Widening Impact of IT

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The Philippine government has placed particular focus on the development of the country's IT industry, though the sector still faces numerous challenges in order to modernise its infrastructure.

In early August the development of the IT sector in the country drew the attention of the UN International Telecommunications Union (ITU). The ITU deputy secretary-general, Houlin Zhao, visited the country in order to better understand how the progression of IT in a developing country can impact industry, especially during the time of a global economic downturn. The case of the Philippines is particularly intriguing as private sector IT-driven companies have continued to expand despite the grey economic climate, largely due to the growth of the business process outsourcing (BPO) industry.

Currently the Philippines is without a fully fledged department of information and communications technology (ICT), instead relying on a less empowered Commission on Information and Communications Technology (CICT), along with the National Telecommunications Commission (NTC). While the CICT and the NTC together perform the essential functions of a department of ICT, they lack the funding, support and political power needed to stimulate and maximise IT development.

In June of 2009 the Joint Foreign Chambers of Commerce (JFC) of the Philippines recommended 10 policy reforms to the Filipino government that it claims will dramatically increase foreign direct investment (FDI) in the country – among those reforms was the departmentalisation of the CICT.

Also drumming support for the necessary legislation to be passed through congress, President Gloria Macapagal-Arroyo made a special point in her "State of the Nation Address" in late July to implore congress to pass the bill before next year's elections.

The reality behind the IT sector in the Philippines certainly indicates the need for decisive action. Recently, the Philippines ranked 85th of 134 countries in the Global Information Technology Report. The report, which assesses a country's ability to establish and improve ICT infrastructure, indicates the country is falling behind the curve, allowing some of its regional neighbours (such as Vietnam and Indonesia) to surpass it. Industry experts are quick to point out inefficiencies – some of which are caused by the presence of overlapping infrastructure.

It should be noted that the archipelagic makeup of the country presents extremely difficult challenges regarding infrastructure development. As a result, broadband penetration in the country remains very low; however, given the advent of affordable netbooks, internet accessibility in the country is anticipated to grow rapidly in the near future.

In an interview with OBG, the Globe telecom CEO, Ernest Cu, stated that, "The Philippine broadband market is very attractive as penetration rates are low and demand from both consumer and business segments is increasing. In early 2008, only 8% of all Filipino households had broadband access, representing just 1.1% of our 92m population and therefore, the potential for broadband is vast."

Other issues, such as e-governance, indicate a need for escalating the capabilities of the CICT. Not only can e-governance streamline simple processes, it can increase transparency and accountability in a government severely lacking in both areas. Furthermore, it is becoming increasingly possible that part of the Arroyo administration's 10-point agenda, automated elections, may not be fully functional in time for next year's voting.

Lastly, issues within the private sector, such as piracy, intellectual property laws and the need for IT courts, should likely be addressed in a sterner manner. According to some estimates piracy accounts for over two-thirds of the entire software market in the country. Software piracy is a crime punishable with up to nine years' imprisonment and a fine of up to $20,430 under the Intellectual Property Code of the Philippines (Republic Act 8293). However, the implementation of the law has yet to stem losses due to piracy, which were estimated at $202m in 2008, up from $147m in 2007, according to the Pilipinas Anti Piracy Team.

Despite some industry insiders' perceived lack of government oversight and support, there are several highly promising aspects to the sector – the first of which is the quantity of human resources in the country. While questions pertaining to quality have been raised in recent years there is no doubt the country produces ample quantities of graduates with degrees in science, technology, engineering, mathematics and software development. The English-language capabilities add further value to the human resources of the country.

This is an important factor as the BPO industry is certainly one of the Philippines' most promising sectors. Also referred to as the country's "sunrise industry", BPO has rapidly emerged as a significant contributor to the national economy, accounting for over $6bn and 600,000 jobs annually.

Over the past decade, growth in the country's BPO industry has been driven primarily by call centres dedicated to customer service. However, the industry continues to expand in terms of quantity, quality and variety of services. Emerging knowledge process outsourcing services in areas such as animation, graphic design, IT support and software development will necessitate the continued development of IT students.

Although the Philippines has yet to fully utilise and develop its IT sector, signs indicate that the government will have a department of ICT by 2010. The looming election season of spring 2010, during which time most legislative reform slows, remains the only obstacle. Regardless of congressional outcomes, private sector IT development will continue to grow – creating jobs and adding significant value to the national economy.

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