News: Local software firms to expand markets abroad -
20 Oct 2007
The number of local software companies expanding their markets abroad is growing in order to take advantage of the demand of their expertise and services in other countries.
"While the domestic software industry is growing, the larger opportunities are really in the international market," says Fermin "Tarcs" Taruc, president of the Philippine Software Industry Association (PSIA).
But there are prerequisites before local companies could venture into the offshore market.
Taruc advised local firms to have quality control processes in place, a sufficient track record to attract international clients as well as the sales and marketing infrastructure to make their presence known to international buyers. "While companies may often begin competing offshore on the basis of low costs, this limits them to relatively low-end life cycle activities such as code writing, testing or maintenance."
In order to move up the higher value work ? design, analysis, and project management, another challenge is to develop deep domain expertise, says Taruc, who is president of Jupiter Systems, a local software company.
To address these challenges, many local companies have begun investing in certifications, increased organizational capability and strategic alliances with foreign partners.
For example, Jupiter Systems was one of the six local companies awarded with a CMM subsidy grant by Philexport last year. "This was in line with the efforts to invest in people, technologies, improved procedures and foreign joint ventures which have been ongoing for the past three years. We recognized early on that these were necessary strategic investments to support our vision of becoming a world-class company," says Taruc. He noted that contact center services for the export market continued to grow in 2004 at a more modest pace than the previous years. "The demand for IT solutions in the domestic market was notable especially after a dry spell over a period of at least two years. There were already positive signals of a domestic market pick-up in the first part of the year. However, the trend became even more evident after the May elections. It would seem that a lot of IT investment decisions were put on hold pending the completion of the exercise, says Taruc.
For instance, Jupiter Systems was closing an average of three to four new accounts per month beginning June 2004 compared to smaller and fewer deals in the previous months.
"Some of these accounts were newly identified leads evidencing a shorter selling cycle. Others were accounts that we had been working on for several months evidencing faster purchasing decisions."
Taruc says the drivers for the IT purchase decisions in 2004 were very telling of the state of local business. In the previous years, those who were investing in IT were driven by the desire to cut costs and increase efficiencies in a contracted market.
While this remains an important consideration, the more recent IT investments were driven by expansions and expectations of further growth, he adds.
Most of the software companies are positive on the prospects of the industry for 2005 as they continue to fill up the demand in the market.
Taruc expects that the number of local companies that would be servicing the foreign market will continue to increase.
For one, Jupiter Systems is supporting localized or translated versions of ERIC, a locally developed software for its clients in China, Indonesia, Thailand and Vietnam.
"We are happy to see other local companies starting similar initiatives. This proves what we have always been saying ¬ that the Filipinos can develop products that compete with the world?s best," Taruc stressed.
To enhance the efficiency of companies, "it?s all about being able to make the best business decisions based on accurate information obtained at the shortest possible time and the least possible costs."
"IT is really just an enabling tool. The technology itself is available to everyone. It?s how you use it that makes a difference. That is why its critical to work with the right IT solution provider, one that displays an understanding and appreciation of your business objectives and is committed to help you achieve this through the use of technology," says Taruc.
For 2005, the PSIA plans to increase its membership from the current 40 to 70. It intends to expand the regular dialogues with the government on issues facing the industry, lobby for government assistance in getting CMM certification, conduct skill set inventory survey and gap identification. The association would continue its industry linkage program and build tie-ups with other IT software associations abroad.
Posted By: Manila Bulletin Online
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