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www.companiesandmarkets.com: Philippines Information Technology Report Q1 2009Mar 31, 2009 (M2 PRESSWIRE via COMTEX) -- -www.companiesandmarkets.com adds new report: Philippines Information Technology Report Q1 2009 Market Overview - The report expects the Philippines to be one of the Asia Pacific region's high-growth IT markets over the next few years, with annual spending increasing to around US$4bn in 2013. The Philippines has a lower PC penetration than many other Asian countries and offers correspondingly high potential for growth over the forecast period. The global economic slowdown did not appear to have a strong impact on consumer demand in 2008, which continued to be robust due to greater affordability and the popularity of notebooks. There are, however, some clouds on the horizon. The business process outsourcing (BPO) sector must overcome a bottleneck in terms of skill shortages, and the BPO industry association recently admitted that it would fall short of its target of 1 million employed in the industry by 2010. The current plight of banks, which account for around 30% of outsourcing demand, presents another threat, although for some organisations the financial crisis could actually strengthen the case for outsourcing. The country also remains vulnerable to weakening export demand which could affect consumer and business sentiment. The report therefore sees the market easing further in 2009 from the strong growth rates seen in 2007. However, the overall IT market compound annual growth rate (CAGR) is projected to be 12% for the 2008-2013 period, reflecting the fundamentals of rising incomes and low PC penetration. Per-capita IT spend was put at just US$25 in 2008, far lower than in other Asian countries such as Malaysia, and even China. One theme of the 2008-2013 period is likely to be geographical expansion, with large call centre companies expanding in search of cheaper labour, infrastructure and operational expenses. Industry Developments The Philippines' Business Processing Association (BPAP) has cast doubt on the BPO industry's ability to reach the government's target of US$12-13bn revenues by 2010. The 2010 target for the BPO sector was set by the government two years ago, but relied on a projection of 1mn employees in the industry by that date. However, BPAP said that it will be difficult to recruit enough workers to fulfil that quota, and has downgraded its projection to around 800,000 employees. One of the biggest challenges for the government and the industry is to continue to ensure a supply of HR with appropriate IT skills. The Department of Education has unveiled a plan to provide computers in an additional two hundred schools, split evenly between elementary and high schools. The programme will cover all sixteen regions of the Philippines and will provide computer lab packages including PC servers, ten workstations, and a wireless broadband router and printer. The ambitiousness of the revenues target is apparent when it is considered that the domestic industry has already more than doubled since 2004. The target would entail the Philippines capturing about 10% of the global outsourcing market by 2010. The Philippines currently has around a 1.4% share, putting it in fourth place globally, behind regional competitors India and China. Company News The threatened slowdown in the PC market did not immediately appear to hit too hard in the Philippines, where in 2008 HP and Acer were the leading PC brands. In 2008, Acer slightly expanded its lead across both desktop and notebook segments with more product releases. HP Philippines targeted 20% growth, and planned to extend its product line to offer more affordable PCs. HP is also expanding in the emerging Mindanao region, home to a large number of manufacturing plants and small and medium-sized enterprises (SMEs). Despite the global credit crisis, software vendors see the SME segment as one of the most promising segments, going forward. SME IT spending was thought to have increased by nearly 20% in 2007. In 2008 Microsoft responded to the current economic crisis by launching a new financing scheme which offers local SMEs the chance to purchase PHP250,000 to PHP1mn of Microsoft products with just a 30% down-payment. BPO continued to attract new investment in 2008. The local unit of IT services company Convergys is to open five new BPO centres nationwide, creating 3,995 more seats for 7,000 new employees. IBM reported a revenues increase of 20% in H108 and announced plans to hire an additional 7000 individuals. Meanwhile, Deutsche Bank announced that it was expanding its outsourcing hub in the Philippines, which will now account for around 60% of group-wide offshoring business. Computer Sales - The report estimated total 2008 hardware spending of around US$1.4bn, and this is seen as rising to US$2.5bn by 2013. PC shipments continued to grow rapidly in 2008 despite fears of a slowdown due to the global economic slowdown, but inflation, and a slowdown in remittances due to a weaker global economy, could dampen consumer spending this year. Affordability remains a key criterion for PC purchase. Prices for branded PCs in the Philippines are now below US$800 per unit. Much growth will of course come from increasing PC penetration, which is still less than 5% currently. However, many consumers are now showing a greater appreciation for the enhanced features and legal software that comes with branded computers. Software - The report expects growth in software spending to continue in 2009, projecting 12% growth from 2008 spending of around US$120mn. Growth should be maintained over the next few years, with BMI anticipating a CAGR for the software sector between 2008 and 2013 of around 9%. Software accounted about 11% of IT spending in 2008 by BMI estimates. Sales will grow as higher PC ownership and internet penetration fuels demand for software. Meanwhile, vendors are exploring new channels to reach the SME segment, such as Saleforce.com and Intel's current co-operation with telecom PLDT. Much will depend on success in combating the software piracy rate which was put by the Business Software Association at 69% in 2007. Open source software is on the rise, and is being preinstalled in the PCs to be sold under the new PC4ALL programme. In addition, a bill promoting the use of FOSS (free and open source software) has come before Congress. In response Microsoft has launched a stripped-down version of Office that retails at about half the price of the full version. Services Growth in the IT Service sector continues to be driven by sustained growth in the IT-enabled services sector, particularly BPO and call centre services. The report forecasts a value of US$674mn in 2009, up from US$601mn in 2008. Due to evolving demand, vendors are having to pay more attention to value-added services such as technical support and product troubleshooting and basic IT and hardware consulting. Call centres are, unsurprisingly, projected to be the biggest single source of earnings for IT service providers, accounting for around 30% of revenues. E-Readiness - The overall number of local internet users has grown steadily over the last five years, reaching an estimated 16.3mn in 2008, according to the report figures. Meanwhile, the number of broadband subscribers was just below 1mn in 2007 and is expected to grow to over 5mn by 2013. By 2013, internet and broadband penetration rates are expected to be 30.8% and 5.3% respectively. Falling prices of PCs and internet subscription rates, partly as a result of greater market competition, have driven this growth. However, low PC and internet penetration rates, along with low telephone density and security concerns, still hold back the development of e-commerce. http://www.companiesandmarkets.com/link.asp?id=OK16GR3C668673 CONTACT: Mike King, Director, www.companiesandmarkets.com Tel: +44 7813 784 393 Fax: +44 1536 790 144 e-mail: [email protected] WWW: http://www.companiesandmarkets.com/link.asp?id=OK16GR3C668673 M2 Communications Ltd disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to [email protected]. |