Secretary Ray Anthony Roxas-Chua IIICommission on Information and Communications Technology

April 16, 2008

The Philippine Offshoring and Outsourcing Industry

Industry Overview

Industry Growth

101

163

236

300

0

50

100

150

200

250

300

350

2004 2005 2006 2007

$1.3

$2.2

$3.3

$4.9

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2004 2005 2006 2007

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

Software9%

ContactCenter

74%

Back Office

8%

TranscriptionEngineering

Animation

Software10%

ContactCenter

66%

Back Office13%

TranscriptionEngineering

Animation

4.9B USD 300K Employees

6%3% 2%

4%3%

2%

Philippine Cyber Corridor

Cities with Operators

BacolodBacoorBaguioBatangas CityCagayan de OroCaintaCamarines Sur Prov.CebuClark/AngelesDavaoDumagueteIloiloLegaspiLipaManila NCRSta. Rosa

Other Ready Cities

CabanatuanDagupanGeneral SantosLeyte Prov.Subic/OlongapoUrdaneta

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

Technical-Vocational 4,990 29,958 34,948

Pre-Baccalaureate 7,167 44,443 51,610

Baccalaureate 86,394 245,706 332,100

Post-Baccalaureate 727 1,318 2,045

Master’s 5,145 8,265 13,410

Doctorate 435 956 1,391

Total 104,858 330,646 435,504

Rest of Phils. Total

2006 Graduates

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 networkRedundant international connectivityDeregulated telecommunications industry

PowerReliable electricity with excess capacity over current

demand Real Estate

Low rental rates with favorable termsDedicated IT parks in urban areas

Government Support

Investment IncentivesIncome tax holidayDuty free importation of capital equipment

TrainingPhP350M (USD8M) in training scholarships

allocated to O&O industry Promotion

Philippine O&O competencies highlighted during trade missions

14

16

21

23

28

36

37

37

39

49

50

95

100

111

115

124

160

India

Philippines

China

Malaysia

Mexico

Chile

Poland

Hungary

Brazil

Czech Rep

Russia

Canada

USA

Japan

Ireland

UK

Germany

Cost Effective Labor

Source: McKinsey Global Institute, 2006

Labor Cost Index (USA = 100)

Service Oriented People

Significant Overseas Filipino Worker (OFW) population8 million Filipinos worldwideRemittance of USD14.4B in 2007Includes 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

101

163

236

300

0

50

100

150

200

250

300

350

2004 2005 2006 2007

Source: BPAP

Total Offshoring and Outsourcing Jobs (000s)

Provides High Incomes

O&O Salaries

Quintile

1st

2nd

3rd

4th

5th

Supports Related Businesses

O&OIndustry

TAXES

Brings Work to the People

80%

20%12%

88%

Source: National Statistics Office and BPAP

Population Breakdown O&O Jobs Breakdown

Manila NCR

Manila NCR

Rest ofPhils.

Rest ofPhils.

Challenges

Challenges Ahead

Talent development Currency appreciation vis-à-vis USD High concentration of customers in USA Dependence on voice services Sustainability of labor cost advantage Competition from other countries

Thank You!