The Philippine Advantage in IT-BPM

Jomari Mercado President & CEO, IBPAP October 17, 2014

Philippine IT-BPM industry size

20062013; US$ billion x% YoY Growth

1Philippines IT-BPM market as percentage of global offshore services market, in revenue terms Sources: BPAP, ACPI, CCAP, GDAP, HIMOAP, PSIA

# FTEs

(~000) 236 371 424 527

Global

share1 5% 6% 6% 7% 8%

3.44.5

6.17.1

8.9

11.0

13.2

16.1

2006 2007 2008 2009 2010 2011 2012 2013

34% 17%

25%

24%

Copyright 2012: BPAP. All rights reserved.

FTEs Revenue

(US$M)

Rev %

inc.

fr 12

Voice BPO 586,000 10,000 15%

Non-voice

BPO/KPO

169,818 2,915 18%

ITO 71,196 1,767 52%

Health Info

Mgt & Care

65,895 988 114%

Engineering

Services

11,920 216 5%

Animation 9,200 132 0%

Game

Development

3,500 50 0%

TOTAL FTEs 917,529 16,067 22%

19%

298 640

9.5%

777

Philippines 2013 Performance

31% 45%

10.4%

22%

917

11%

1

by the numbers

O n e M i l l i o n

2

IBPAP, Tholons Analysis

Advantage Vision

Annual Graduate Output (000) Graduate Output of Global IT BPM Locations

Tholons Analysis

Advantage Talent

~300k employed outside of Metro Manila ~150k employed in 3 Centers of Excellence Domestic Growth + Impact Sourcing pushing up employment in Next Wave Cities

IBPAP, ICTO, Tholons Analysis

Advantage Scale

Indexed Operating Costs per FTE per Annum (BPM Market Range)

Tholons Analysis

Advantage Cost

7

Impact on the Philippine Economy

Note: GDP at current prices

Source: Philippine Statistical Authority (PSA); BSP; DOLE-BLES; team analysis

Total Exports

USD billions

Employment contribution

Million jobs

97.6%

2.4%

98.8

2005

94%

6%

272.0

2013

100% =

95%

5%

47.5

2005

79%

21%

76.0

2013

100% =

GDP

USD billions

IT-BPM industry contributed

6% to total Philippine GDP

in 2013

Industrys 21% CAGR for 8 years exceeded 6% CAGR of total

exports for the same period

The IT-BPM industry contributed

16% to annual increases in total

no. of employed individuals for the

past four years

88%

12%

1.1

2005-06

84%

16%

3.1

2010-2013

100% =

Others

IT-BPM

* Based on consumption of average Filipino family; savings of 80th and 90th percentile

Source: National Statistics Office; team analysis

~USD6.7 billion annual salaries

and benefits

Housing Savings

Others

34 million Bench jeans

6.7 million iPods

USD1,340 million

Investments Financial institutions

USD1,000 million

90,000 middle-class houses

USD670 million

Food

1.7 billion Chickenjoy meals

1 billion Big Mac meals

USD2,000 million

Taxes

USD1,340 million

1 million classrooms 7 billion days of

nutrition program

1.7 billion jeepney rides

34 million P500 prepaid cards

USD335 million

Second-order Effects from Direct Employment

Transporta- tion and Commu-

nications

30%

10% 5% 20%

15%

20%

8

Success Stories

9

Success Stories

10

Facing the Challenges

Middle management availability and experience

Niche skills, ie investment banking Growth of tourism industry Change of leadership in 2016 Changing policies and regulations Growth outside Metro Manila Emergence of other countries Rise of new technologies Impact of ASEAN integration

11

The Road to 2020

13

by the numbers

growth

1.3 m i l I i o n direct employment by 2016

14

by the numbers

US$

b i l l i o n 2016 IT-BPM Revenue

15

Thank

you!!

16