Mapping the Philippines in the Offshoring Services Global Value Chain and a Closer Look at the Engineering Services Outsourcing

This chapter aims to analyze the current position and potential for upgrading of the Philippines in the global value chain of the information technology offshoring services. With its rapid growth in the last decade, the Philippines is characterized as strong in voice and is expanding in the non-voice and more complex services sectors. Applying the IT offshoring services framework introduced by the Duke CGGC GVC, the analysis shows that the industry’s upgrading strategy could pursue the following trajectories: (1) upgrade from BPO to KPO especially in medical, financial, and legal; (2) expansion and upgrade within ITO; and (3) inter-sectoral upgrading to verticals or industry-specific activities particularly shared services companies, game development, and engineering services outsourcing. In upgradingUpgrading in the IT-BPM GVC, human capital is a critical factor. Hence, the workforce and their well-being should be at the center of the country’s IT-BPM’s GVC strategy. Expanding into more knowledge-intensive BPOBusiness process outsourcing (BPO) segments would require skills and workforce development covering not only good communication skills but also specialized qualifications in areas such as IT, engineering, finance, and design. One of the challenges that the PhilippinesPhilippines faces is the lack of adequate size and quality of the country’s pool of professionals and graduates in business-related fields, medical and allied fields, social sciences, and engineering. Close coordination between the government and the industry would be needed in order to address the looming talent supply gap and implement educational reforms to better match the industry’s technical requirements. Government measures would also be needed in strengthening infrastructure support particularly broadband infrastructure, ensuring high-speed Internet connectivityConnectivity and availability of power at reasonable costs, and effective implementation of the intellectual property law.