How the Philippines' rising IT sector can service Japan: the Philippines boast some of the finest IT workers in the world, argues Jessica Pabellon - Opinion

Japan, Inc., Sept, 2003 by Jessica Pabellon

NINE TOP IT COMPANIES from the Philippines participated in the 12th Software Development Expo and Conference (SODEC) 2003, held this July at the Tokyo Big Sight in Odaiba. SODEC is Japan's largest software development exhibition, and this year's Filipino presence was a first.

"SODEC is one of our best ICT projects to date," says Roman G. Baltazar, Tokyo-based Commercial Counselor for the Center for International Trade Expositions and Missions. "It proves the competitive position of the Philippines in this sector--even in a non-English speaking environment such as Japan."

Japan's future labor shortages have been amply covered in the global media. Filipino laborers come from a multicultural society that makes them extremely adaptable to multinational work environments. They are not only multi-skilled, but English-proficient as well--and an increasing number are taking their communication skills a step further by mastering the Japanese language. They work long hours, and their salaries are typically one-tenth of their counterparts' earnings in the US.

With 643 IT schools, 400 technical schools and 86 colleges and universities turning out an estimated 350,000 graduates every year, the Philippines boasts a 94 percent literacy rate--and ranks second among 15 Asian countries in terms of training.

The Philippine IT industry has grown dramatically over the past 30 years. From $10 million export revenue in 1989, the Philippine IT industry now exports approximately $1 billion in information technology services generated front some 290,000 skilled professionals. Once considered the "best-kept secret" of global companies, it has grown into an advanced industry capable of providing a broad and highly specialized range of services to different sectors in the local and foreign markets.

Filipino knowledge workers have been working behind the scenes of the IT industry for more than 25 years, providing the technological backbone for some of the biggest international firms. With five operational cyberparks and 1,739 registered IT companies all over the country, the Philippines is not only a top contender for the distinction of being the e-services hub of Asia, it is also recognized as a major outsourcing services provider for American, European, and Japanese firms.

US companies--including Oracle, Lotus, IBM and Microsoft--currently dominate the Philippine IT software and services outsourcing industry, holding more than 50 percent of the total market share. The challenges of the global economy have led an increasing number of companies to tap overseas professionals to do part (and sometimes all) of their backroom business processing and computer operations. Offshore outsourcing offers the single best solution to the rising cost of operations for many companies. The Philippines is an ideal offshore outsourcing services provider, not only because of the low cost of labor, but primarily for the superior quality of its human resources.

One of the first companies to pioneer the Japanese IT offshore outsourcing market was Advanced Technology and Systems Inc., (ADTX), a Philippines-based subsidiary of IBM-Japan and the Alcantara Group of Companies. A research and development company dealing in application software development, retail solutions, storage solutions, mobile device services, firmware and device driver development and Product Quality Assurance Service, ADTX's pride is its Training Center, which it established in cooperation with NIIT Philippines this year.

ADTX won the "Best Product" Award for its MultiMonitor Color Panel in April of this year in the e-Services Philippines (the country's premier ICT trade fair in Manila). The company enlists the most promising IT graduates in the Philippines to train as scholars in a five-month intensive program based on JITSE (Japanese IT Standard Examination) standards. The program not only equips graduates with new technologies, but also sharpens "soft skills" in business, leadership, communications and Japanese language proficiencies.

Equally strong in its emphasis on training and research is Astra (Philippines) Inc. The company is unique among other Philippine IT firms in its strong ties with the University of the Philippines. Its close collaboration with academia gives it direct access to some of the most brilliant minds in the country and keeps it in the forefront of research and development.

Astra is currently working to develop its own software, which it hopes to release in the international market in the near future. Some of its other services include corporate application systems development, database system development, web system development, content design and production and engineer placement.

Customized service from start to finish is EAZIX Inc.'s promise. "We had three objectives at SODEC this summer," notes Luke Mendoza, EAZIX's director and head of systems and software development. "To understand Japan's needs in software outsourcing, to introduce EAZIX and to benchmark other global outsource solution providers. We achieved two of those objectives this summer, and we look forward to a bigger and better participation next year."