PRLog (Press Release)– Jun 05, 2011– Market Overview
BMI expects the Philippine IT market will grow by around 11% in 2011, slightly slower than in 2010. Over our five-year forecast period, the market should achieve regional outperformer status, growing from a projected US$2.9bn in 2011 to around US$4.5bn in 2015. Demand from areas outside Manila will continue to drive growth this year.
The Philippines has lower PC penetration than many other Asian countries and thus offers correspondingly high growth potential over the forecast period, particularly with support from government information and communication technology (ICT) programmes. In the enterprise segment, surveys suggest that many enterprises and small and medium-sized enterprises (SMEs) plan to increase IT spending again in 2011. The business process outsourcing (BPO) industry, which accounts for around 30% of IT spending, continues to grow.
The Philippine market appears better placed than others in the region for recovery, as consumer spending remains strong and the key BPO industry continues to grow. BMI estimates the compound annual growth rate (CAGR) for IT spending at 11% for 2011-2015, driven by rising incomes as well as PC penetration. Per capita IT spend was estimated at just US$28 in 2010, far lower than in other Asian countries such as Malaysia and China.
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Industry Developments
In 2010, Lubang Island in Occidental Mindoro launched the first local pilot of the One Laptop Per Child (OPLC) project. Lubang became the first formal classroom deployment of the programme in South East Asia, and there were plans to use it as a model for replication across the country. Meanwhile, in 2010, the Philippines Department of Trade and Industry continued to expand its Personal Computers for Public Schools (PCPS) programme.
Despite the global economic slowdown, various government organisations proceeded with projects designed to facilitate delivery of e-services. The Bureau of Customs Electronic-to-Mobile (e2m) project is introducing paperless transactions for processing imports documents. The e2m project is remote control helicopter just one part of the PHP500mn computerisation programme being undertaken by the bureau, which accounts for 25% of the government's tax revenues.
Company News
Vendors in the Philippine market are increasingly focused on the cloud computing opportunity. US IT leader HP claims to have seen more Philippines companies shifting from traditional networking to cloud computing. Meanwhile, in August 2010, leading local telecoms company PLDT launched what were promoted as the first cloud computing services in the Philippines under its AppFarm brand.
Multinational PC vendors in the Philippine market are looking to drive growth through expansion outside Metropolitan Manila. In 2010, Lenovo Philippines announced it was going to launch a more aggressive marketing campaign in Cebu, based around its latest Idea laptops and all-in-one desktop. HP is also expanding in Mindanao - which is home to a large number of manufacturing plants and SMEs - and has targeted the Davao region. Meanwhile, Japanese company Toshiba has also recently opened its first concept store in Cebu.
Microsoft reported its H110 market revenue growth for the Philippines surpassed that of the same period of 2009. Microsoft Philippines' 2009 revenues were estimated at US$99mn. The company has said it continues to see growth in the Philippine market, particularly through cooperation with local original equipment manufacturers, which bundle Windows 7 and other Microsoft products together with their PCs.
Computer Sales
BMI forecasts 2011 Philippine computer hardware spending of around US$1.9bn, which is expected to rise to US$2.8bn by 2015. Spending on computer hardware is estimated to have grown 16% in 2010, with a boost in the second half of the year from procurements delayed from 2009.
Jobs in the IT industry, particularly the BPO sector, are projected to grow by 20-25%, driving demand for hardware. Government procurements are also providing relief with e-government and public sector computerisation programmes. Education initiatives such as the education department's Laptop for Teachers programme will help sustain spending in this segment.
Software
BMI estimates the addressable Philippine software market will increase to US$315mn in 2011. Growth should be maintained over the next few years, as BMI projects a CAGR for the software sector over 2011-2015 of 12%. Software accounted for about 11% of IT spending in 2010 by BMI estimates and sales will grow as higher PC ownership and internet penetration fuel demand for software.
Vendors are exploring new channels to reach the SME segment, such as Saleforce.com and Intel's current cooperation with telecoms company PLDT. Much will depend on success in combating the software piracy rate, which was estimated by the Business Software Alliance at 69% in 2009. Opensource software is on the rise and is being pre-installed in PCs to be sold under the PC4ALL programme.
Services
Growth in the IT services sector continues to be driven by the IT-enabled services sector, particularly BPO and call centre services. BMI forecasts a value of US$755mn in 2011, up from US$681mn in 2010. Due to evolving demand, vendors have to pay more attention to value-added services such as technical support and product troubleshooting, or basic IT and hardware consulting.
Growing adoption by the BPO sector is expected in 2011. Call centres are, unsurprisingly, projected to be the biggest single source of earnings for IT service providers, accounting for around 25% of revenues. After call centres, telecommunications, financial services and manufacturing are the next most important sectors.
E-Readiness
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