Recent Study: Philippines Information Technology Report Q2 2014

The Philippines IT market is expected to be a regional outperformer over the medium term due to the low penetration of products and services, an opportunity for vendors, and the rapid expansion of the BPO industry. We forecast IT spending growth of 10.9% in 2014, with the market reaching a value of PHP181.8bn. We expect medium-term performance to be slightly weaker, but still outperforming on a regional basis. Increased levels of PC ownership as incomes rise and average PC prices decline will boost the retail market, while the BPO industry is positioned to grow over the medium term as it increases volumes and moves up the value chain. Emerging technologies will add to growth momentum, with cloud services, analytics, smart infrastructure, telehealth and e-government all expected to gain traction over the medium term.

Headline Expenditure Projections

* Computer hardware sales: PHP98.2bn in 2013 to PHP106.8bn in 2014, +8.9% in local currency terms. Desktop and notebook shipments declined in 2013, but this was more than compensated for by the boom in tablets. We expect demand for low cost tablets will extend this trend to 2014.
* Software sales: PHP18.8bn in 2013 to PHP21.2bn in 2014, +13.1% in local currency terms. Enterprise software penetration is low, but with the modernisation of local companies we expect strong growth in spending particularly for low cost cloud ERP systems.
* IT services sales: PHP47.0bn in 2013 to PHP53.7bn in 2014, +14.2% in local currency terms. The BPO industry is well developed in the Philippines, but we expect improvements to infrastructure will enable providers to move up the value chain to software and application development, thereby boosting sales.

Full Report Details at
- http://www.fastmr.com/prod/775435_philippines_information_technology_report_q2_2014.aspx?afid=303

Key Trends And Developments

* The BPO industry continues to be centred on the Manila area, with around 73% of operations in that region. However the industry is becoming increasingly important across the country. The outsourcing industry is now the leading private sector employer in several other cities, and we expect geographical diversification of the industry will continue. The IT and Business Process Association in the Philippines is working with the Department of Science and Technology and the Commission on Higher Education to augment skills supply in 10 new wave cities for BPO services with the aim of creating an additional 520,000 jobs. The 10 new growth sites for IT-BPO hubs include Baguio City, Iloilo, Cagayan de Oro, Santa Rosa, Laguna; Davao, Dumaguete, Metro Cavite, Metro Rizal, Naga, Bulacan and Cotabato. Meanwhile, another positive development is the launch of the South-East Asia Japan Cable (SJC) system connecting the Philippines with Brunei, China, Hong Kong, Thailand, Singapore and Japan, which will enable BPO providers to move to higher value services such as analytics and software development.

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