time employees (FTEs) reached about 640,000. The industry is expected to post roughly 20% revenue growth for 2012. 3. Positive effects of promoting the industry Heightened Public-Private Partnerships (PPP) or greater collaboration among stakeholders, including government, industry and the academe, is expected to buoy growth and lead the industry to meet Road Map targets and contribute to 9% of GDP by 2016 (Figure 4). The contribution of the BPO sector to the Philippine economy is undeniable. The industry has given Filipinos jobs with above industry compensation and career paths that will make them stay in the country rather than seek employment abroad. As such, the value proposition of the country is anchored on the availability of a skilled and scalable workforce. Although lower labor cost in the country vis--vis other locations is a primary factor in attracting BPO jobs, the sector, nonetheless, offer a premium wage structure compared to local firms and domesticoriented industries. The resulting higher disposable incomes led the Asian Development Bank (ADB) to conclude that the wholesale and retail sector tops the list of industries where the BPO industry has the strongest linkage. 3 Since the sector depends on human capital, the quality of the telecommunications network, and the quality of institution, the government created the enabling environment which reaped benefits for both service providers and country, fuelling to the overall economic development. II. INDUSTRY PERFORMANCE AND PROJECTIONS 1. Investments/Number of Firms/Major Players Investments Every year the Philippines has seen an increased in the number of companies setting up a BPO presence in the country except the period between 2007 to 2008 which marked the beginning of the global financial crisis.

Source: BOI and PEZA

Nedelyn Magtibay-Ramos, Gemm a Estrada, and Jesus Felipe, An Analysis of the Philipp in Business Process Outsourcing Industry, 2007

The graph illustrates the total investments registered with the Board of Investments (BOI) and the Philippines Economic Zone Authority (PEZA), two Investment Promotion Agencies (IPAs) under DTI which host more than 90% of all IT & BPO activities in the country. Major Players During the past decade, the Philippines attracted many companies, both third party providers and Global In-house Centers (GICs). There are more than 700 companies currently engaged in offshore operations in the country. The following table shows the extent of the success that the BPO industry enjoys in the country.
MAJOR PLAYERS

CONTACT CENTER

IT AND SOFTWARE DEVELOPMENT

BACK OFFICE AND OTHER PROCESSES

CREATIVE SERVICES

ENGINEERING SERVICES & R & D

2. Installed Capacity Presence of a Demand-Supply Gap Despite growing antagonism towards outsourcing from citizens of source countries and in spite of economic and geopolitical uncertainties, the IT & BPO industry global delivery system is still expected to be part of corporate and business strategy. Today, many countries across the globe are attempting to replicate the successes of the Philippines in attracting corporations from United States as well as Europe to outsource and
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offshore business processes. The emergence of these new destinations will be the catalyst that drives future growth and evolution of the industry. Figure 1 shows how the global offshore services will double by 2016. Even as the industry grows and evolves, the Philippines is well entrenched to exploit new market opportunities especially in non-voice services while cementing leadership position in voice services. The country has surpassed erstwhile leader India in terms of revenues and head count in voice services with US$7.38 billion, marginally higher than Indias voice-based BPO exports revenues of about $7 billion in financial year 2011 4. Moreover, aggressive campaigns to diversify into more complex services will sustain rapid growth with the Philippines intending to be the world leader in Healthcare Information Management Outsourcing, Finance and Accounting Outsourcing, HR Outsourcing, and Animation and Game Development. Another goal is to double market share by 2016 in Information Technology Outsourcing, Engineering Services Outsourcing and Multilingual BPO 5. 3. Sectors Served The workforce demonstrates efficiency not just through process capability but by superior business expertise in both voice and non-voice services spanning a range of verticals. Voice and Non-Voice Services Sales and Customer Relations Management KPO (Marketing Research, Legal Case Research and Preparation, Medical Research, Insurance, Mortgage) Back-Office (Finance and Accounting, HR, Payroll, Procurement) Software Development (Product Development, Embedded SW, Project Management, Quality Assurance) and IT Services (Business Continuity/Disaster Recovery, Web Hosting, Network Management) Health Information Management (Claims Processing, Coding and Billing, EMR/EHR) Transcription (Medical, Legal, Publishing, Data Transformation, Film Subtitling) Creative Content (Games Development and Animation) Engineering and Architecture Design

Verticals Banking Financial Services, Insurance (BFSI), Manufacturing, Healthcare, IT, Legal, Energy, Publishing, Retail, Travel, Automotive, Telecommunications, Media, Logistics, Procurement, Fast Moving Consumer Goods, etc.

4. Global Markets Served 6 Although the United States remains the prime source of outsource work, the UK, other European countries and APAC are emerging as major source of business.

Figure 3: Philippine IT-BPO source markets In US$ billion

100% 90% 80% 70% 60% This is attested by the recognition of the 50% National Outsourcing Association (NOA) of the 40% 30% 4 UK recognizing the Philippines as Offshoring Manila Bulletin, Philippines Poised For BPO Leadership, March 18, 2012 20% 5 Alejandro Melchor, After dominating call centers, Philippine IT-BPO seeks world leadership in four more fast growing services, DOST-ICTO, 30 January 2012 10% 6 Destination of the Year in 2007, 2009 and BPAP Roadmap 2016, Everest Research Group, 2010 0% 2006 2010 4 2010. Domestic APAC/AUS UK, EU 1% 8% 10% 5% 10% 11%

Figure 3 shows signs of diversification of source markets as percentage share of US

5. Economic Contribution 5.1 Multiplier Effect and Industry Linkages

The IT-BPO industry contributes to job generation as well as to the overall growth of the economy. Likewise, it creates influencing factors known as the Outsourcing Adjacencies 7 or those individual components which compose the entire outsourcing ecosystem. The impact and breadth are further classified into 4 broad categories comprise related and supporting micro level components.

Resourcing Requirements: Considers the labor or people intensive nature of the industry
which influences related micro parameters such as: o Housing and Infrastructure: Employees tend to stay close to places of work which necessitate development of transportation and commuting systems, as well as residential complexes. Transportation: Boosts the types and scale of mass transportation and increase supporting employment tributaries. Food & Commodities Supply Chain: Increases demand for food in and around the outsourcing hubs and increases the demand from the agricultural sectors. Likewise, there is an increase in employment at food establishments, 24-hour convenience stores and related sectors of commodities and other retail goods. Lifestyle and Entertainment: Growing population and migration toward BPO hubs lead to construction of lifestyle and entertainment venues such as malls and recreation venues which in turn create employment to support these venues.

Communication, Collaboration and Technology: Considers the service delivery system

involved often in different time zones and geographies, and therefore heavily leverages on a robust and redundant communication platform.

Globalization: Considers the diverse time zones that require employees to work in shifts.
Thus not does only the outsourcing sector workforce work round the clock but also the support service personnel bringing in the concept of working in shifts and round the clock availability.

Skill Development & Propagation: Considers requirement for specialized skills and
constant pool of trained manpower, creating a virtual cottage industry of skill development/ training schools which generates more ancillary jobs revolving around technical training, language training, and other process-specific education and formation.

Clark Lester Bautista, THOLONS, The IT & BPO Industrys Direct and Indirect Economic Impact, June 2011

Overall, BPA/P estimates that by the year 2016, the IT-BPO industry would have contributed US$12.9 billion in annual salaries and benefits or roughly PhP 564.3 billion through its consumption. 8 From the estimated total annual salaries and benefits of BPO employees, the food sector is expected to get 41%; housing, 13%; transport & communication, 8%; and other subsectors (as garments and gadgets), 4%. On the other hand, the government will be collecting roughly 20% from the salaries of BPO employees while about 14% is estimated to go to savings. (Figure 4).

Taking this into account, IT-BPO firms in the Philippines contributed to the rise of rest and recreation services as well as commercial and residential real estate developments. Higher income capacities of even an entry level contact center agent - around $330 to $340 per month has increased disposable income and better purchasing power.
5.2 Revenue and Global Market Share and Contribution to GDP IT-BPO services serve as catalysts for growth, the industry played a major role in fueling recent economic development in the Philippines. While the country experienced chronic unemployment because of low to moderate growth and intervening economic crises in the 1970s, early 1980s and late 1990s, the past decade saw the IT & BPO industry grow exponentially, rising in prominence to make the country a destination of choice for GICs and third party service providers. A World Bank study 9 cited its significant contribution to the expansion of services exports in the Philippines as a percentage of total exports increasing from 9% in 1999 to 21% in 2009. The country's services exports rose 3.6% on average per year during the period, higher than that of Asia as a group, which averaged 1.5% per year. Unlike many developing countries, the Philippines had been a net exporter of services since 2006, emerging as one of the best performers in services exports, particularly in IT & BPO. The country currently holds 8% of the global market for IT & BPO services and is expected to reach 10% by 2016 if Roadmap projections are met. 10 The industry can expect additional revenues venturing into high-value non-voice services.

8 9

10

BPAP and Everest Group, Philippine IT-BPO Road Map 2016: Driving to Global Leadership Raja M. Mitra, Senior Consultant, World Bank Group, BPO Sector Growth and Inclusive Development in the Philippines, January 26, 2011 BPAP Roadmap 2016, Everest Research Group, 2010

At a compound annual growth rate (CAGR) of 20%, IT-BPO will become a US$25-billion industry by 2016. The industry is also expected to contribute about 9% of GDP. The study further indicates that if both the industry and government strengthen PrivatePublic-Partnership, the industry can reach loft revenue aspirations and potentially employ 1.3 million workforce by 2016.

Figure 5: Philippine IT & BPO Industry (US$ billions)

6. Industry Projections 6.1 Revenues The industry showed resiliency even during the financial crisis that lingered through 2008-2009. Growing at a robust rate of 28% annually over the past six years, the industry is expected to reach US$25 billion in revenues by 2016 based on the higher end of Road Map projections (see Figure 4). The country is now considered as a strong alternative to India because investors regard the consistency of policies on incentives for IT & BPO locators. The positive business sentiment and improved investment climate would allow the sector to generate higher revenues.

6.2 Employment The industry created more than 110,000 new jobs in 2011 and is expected to create 120,000 more in 2012. Voice BPO remains the largest sector at 65% of total industry followed by the
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non-voice BPO at 20%. By, 2016, the industry is poised to generate 1.3 million full time jobs (See Figure 4) The year 2011 saw the industry reach approximately 640,000 employees as expansion of current locators and influx of new locators buoyed industry performance.
Table 1: Philippine IT & BPO Industry (US$ billion)

Voice BPO Non-voice BPO/KPO ITO Health Info Mgt & Care Engineering Services Animation Game Development TOTAL FTEs

IT & BPO Performance 2011 FTEs Revenue (US$M) 416,000 7,400 128,650 2,058 49,908 993 24,700 277 9,030 172 8,640 128 1,391 8 638,319 11,036

Y-O-Y 21% 24% 37% 172% 5% -10% 13% 24%

III. THE PHILIPPINE VALUE PROPOSITION There are several reasons why companies are drawn to the country for their outsourcing needs. These competitive advantages drove accelerated growth of BPO services in the Philippines and continue to set the country apart from competitor countries, as follows: 1. HUMAN RESOURCES Highly Educated, English Proficient and Skilled Workforce Companies are assured of the best value-for-money proposition with natural pool of talents and human resources that are skilled and adept in the use of English, commanding 72% proficiency among the population. The Philippines also enjoys high literacy rate at 95.9% 11, considered among the highest in Asia. Of crucial importance to the success of BPO is for a country to have a large population base to be able to meet the soaring demand for human resource. This must also be complemented with a strong educational system, which will equip people with the necessary skills-set and capabilities to perform optimally and efficiently. The Philippines has a large population base, about 100 million that is turning out to be an asset as it stimulates investment in education translating to more workers and expanding the talent pool. The country produces 460,000 graduates per year 12 of which 1/3 are graduates business related courses and another 1/3 have degrees in IT and Engineering. Fast Learning Curves

11 12

CIA World Factbook Commission on Higher Education (CHED), Philippines

Expats held senior management roles at the first wave of outsourcing but local talents gradually occupied managerial and C-Level positions even as operations became more established and processes more complex. No significant loss in quality and productivity were observed, thus, ensuring consistent returns and better value to clients. Strong Customer Service Orientation and Loyalty Filipinos are renowned for their strong customer service-orientation. This is an extremely desirable trait because this demonstrates high level of customer interaction and problem solving skills, both critical to performance indicators IT and BPO service providers. Filipinos also have excellent work ethic and incomparable loyalty which translates to low attrition rates. Employees are the most important and valuable asset of an organization, hence, companies do their best to hold and retain and make them stick in the organization. Steady Supply of Graduates and Human Resources 13 Every year, the country produces almost half a million college degree graduates, 66.6% of whom have courses suitable for the IT/BPO sector.

Philippines ranks 3rd among BPO destinations in terms of annual graduates: Table 2: Summary of Graduates (000) Tertiary Graduates (College) Finance and Accounting / Business India 3,500 India 560 China 2,000 China 127 Philippines ~500 Philippines 107 Poland ~500 Poland 107 Mexico 371 Mexico 68 Egypt 330 Egypt 66 Malaysia 131 Romania 33 2. IDEAL LOCATION Expat Friendly The Philippines ranks high among expatriates willing to relocate or work on multi-year assignments. The country emerged as the 8th most preferred destination for expats for 2011 according to a research by HSBC 14 . The main objective of the research was to provide insights on life as an expat experiences, issues, challenges and rewards, putting a premium on ease in quality of life, cultural assimilation, and language and even what it's like to raise children abroad.

Information Technology (IT) China India Philippines Malaysia Poland Mexico Egypt 634 510 85 68 53 50 39

13 14

Commission on Higher Education (CHED) and Everest Analysis 2010 HSBC, Expat Explorer survey 2012

1 2 3 4 5 6 7 8 9 10

Friendliest Countries15 New Zealand Australia South Africa Canada United States Turkey United Kingdom Philippines Spain Malaysia

In one particular component of the survey called the Expat Economics Luxury league table, the Philippines ranked a strong 3rd among countries surveyed. It says Expats enjoy more luxuries in the PHL compared to their home countries like domestic staff, swimming pools, owning their property or owning more than one property, among others. This is predominantly due to increased affordability rather than to increased income. Lower spending on essentials like accommodation, public transport, food and childcare account for the extra level of disposable income. Adaptability and Affinity with Other Cultures Companies can expect Filipinos to easily integrate with professional environment and business culture of different clients and nationalities. Multinational companies operating in the Philippines are quite impressed with the Filipinos ability to assimilate interpersonal norms of behavior and organizational culture. Because of the Filipino workers ability to easily adapt to other cultures and nuances of behavior, companies no longer need to invest heavily for cross-cultural training. 3. INFRASTRUCTURE Multiple Choices of Locations The real estate industry continues to be bullish with the IT and BPO sector driving demand for office spaces in major cities. There are many ideal locations throughout the country as the government encouraged the development of IT parks/centers and accredited buildings. These facilities are equipped with the necessary infrastructure and systems support in order to function at a world-class level.
Figure 1. PEZA 159 IT Parks / Centers

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HSBC Expat Explorer Survey 2011

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Source: www.peza.gov.ph, December 2011

Redundant Telecommunications Network The telecom industry is one of the more robust sectors in the country. Over the past two decades, the sector witnessed substantial investment in infrastructure, driven by the deregulation of the industry in the mid-90s which initially encouraged fixed-line development followed by the burgeoning mobile telephony market, then by a surge in wireless broadband services. More recently, the boom in BPO activities spurred further investments from telecom networks to upgrade voice and data capacity both for domestic and international connectivity. Because BPO services continue make up such a lucrative business, the government has taken steps for the continued growth of the industry by ensuring that a robust and redundant telecommunications network is in place. The infrastructure includes satellites, cable and domestic fiber optic network (DFON), among others. There are several submarine networks that serve as critical components to the BPO industry, providing reliable and diverse links between the Philippines and the rest of the world. There are now seven submarine cable systems landing in the Philippines, including APCN, APCN-2, C2C, EAC, TGN-IA, AAG and Guam-Philippines, distributed in five cable landing stations in Batangas, Ballesteros, Capepisa, La Union and Nasugbu. The good telecommunications infrastructure, both for voice and data makes the country the ideal location for BPO services, as compared to other countries in the Asia Pacific region. The cost of bandwidth has also decreased considerably over the last couple of years. In addition, the presence of a number of carriers for telecommunications services assures a solid competitive landscape for outsourcing buyers. A number of operators have moved forward on putting Next Generation Networks (NGNs). The major operators PLDT and Globe Telecom continue to buy into regional and international submarine cable systems.
Figure 2 (Left): National Telecom Infrastructure Figure 3 (Right): International Capacity (17 International Cable Systems)

BALLEST VIG

SF

BAG

SOLA CABANA AURO MAK

TARLA SUBI SAMPA ERMI BACO NASU

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NA DONS MASB SORSO

BATANG PAGBI

SAN ROX

Source: PLDT Alpha Enterprises

4. COSTS AND OTHER COMPARATIVE ADVANTAGES Filipino employees represent premium talent because of their ability to deliver service that leverages both business expertise and process expertise. Add to the quality of human resource pool is the significant benefits in terms of labor cost in the Philippines. With one of the lowest hourly labor rates in the world, locators and potential investors gain significant savings on operations due to lower costs as well as operational efficiencies as companies can operate 24/7. Companies can easily implement shift-work schedule in the Philippines. The morning shift typically starts before 12 noon for Australia/New Zealand client support. The mid shift typically starts between 12 p.m. and 3 p.m. for UK client support. The night shift begins after 3 p.m. and is aimed to support clients in the United States and Canada. 5. SUPPORT INSTITUTIONS As the 2nd largest destination for outsourcing, it is imperative to create an environment where there is heightened cooperation between the government and private sector. The resulting synergy develops hard and soft infrastructure and creates a robust environment for business to prosper and further improve competitive advantages. The following stakeholders and the general initiatives they have undertaken are instrumental to the growth of the industry: Government At the forefront of this initiative is the Department of Trade and Industry (DTI), conducting international investment promotion of the Philippines as an off-shore BPO location from the onset. TESDA Skills development training to create highly skilled, globally competitive and flexible workforce. This invigorates the workforce with valuable skills and accelerates skills development. Source: BPAP Next Wave Cities 2010-2011 o o DOST Policy formation and development of locations for BPO thru the ICT Office (ICTO)

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Academe Adapting curriculum to the needs of the industry. Many academic institutions are now implementing courses intended to address the needs of the industry.

Industry Associations Ensure responsible and dynamic participation in promotion and policy formation BPAP and associations under its umbrella, as follows: Contact Center Association of the Philippines (CCAP) Health Information Management Association of the Philippines (HIMOAP) Philippine Software Industry Association Game Developers Association of the Philippines Animation Council of the Philippines Inc. Other private sector stakeholders: o Telecom providers Assure redundancy and latency that is vital in the delivery of services. The world-class telecommunication network of the country and the declining rates further enhances competiveness. o Real estate developers Modern buildings are rising in major cities in the country, creating, creating new business districts all over the country. The real estate industry continues to be bullish with the IT and BPO sector driving demand and robust growth for office spaces.

6. GOVERNMENT SUPPORT 6.1 Enabling Laws EO 226 (Omnibus Investments Code of 1987) - BOI is tasked with identifying priority sectors for investments through the formulation of an annual Investment Priorities Plan (IPP). The inclusion in the preferred activities serves as basis for granting fiscal and non-fiscal incentives to locators. RA 8748 - Authorizes the Philippine Economic Zone Authority (PEZA) to grant fiscal and non-fiscal incentives for local and foreign investors who locate in economic zones including IT Parks and IT Centers. R.A. 7042 (Foreign Investment Act or FIA) Provides guidelines for foreign investors to be allowed to invest 100% equity in companies engaged in almost all types of business activities subject to certain restrictions as prescribed in the Foreign Investments Negative List (FINL). Foreigners can own up to 100% of the contact center activity.

COMPARISON OF INCENTIVES OF PHILIPPINES INVESTMENT PROMOTIONS AGENCIES

BOI (Executive Order No. 226, as amended) PEZA (Republic Act No. 7916, as amended) CDC/SBMA (Republic Act No. 7227 Bases Conversion Devt Authority) Exempted from all local and national taxes

INCENTIVE

Income Tax Holiday (ITH)

4 6 years (max of 8 years)

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ITH Bonus Special Tax Rate of 5% on Gross Income Importation of Capital Equipment, Spare Parts, and Supplies Wharfage Dues, and Export Tax, Duty, Impost, and Fees Simplification of Customs Procedures Employment of Foreign Nationals

2 years provided the firm meets certain conditions

value-added taxes, franchise taxes, excise and ad valorem taxes

Special Tax Rate of 5% on Gross Income 0% duty-free Tax and Duty-Free

Exempted Available

None

Foreign nationals may be employed in supervisory, technical or advisory positions within 5 years from a projects registration, extendible for limited periods. The positions of president, general manager, and treasurer or their equivalents, of foreign-owned registered firms may be retained by foreign nationals for a longer period. Foreign employees may bring with them their spouses and unmarried children under 21 years of age

COMPARISON OF INCENTIVES VIS--VIS OUTSOURCING PROVIDER COUNTRIES

Area Philippines Import duty waiver for capital equipment Investment related VAT, customs duty waiver Training grants for finishing schools (TESDA vouchers) Exemptions on local taxes and permits Other input cost linked VAT exempt inputs Services, Sales tax exemption 50% exemption of stamp duty 5 year ITH only in SEZs; plus 50% exemption for 2 successive 5-year blocks subject to reinvestment 100% depreciation on capital goods for 5 years Preferential corporate tax 15% Business tax exemption India Concessional 3.09% customs duty on import of capitals goods Varies China Egypt Malaysia CAPEX subsidies up to 100% Import duty waiver - multimedia equipment Training charges tax exempt till 8% of payroll Training subsidy Telecom subsidie s Rental discount Personal tax rate cuts Corporate tax rate cuts 10 years corporate tax holiday Accelerated depreciation Training subsidy: 20-40% Subsidy on telecom, rentals and utilities

CAPITAL OPERATING

Talent development linked

TAXATION

Tax linked

6 years extendable to maximum of 8 years (or) 4 years extendable to a maximum of 6 years Post-tax holiday, payment at 5% rate on gross income

INCENTIVES FOR ROHQ Subject to preferential income tax rate of 10% in taxable income Subject to 12% VAT Multiple entry visa valid for three (3) years (including spouses and unmarried children below 21 years old) Non-immigrant visa within 72 hours from submission of documents Exempt from securing ACR
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Travel tax exemption (personnel and dependents) 15% withholding tax on compensation income applicable to personnel holding managerial and technical positions subject to: Position and function test Compensation threshold test Exclusivity test

6.2 Development of Next Wave Cities Under the Information and Communications Technology Office (ICTO), ICT councils are created and tasked with building capability and promoting awareness of the benefits of hosting IT & BPO companies. As of March 2012, there are 34 ICT Councils established nationwide. There are existing collaborative engagements between government and the private sector to enable physical and social eco-system that will ensure wider portfolio of locations and improve chances of attracting more locators in the sector. Dubbed as the Next Wave Cities (NWCs) program, the objective is to sustain growth momentum and generate new investments in cities located in Luzon, Visayas and Mindanao, as potential hosts for BPO companies. The will ease congestion in the National Capital Region and the Central Business Districts by providing alternative choices of locations. This also mitigates the pressure on wages and attrition, which is being experienced because of the conglomeration of locators in the NCR. BPA/P, Commission on Information and Communications Technology (CICT), and the Department of Trade and Industry (DTI) developed a Next-Wave City Scorecard which provides information on the key buy factors: talent, infrastructure, cost, and business environment. The NWC scorecard reflects the market sentiment of investors, giving more weight to the cost of doing business in different locations. It also takes into consideration each citys absorptive capacity, or its local BPO sectors estimates employment capacity versus existing sector employment. Moreover, the scorecard recognizes each citys educational institutions, which are accredited as Centers of Excellence/Development by the Commission of Higher Education (CHED). These metrics add dimensions in the employability of local talent particularly its quality and availability.

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6.3 Talent Development in the IT-BPO Industry Industry stakeholders identified 9 programs that best preempts a looming talent supply gap. Each program targets areas for intervention along the entire talent supply chain from assessment to training and education to specialized knowledge requirements. Talent development initiatives are designed to attract, recruit, and develop the 1.1 million employees that industry needs to meet its Road Map 2016 accelerated growth target of US$25 billion in revenues. The following are the programs aimed at addressing talent supply capability building for the different industry sectors: 1.1 Global Competitive Assessment Tool (GCAT) BPAPs Online test based on industry-standard Previsor. Assesses basic skills and abilities identified as relevant to sustaining an individual in a career with the IT-BP industry. Measures the skills gaps and areas of improvement of test takers which guides schools and companies in designing appropriate interventions. 1.2 Advanced English Proficiency Training (AdEPT) program Two-week course aimed at improving English proficiency. Offered to university students and individuals already in the industry wanting to improve their English. 1.3 Industry Training for Work Scholarship Program (I-TWSP) - TESDA bridging program composed of courses designed by industry to prepare trainees for jobs in call centers, software development, medical transcription, and animation. Content for courses in finance and accounting, medical coding and billing, game development, and other course are also being developed and will be offered within the year. MoA between TESDA and BPAP for the joint management and implementation 400 million allocation supports scholarships under a distribution system managed by BPAP and its partner associations.
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 Proven in the past years to be effective in converting near hires into employees after they complete the courses that range in length from 2 weeks to 6 months. To further support the I-TWSP, TESDA has also provided 50 million to fund TESDA Trainers Training (T3) to increase the number of trainers for the I-TWSP. 1.4 BPAP has also recently started two new programs: one on emerging services and the other for high school graduates. Emerging Services Program - Addresses the training and educational needs for specialized services such as finance and accounting, insurance, health care, IT, engineering services, creative services, among others. Associate Program A 612 month program to help high school graduates become employable. 1.5 Service Management Program (SMP) Recently approved by the Commission on Higher Education (CHED) under the leadership of CHED Chair Patricia B. Licuanan. 21-unit minor degree course that can be taken by university students intending to go into the IT-BPO industry. By completing this course, students will receive specialized education in service management to augment their major fields of specialization such as business, IT, engineering, or other courses SMP, which will be offered in at least 6 colleges in SY2012-2013, has been designed by industry practitioners to provide students with skills required to qualify for internal jobs, practical experience, and industry-specific courses. SMP was approved by CHED in a record time of just 4 months. CHED also allocated about 125 million to SUCs to implement IT-BPO programs. 1.6 Service Technology Management (STM) - Program that can be offered by universities as either a post-graduate certificate or a masters degree for individuals with experience in other industries who want to join the IT-BP industry as a career shift. STM was specifically created to arm potential team leaders or managers with industry-relevant information, education, and experience. 1.7 Executive Development Program - Aimed at providing forward-thinking leadership and management education for executives who already hold key position in IT-BP companies. This will help fast-track the development of a sizeable cadre of Filipino executives in management positions in global companies. 1.8 Volunteerism and Sponsorship - BPAP encouraged members to sign up as volunteers for programs of choice. Participants also signed up their bosses as Executive Sponsors to seal their companys commitment to deeper engagement in industry-wide efforts to sustain and enhance the IT-BP talent supply chain. 7. UNIQUE ADVANTAGES

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The country is a study in contrast and diversity, boasting of bustling megacities while maintaining the idyllic vibe of its islands. Modern buildings are rising in Metro Manila while spectacular and pristine beaches offer perfect getaways for those who want to experience Filipino tropical spirit. The second-largest archipelago in the world with over 7107 tropical islands, visitors are inevitably touched by the Philippines beauty and people. A former Spanish and US colony, the Philippines is renowned for warmth and hospitality. Visitors can expect to be greeted with an affable smile which gives one a sense of being welcome. English is also widely used and as the medium of instruction in education, media and business. The Philippines ranks as a preferred posting for Expats. 16 VI. CONTACTS ADRIAN S. CRISTOBAL, JR. Undersecretary for Industry Development and Trade Policy BOI Vice Chairman and Managing Head Telefax: (+632) 8953512 / 8953993 Tel: (+632) 8809303 / 8809332 / 8904898 Email: ascristobal@dti.gov.ph Website: www.boi.gov.ph LUCITA P. REYES Executive Director Industry Development Group Board of Investments Telefax: 8953978 Tel: 8953983 / 8976682 (local 326/325) Email: LPReyes@boi.gov.ph EVARISTE M. CAGATAN Director Infrastructure and Services Industries Department Board of Investments Telefax: (+632) 8956617 Tel: (+632) 8976682 local 228 Email: EMCagatan@boi.gov.ph JOY JOSETTE L. LACHICA Division Chief Sectoral Studies Division (Tourism and BPO Industries)
16

HSBC, op cit

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Infrastructure and Services Industries Department Board of Investments Tel: Trunk Line (+632) 8976682 local 279 ; Direct Line (+632) 8953997 Email: JJLachica@boi.gov.ph Prepared by: PAUL EDWARD E. TAJON VANDERBILT S. LEYNES Sectoral Studies Division (Tourism and BPO Industries) Infrastructure and Services Industries Department Board of Investments Email: PETajon@boi.gov.ph, VSLeynes@boi.gov.ph April 2012

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