His Excellency, President Benigno S. Aquino; Secretary of Trade & Industry Gregory L. Domingo, Secretary of Science & Technology Mario Montejo; Director-General of the Technical Education & Skills Development Authority (TESDA) Joel Villanueva; Congressman Sigfrido Tinga:
On behalf of the Business Processing Association of the Philippines (BPAP) and its partners associations, the Animation Council of the Philippines, the Game Developers Association of the Philippines, the Healthcare Information Management Outsourcing Association of the Philippines, and the Philippine Software Industry Association as well as the Contact Center Association of the Philippines and the National ICT Confederation of the Philippines, please allow me to warmly welcome you to the 3rd International Outsourcing Summit (IOS).
This BPAP-hosted summit has evolved into a truly global event, and this year we have attracted a record 400+ speakers and delegates from 17 countries and five continents. We are very please that we can share with our colleagues from abroad, the very constructive dialogue that we have been having with the Aquino administration about the future of the IT-BPO industry in the Philippines.
The Opportunity for the Philippines is to be #1 in the world, employing 4.5 million Filipinos, including those hired directly and indirectly by the industry
The good news is that the Filipino knowledge worker is already internationally recognized as world class, and we are now universally recognized as #1 in the world in voice services. Our big opportunity is to leverage this success and become the #1 destination for IT-BPO in general, especially in important segments of non-voice services such as finance, accounting, legal, health care, creative, engineering, and targeted IT areas.
We have already made huge strides in diversifying in non-voice IT-BPO services, and as a result many in this room are hiring growing numbers of accountants, lawyers, doctors, nurses, programmers, game developers, architects, and engineers to perform increasingly complex work.
The tremendous global demand for high quality Filipino talent could increase industry generated jobs from 1.8 million in 2010 to 4.5 million in 2016; of those, 30% are direct jobs in the industry, and 70% are indirect. We have assumed that each direct job in the industry generates 2.5 indirect jobs such as construction and restaurant workers and jeepney drivers, whereas other countries assume a ratio of 3:1 or greater.
One of the best things about our industry is that the growth in generates is very inclusive and alleviates poverty nationwide. We look for talent everywhere, and employees range from high school to nursing to IT graduates, from Laoag to Davao, from socioeconomic class B to D, and include returning overseas workers.
And very importantly, our industry is proving to be a powerful antidote to one of the biggest challenges our society faces, namely emigration and the hollowing out of millions of Filipino families. I wish all of you could have heard our keynote speaker at lunchtime, Myrna Padilla, who spoke eloquently about her journey from daughter of an impoverished fisherman to an overseas domestic helper in Hong Kong. She lived apart from her children for 20 years.
During that time, she learned how to use computers from her employer’s eight-year-old son, and eventually realized that technology provided the means to work abroad, from home. She returned home to Davao to start her own IT outsourcing company that today serves clients in the US and Europe and creates jobs in her home town.
She reminded us that PowerPoint presentations and huge macro numbers mean nothing to the masa, but that the opportunity to break the cycle of poverty by using one’s God-given talent without leaving home and family, because of the miracle of the Internet and super cheap telecom services, is a major contribution to the country and its people.
The Bad News is that We Face Several Major Obstacles to these Opportunities
First and foremost, our supply of talent is a huge constraint, in both quantity and quality. Demand is growing at over 20% annually but our supply of graduates is only growing at 30%. And only 5%-8% are hire-able. There are also huge pockets of untapped demand in the UK, Australia, and Europe in both non-voice and IT. In short, a tremendous amount of demand is being wasted.
We could be growing much faster, and we could be employing many more Filipinos.
What is at Stake if we can Overcome these Hurdles?
If we can address these critical supply and demand issues, we can accelerate from the Base Case to the Accelerated Case of the industry’s Road Map 2016, with major and rapid impact. Instead of achieving $20 billion in exports and 3.2 million total employed in 2016 in the Base Case, we could achieve $25 billion of exports and 4.5 million total employed in the Accelerated Case.
The cumulative impact of the Accelerated Case over five years is huge. What is at stake is an incremental $14 billion in export revenues, and an incremental P295 billion in payroll taxes over the period 2012-2016.
We Believe that the Solution is to Transform our Public-Private Partnership
The Philippine government has been an active supporter of our industry from its inception. For example, as Secretary Domingo and I were both reminiscing yesterday, he has been a tireless champion for us since the very earliest days of the industry in the early 2000s during his first stint in the Department of Trade & Industry, as has Department of Transportation & Communication secretary Manuel A. Roxas, II. Secretary Roxas headed DTI in those early days.
Now, we have a historic opportunity to take our partnership with your government to a much, much higher level.
Based on our very active dialogue over the past year with the government leaders present here today, as well as many others in your cabinet and in congress, we are optimistic that we can create a much more powerful partnership which we would like to call “IPPP,” or an Industry Public-Private Partnership, which is different from infrastructure projects and instead focuses on maximizing the potential of an entire industry.
The starting point and first key is the comprehensive Road Map 2016 our industry’s stakeholders have drawn up in consultation with key government departments, with a laser-like focus on two key areas. First, talent development and secondly, generating demand in non-traditional geographies such as the UK and Australia in non-voice and IT services.
The second key is cohesive teamwork; i.e., we are seeing a united industry working very closely with a well-coordinated executive branch of government and other key players such as Congress and the academe, to develop detailed action programs. The third key is to significantly increase investment by both public and private sectors: the private sector today already spends approximately P680 annually for remedial training. Industry is prepared to invest even more, especially if government can augment this with matching funding.
To be specific, we have been working closely with Commission on Higher Education secretary Patricia Licuanan, Education secretary Armin Luistro, and DG Villanueva in the education cluster; and Secretary Montejo on key programs such as:
- Our Near Hire Training Program,
- The Global Competitiveness Assessment Test,
- An application that Secretary Montejo’s team is working on that will enable, students to teach themselves English more effectively,
- More impactful marketing of our industry to students and their parents,
- A curriculum for a Service Management minor designed by industry; and of course,
- The K-12 program (An initiative that will expand basic and secondary education to 12 years, from 10.)
We believe that some of these programs will have a very high return on investment with a quick payback in jobs generation. For example, the Near Hire Training Programs for the voice segment that we have successfully implemented with TESDA in the past, can train the top quartile of those who nearly got a job, in just 100 hours and for just P5,000. Over 70% of all those trained got a job in just two to three months. This kind of intervention can generate tens of thousands of jobs very quickly and we are working closely with DG Villanueva and his team on this.
We also of course continue to work closely with Secretary Domingo to promote the Philippines abroad especially in newer geographies such as the UK, Europe, and Australia, and our less well-known areas of strength such as non-voice and IT services; and, with Budget secretary Florencio Labor secretary Rosalinda Baldoz for support in the budget and labor areas.
Conclusion
In conclusion, if we continue our current approach, which is largely private-sector led, then the IT-BPO industry will continue to grow, but the Base Case will likely be the best we can do. However, if we transform our partnership into a much stronger IPPP by working much more closely together, we believe that our industry and your administration have a good chance of achieving the Accelerated Case by 2016, which would result in:
- Becoming the world’s #1 destination not just for Call Centers, but for IT-BPO in general
- Increasing total industry-generated jobs across the nation from 3.1 million to 4.5 million
- Increasing cumulative 2012-2016 exports from $78 billion to $92 billion
- Increasing cumulative 2012-1016 payroll taxes from P995 billion to P1.3 trillion
- And most importantly, training hundreds of thousands of young Filipinos to learn world-class skills and transform their lives without leaving the country
We see your presence here today as a clear signal to the world that we are ready to face the future together in a strong, strategic partnership. Thank you and your cabinet officials for joining us today.
