Outsourcing: The Philippines vs. China and India

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Trend Micro, a Tokyo-listed antivirus software company, employs 1,100 people in the Philippines, one-third of its total workforce. According to Trend Micro Philippine site manager Mitchel Chang, "Filipino software professionals have an excellent service-oriented attitude, are responsive, passionate, and have strong English skills." However, he agrees that finding experienced senior software professionals and senior managers with international work experience is a big challenge. "It is critical for the Philippines to build up even more senior software professionals domestically or help attract some of the overseas experienced software professionals to repatriate back to the Philippines," he says.

Narra VC's Sandejas, a Stanford-trained PhD in electrical engineering, echoes Gurango and Chang. "There is a smaller number of computer scientists and computer engineers with long-term experience and also [a smaller number] with a deeper understanding of core technological concepts, such as those who can change graphics or transmission coding in commercially demanding applications, or those who can invent new search algorithms," says Sandejas. If the Philippines wants to become a serious player in high technology, he says, the local software industry needs to work closely with Philippine universities to beef up the number of science and technology graduate degree holders.

Domestic Stimulus Package?

A domestic stimulus package for technology entrepreneurs, combined with expanded efforts to increase the number of graduate students in computer science, might help the software sector weather the slump. "If government decides to spend—let's say spending on computerization of the elections or the wiring up of schools—it could prime the local tech sector," Sandejas said. He is unsure whether a recession in the U.S. will result in the growth of software outsourcing opportunities for Asia, but he is hopeful. "Any cost reduction in the U.S. will yield more than cost reduction efforts in Asia, because U.S. engineers are more expensive," he argues.

Despite Obama and the Democrats' promise to cut incentives for outsourcing, sending contract work offshore may still remain attractive due to the quality of work and significant cost savings offered by countries such as the Philippines. But to increase its share of the business, the Philippines needs to improve its technical talent pool with the help of academia, persuade its seasoned professionals abroad to return, and help its entrepreneurs stay the course during this downturn.

Dennis Posadas is the author of a new business fable on technopreneurship to be published by Pearson Asia in 2009.