Philippine Economy Booms, but Infrastructure Feels the Strain

August 6, 2014 DATAMARK

The Philippines has become one of the top destinations in the world for IT and business process outsourcing (BPO), but problems with infrastructure could put the brakes on the country’s economic growth, according to a New York Times report.

At the beginning of this year, investment advisory firm Tholons released its list of Top 100 Outsourcing Destinations for 2014, and Manila, the Philippine capital and country’s second largest city, was ranked 2nd, just behind Bangalore, India. The Cebu metropolitan area also made the top 10, ranked eighth. Five other Philippine locales made Tholons’ Top 100.

But the Times reports that the Philippines’ roads, airports and electrical infrastructure are under strain to keep up with the country’s booming economy. Residents of the capital complain of power outages, water shortages, and poor road systems that turn five-mile trips to work into miserable two-hour commutes.

The Japan International Cooperation Agency estimates that the 2.2 million vehicles overwhelming Manila’s road system is costing the country $20 billion in lost productivity–a big hit on the country’s gross domestic product of $272 billion.

The administration of President Benigno S. Aquino III recognizes the risk of not addressing the infrastructure problem in a country that has a huge, young workforce eager to make a living. The country’s median age is 22.7, and much of the workforce speaks fluent English with a neutral accent.

According to the Times, the government is moving on 57 infrastructure projects, including airport upgrades, construction of a natural gas pipeline and improvements to highways and Manila’s commuter train system.

The IT & Business Process Association of the Philippines (IBPAP) remains optimistic for the future, and continues with initiatives to grow outsourcing activity in tier 2 cities beyond metropolitan Manila.

“Our goal for 2016 is to add three more cities from the Philippines in the (Tholon’s) top 100,” said Louis Casambre, undersecretary of the Philippines’ Department of Science and Technology-Information and Communications Technology Office.

IBPAP estimates the industry will be powered by a workforce of 1.3 million by 2016, generating $25 billion in revenue.

The post Philippine Economy Booms, but Infrastructure Feels the Strain appeared first on Outsourcing Insights.

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