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e-Government: Interview

Software Development: The Potential for Outsourcing to the Philippines

An Exclusive Interview with Cabinet Member Ray Roxas-Chua

Note: Ray Roxas-Chua is the Chairman of the Commission on Information and Communications Technology (CICT), in the government of the Philippines. He is the youngest cabinet member in the administration of President Gloria Arroyo-Macapagal.

I interviewed him in late 2008. The interview occurred before the Satyam scandal in India, which in my view threatens to disrupt all outsourcing growth in India, perhaps to the benefit of other countries, including the Philippines.

Roger Strukhoff: Let’s start with some background information on the CICT.

Ray Roxas-Chua: The CICT was formed in 2004, as a realization of the importance of ICT (Information and Communications Technology) to the development of the country. We are the lead agency responsible for the active development of ICT in the Philippines. In a nutshell, our mission is to leverage the benefits of ICT in all aspects of society. This covers a broad spectrum, including the growth of ICT and ICT-enabled service industries, e-government initiatives, human capital development for an ICT-enabled workforce, and infrastructure development for bridging the digital divide.

Strukhoff: Interesting that you mentioned the human aspect as well as the infrastructure. It doesn’t do much good if you build this fantastic infrastructure but people aren’t trained and educated.

Roxas-Chua: Exactly. They’ve got to be developed at the same time, because you’re not going to maintain any of these infrastructure and equipment without the proper manpower.

NOW: You were appointed then as Chairman in 2007 by President Gloria Macapagal-Arroyo, and you are still the youngest member of her cabinet.

Strukhoff: Do you think that someone of your generation, which is very comfortable with information technology, is able to bring sort of a new and more comfortable perspective to a mission like this?

Roxas-Chua: Yeah, I think I do. I think it’s a great fit to have someone of my generation in this position. I witnessed the transition from typewriters to computers when I was growing up, then witnessed the emergence of the Internet and World Wide Web when I was in college. So I completely appreciate the benefits that come with having access to these types of technologies. I think this definitely helps me push the initiatives that will bring ICT into the awareness of the general public. And coming from the private sector I have a new, fresh perspective to bring into government.

Strukhoff: The web being created is often described as something that democratizes information…

Roxas-Chua: Yes, and I think it’s a great tool for empowering the people. It helps to create a level playing field, and I think it’s great for a developing country like the Philippines.

Strukhoff: How do you view the work that you’re doing with the CICT?

Roxas-Chua: Part of our goal is to bridge a digital divide and trying to make computers and connectivity more affordable and more accessible. This is something we need to do for the people. It’s our mandate. But the challenge here is really making people realize the benefits of ICT. It’s our job to increase the awareness of ICT, then to make it more accessible to the people.

Strukhoff: One of the CICT programs that fits this description is your “Computer For All” initiative. Let’s talk about that a bit.

Roxas-Chua: Well, we have several initiatives. One is to bring down the cost of PCs. For that we’re working with the private sector, the equipment manufacturers, particularly Intel, which recently launched something called the “net-top.”

Strukhoff: The “net-top.” OK, give us the scoop…

Roxas-Chua: This system is like a desktop or laptop, but is called a net-top because it’s Internet-centric. It’s a full featured PC with monitor and everything you need for 10,000 pesos (note: between $200-250USD).

Strukhoff: And this is just one initiative…

Roxas-Chua: Yes. Another one of our initiatives is putting computers in public high schools, to get students exposed to computers at an early age. I know in much more developed countries like the U.S. they probably start in elementary school and even younger, but doing this at the high-school level in the Philippines is a nice step.

Strukhoff: You mentioned a lack of appreciation, or maybe understanding, among the general population about the full benefits of computers. How do you address this as part of your mission?

Roxas-Chua: The majority of the population still hasn’t even experienced these benefits so it’s understandable that they won’t have a good understanding. And although our government is getting younger, it is still really tough to push ICT legislation.

This is only natural, because in a developing country such as ours you’ve got a lot of issues that are more in the minds of the people--oil prices, food issues, security, and others. Another example was provided in 2008, when we got hit with a huge typhoon that resulted in many casualties.

Strukhoff: So how do you address this situation?

Roxas-Chua: As these things occupy the minds of people, ICT falls in the background a lot of times. But I think that people should also realize that (our commitment to ICT) is a long-term thing. If we’re able to leverage the power of technology, the power of the Internet, this will have tremendous benefits for the people, particularly for the poor.

Strukhoff: Do you see the development of ICT in the Philippines as enabling outsourcing or even a native industry?

Roxas-Chua: I’m glad you mentioned that. The Philippine off-shoring and outsourcing industry, as we call it, is actually one of the fastest-growing industries that we have right now. Filipinos can offer a wide range of services globally, almost seamlessly. People don’t even realize it’s off-shore.

And the Philippines has long had a tradition of customer service. We’ve been a huge exporter of labor for the longest time, with approximately 10 million Filipinos overseas. Our vision is to leverage technology to continue this tradition without our people having to leave the country. This just totally expands the opportunity.

Strukhoff: How is this going so far?

Roxas-Chua: The Philippines has been doing very well. A lot of third-party research firms consider the Philippines next to India when it comes to outsourcing, particularly when it comes to voice services. We’re a big player, we’re growing very quickly. The government is very supportive because the job creation opportunities are tremendous. Right now we’re already employing 300,000 people in the industry. So this makes a huge contribution to the national economy.

Strukhoff: What type of jobs are being created?

Roxas-Chua: The largest portion of the business is in voice services right now, due to the built-in advantage of English speakers in the Philippines and an affinity for Western culture based on historical ties. So we’re a great fit for U.S. companies looking to off-shore their voice functions. Now we need to focus on higher value-added services such as software development, back-office outsourcing like finance, accounting, and HR, as well as niche areas such as animation and engineering design. Medical and legal transcription are also already pretty big here as well.

Strukhoff: What do you think of globalization, meaning, do you see a level playing field for the Philippines, and what sort of things would you like to see in the context of globalization for the Philippines?

Roxas-Chua: We’re definitely feeling the effects of globalization. The off-shoring and outsourcing industry is a perfect example of that, because with the advances in technology we can serve pretty much anybody anywhere in the world. Technology has really enabled that to happen. I wouldn’t quite say the playing field is completely level yet, but it’s getting there. The Philippines is a developing country, as I’ve said, so I wouldn’t call ourselves one of the technology leaders in the world. But yet, all of a sudden we’re arguably number two or three in the off-shoring/outsourcing industry. And all of this is because of technology.

Strukhoff: What are the top three or four things that make you enthusiastic about your job?

Roxas-Chua: I was involved with technology for a long time when I was working in the U.S., and it continues to drive my interest. And now that I’m in government, I’m in a position to really make a difference.

The most important difference between working in the government and the private sector is the number of people that you can help by the initiatives that you undertake. Success in our initiatives to make computers accessible and make connectivity affordable can affect millions of people. The gratification from being able to do that is really what drives me.

More Stories By Roger Strukhoff

Roger Strukhoff (@IoT2040) is Executive Director of the Tau Institute for Global ICT Research, with offices in Illinois and Manila. He is Conference Chair of @CloudExpo & @ThingsExpo, and Editor of SYS-CON Media's CloudComputing BigData & IoT Journals. He holds a BA from Knox College & conducted MBA studies at CSU-East Bay.