"The Philippines doesn't even come to mind," said Stephanie Childs, vice president of the Information Technology Association of America (ITAA), in her presentation during the opening day of Software Innovations Philippines 2006.
Childs represents ITAA (www.itaa.org), which has more than 300 corporate members in the U.S. and promotes policies that concern the IT industry like information security and workforce migration.
The ITAA official presented an overview of offshore outsourcing in the U.S., with companies forecasted to spend nearly US$ 6.2 billion on offshoring by 2008.
Childs said U.S. tech companies continue to focus heavily on India and China when it comes to offshore software work.
She said, however, that the Philippines has an advantage when it comes to 'proximity to client base,' referring to the close affinity of the country to the U.S. in terms of culture and English-language fluency.
Meanwhile, Randall Reade, chairman of the Northern Virginia Technology Council's (NVTC) international committee, pointed out in his presentation that there is a need to educate business leaders in the U.S. about the software industry in the Philippines.
"Frankly, no one even has an image of the Philippines," said Reade, who runs a company called Zipzone that exports software to Asia-Pacific and whose primary task at NVTC (www.nvtc.org) is to 'get its members interested in software overseas.'
While India has gone ahead than other countries, Reade said the rising costs of outsourcing to India has forced U.S. clients to look elsewhere.
He mentioned several factors that U.S. companies look for in a particular country where it plans to outsource, namely: cost, attrition, English fluency, quality, difference in time zones, telecommunications infrastructure, political and currency stability, security and piracy (level) and 'relationships.'
'All international trade is based on personal relationships,' Reade said.
In addition, Reade said software companies in developing countries like the Philippines can take advantage of two industry trends: the increasing popularity of open-source software and the rise of 'software as a service' model, which provides a low-cost alternative for smaller companies.
In the latter model, users can download software online and can get upgrades usually through monthly subscription. Unlike proprietary software, this, according to Reade, allows for more flexible licensing schemes wherein companies can license software depending on the number of workers granted access to it.
In terms of potential market for software, Reade also mentioned growth areas in the U.S. that includes security ('It's broad and covers everything from airports to personal security.'), health care, life sciences and business to government or B2G.
He cited the huge potential for B2G applications in the U.S. not only for the federal government but in local governments of each of the 50 states. Added Reade: 'Surprisingly, most governments (in the U.S.), do not require software to be U.S.-owned so software for automating any task like picking up garbage can be interesting except maybe those used by the military.'