The Philippine Software Market
Philippine software and software service sales will reach $95 million by 2025. In 2020, the software sales benefited from increased demand for devices from Filipinos performing work and studying remotely. Local firms have also pushed for digital transformation, increasing spending for enterprise architecture projects. The purchases also were driven by Microsoft Windows 10 releases to access significant security and feature updates. The 2020 IMD Digital Competitiveness Ranking report listed the Philippines as 57th out of 63 countries.
More than 400 software firms operate in the Philippines, with U.S. and European firms dominating the enterprise application segment. The Philippines’ robust business processing outsourcing (BPO) industry is a strong market customer for enterprise applications. In 2020, the Philippines’ IT and Business Process Association noted that the Philippine BPO industry generated $26 billion in revenue. Domestic consumers include sizeable private sector entities such as financial institutions, healthcare facilities, and conglomerates with various business units seeking digitization solutions in HR, accounting, business intelligence, and data warehousing.
SME’s are emerging customers to this segment, recording 32% of GDP. However, they are often not equipped with the digital tools necessary to expand their businesses efficiently. Other sectors with software needs include the retail, manufacturing, and fintech sectors. Many local businesses are emerging, providing low-cost consulting, maintenance, and systems integration services.
In 2020, the Asia Cloud Computing Association ranked the Philippines 11th in cloud readiness out of 14 Asian countries. The data hosting and processing segment is expected to grow as more firms seek to utilize cloud solutions for efficiency and resilience during the pandemic. Local telecom firms such as Globe and PLDT-Smart plan to create their own data center to service more customers. Large local BPO firms are the consumers of cloud solutions, utilizing regional hubs in Singapore. Most global cloud providers partner with a local firm to offer services.
The Philippine Government’s Digital Transformation Strategy, prioritizing the national ID system. The strategy also seeks to improve the Government’s digital infrastructure, connectivity, ease of doing business through innovative tools and solutions. Software development for revenue management systems, tax collection, and a one-stop online platform for business processing are projects in the pipeline. Government cloud data center, employee email, and national archives management are also part of the Government cloud-first policy.
Interested firms may bid on projects that the Government will tender.H owever, U.S. firms are strongly encouraged to engage the government early to draft their tender specifications. Advocating early on will help one connect with a possible champion for one’s solution, increasing the likelihood of its eventual selection. To pursue both Government and private sector opportunities, having a local partner is essential. The U.S. Commercial Service Philippines can assist in this partnering process.
For more information, please contact Mr. John Giray, Commercial Specialist at the U.S. Commercial Service Philippines at John.Giray@trade.gov.