Technology
Written by Alma Anonas-Carpio / Correspondent
Monday, 02 March 2009 19:44

WHILE the economic downturn has hurt the Philippines’ information technology (IT) sector, several industry players still see a silver lining in the economic cloud, sentiments aired by software and hardware manufacturers during a press forum in Makati City on Friday.

Lauro Vives, chief researcher and founder at Canada-based think tank XMG, said financial pressures are “affecting both buyers and sellers of IT services,” noting that this has led, in turn, to a decreased demand for “people’s talents,” particularly workers in the information and communications technology (ICT) field.

On the brighter side, Vives said, the economic downturn has triggered the “restructuring of the IT services market” and given the ICT work force an “opportunity to normalize its talents.”

He added: “We are entering a change in the economic tide and into the era of the ‘new normalcy,’” quoting the think tank’s August 2008 report.

The local semiconductor industry was the hardest hit by the downturn, which was marked most keenly by the closure of Intel Philippines’ manufacturing facility in Cavite, among others.

Globally, the downturn that began in late 2007 has since affected consumer and IT spending “in a significant way,” the Semiconductor and Electronics Industries of the Philippines Inc. (Seipi) said in a recent report posted on its website. The Philippine semiconductor market “remains in a state of turbulence,” it said.

Seipi president Arthur Young said because semiconductors are an integral part of most consumer electronics such as laptops, desktop computers, cellular phones and the like, demand has dropped drastically enough to trigger layoffs.

When the downturn began two years ago, Young said, the global semiconductor industry shifted its focus from the United States, Western Europe and Japan to Eastern Europe, China and South America.

However, “when the subprime [crisis] happened, everything went down…nothing made sense anymore.”

He also noted that 75 percent to 80 percent of the country’s electronics exports “are in semiconductors.” From an initial drop of 4 percent, “semiconductor demand fell off the cliff” in the wake of the crisis.

While Young said Seipi’s member corporations are all working to “keep our talents within the industry before letting them shift to another industry,” he noted that direction in 2009 is now “more challenging.” This, as forecasts show that global demand for personal computers will drop by 50 percent in 2010. He also noted that there are projections demand for laptop computers will decline, as well.

On a more upbeat note, Young also said forecasts predict “double-digit growth” for sub-laptops, also called ultramobile personal computers or sub-notebooks, in the months to come. “However, fewer semiconductors are needed to make sub-notebooks, so that still translates into a lower demand for semiconductor parts.”

Young noted that, because of all these factors, the first quarter of 2009 is not a good one for the semiconductor industry, though he expects to see a slight recovery in the second quarter of the year.

“[Next year] will be a good growth year, albeit in single digit…and we expect to see recovery in 2011, when money will be flowing back into the market and we will see [again] double-digit growth.”

For consumer electronics and software, Information Technology Association of the Philippines president and Lenovo Philippines country manager Vicky Agorrilla said the economic downturn has created a “challenging environment.”

Agorrilla noted that the Commission on Information and Communications Technology (CICT) has taken steps to initiate a dialogue with the industry to see how the impact of the economic downturn can be mitigated.

“Now our main concern is keeping the flock together. We will try in every way to help affected employees find a job in the same industry before we let them out of our yard,” she said.

Agorrilla added Lenovo is working to “stay focused on our fundamentals of staying as close to your customers as possible, responding to their needs and understanding their spending, investing in innovation, maintaining efficiency and focusing on high-growth markets.”

Business Process Outsourcing Association of the Philippines (BPAP) chief executive officer Oscar Sañez also spoke at the forum, saying outsourcing remains in the pink despite the downturn and that BPAP expects the country’s sunrise industry to experience growth between 20 percent and 30 percent.

BPOs now have a work force of “close to 400,000 people across the country,” Sañez said, noting that the BPO space is doing “very well. Lucky for us, this global crisis is encouraging many companies to outsource their business processes” as corporate cost-cutting efforts continue globally.

Sañez also predicted growth in “nonvoice” BPOs, such as back-office processes, human resource development services, medical transcription, legal back-office work and the like. “In fact, nonvoice BPO revenue totals $1 billion, three times bigger than [the revenue] for voice [BPO], indicating big potential gains for the Philippines.”

With continuing investments in both educating and marketing the Filipino technology work force from both the manufacturing and service ends of the spectrum, Sañez hopes to see another 110,000 jobs created within the year.

“Good financial planning is key” to surviving the financial crunch, Vives said, noting that the trend of “doing more with less” and cutting spending is likely to continue, even as the decreased demand for IT manpower may lead to more IT jobs “shed through 2009.”

The “total industry headcount growth forecast for the Philippines [dropped] from 23 percent from 2005 to 2008 to 13.5 percent compounded annual growth rate through to 2010,” Vives said.

Vives also predicted that the local telecommunications industry’s newest battleground will be in the arena of value-added services.

All in all, the ICT industry’s economic downturn survivors “will be focused, responsive to clients, resilient and variable in the way they think,” Vives noted, adding, “successfully turning crisis into opportunity depends more on closely integrating technology and the business.”

*Published by BusinessMirror newspaper. It is so good to see my byline out again. :)