Software development is defined as the process of understanding and enumerating the requirements of a software user and translating those requirements or specifications into instructions for the computer to follow and initiate. Software development also involves testing and editing codes to make sure that specifications and their translations are correct, and in documenting and maintaining the program. Already the biggest segment in the E-services industry in terms of players, the software development sector comprises more than 300 outfits offering a variety of services, including analysis and design, prototyping, programming and testing, customization, reengineering and conversion, installation and maintenance, education and training of system software, middleware, and application software. These services are offered to local, but most especially to foreign, clients such as US, Europe and Japan.
The Philippines is to continue offering low-cost, dependable solutions for multi-national corporations (MNC’s) BPO needs. This will allow the nation to pick-up more business to scale up the industry and allow foreign corporations to overtook any political or security issues.
Marketing Channels and Activities of Software Industry :
- Application software : This refers to programs that address functional concerns across industries such as human resource management, payroll system, project management and other related activities. This also includes wo0rd processors, database programs, Web browsers, applications for drawing, painting and image editing and communication programs.
- System software : This refers to the development of programs for operating systems, and software tools and development packages.
- Middleware : These are computer programs used to mediate between application and the system software or between two different kinds of applications .
The main marketing and distribution channel of software development firms is through direct selling. Majority of the firms obtain their foreign buyers from referrals and thru their own contacts. Other means of generating foreign sales include trade fairs and business missions.
The Internet is the chief trade promotional activity of the firms to make their target markets aware of the products and services they offer. Other important promotional activities are production and distribution of brochures.
The target market for majority of the firms is a combination of different segments, including that the sector does not focus on a particular market niche. Software development firms cater to a combination of the high-end and midrange market segments and the rest to a combination of the mid-scale and low-end.
Software Development Companies involved in the development of software products normally invest in Research and Development or R & D and on marketing the products they produce. They usually focus on a particular industry or vertical solution (e.g.. banking and finance, insurance , manufacturing, etc.) or develop products that are cross-functional in nature such as Enterprise Resource Planning (ERP) systems (Accounting, Human Resource, payroll, inventory, etc.). Other Software Development Companies involved in product development are mature organizations that have been in the business for some time. These are also the firms with sufficient resources to invest in product Research and Development or R & D and extensive marketing and promotional programs.
Software services, on the other hand, involve the contracting or outsourcing of work by companies (local and offshore) to a Software Development Companies. The Software Development Companies develop, customize or maintain a system based on the client’s specific requirements. Another service that Software Development Companies offer is skilled manpower (programmers, systems analysts or project managers) that are assigned to a company. The skills of the personnel to be deployed are based on the specific needs of the clients and are usually dictated by the technology it is using. This is more commonly known as body-shopping.
Subcontracting software development is also a normal practice within the industry. Software Development Companies that undertake large, complex projects normally subcontract portions of their work to other local Software Development Companies. Offshore software companies, mostly those based in the US, subcontract programming work (the development of a new system or maintenance of an existing one) to local Software Development Companies.
Body-shopping is also a common practice for software firms, particularly in maintenance programming when the local company provides skilled manpower to the foreign client through the foreign counterpart company. In this case, a specific technical person or persons are assigned to work at the client’s premises for a definite period of time under a contract between the client and local Software Development Companies.
The Philippine local firms consider their major competitors to be India and North America and United States. They cited skills levels, corporate image and reputation, advance technology, lower prices, government support, large volume of resources, lower labor costs and strategic locations for marketing as the strengths of their competitors.
The Philippines is one of the South East Asia Pacific countries and has a culture very close to United States. Literacy rate of 94.6% and a growing IT literacy rate of approximately 7% every year. Since a decade, there has been an increase of more than 20,000 Mathematics and Information Technology (MIT) graduates in Philippines every year.
The Philippines, one of the largest offshore destinations for business process outsourcing (BPO), is home to a US$350 million offshore outsource software services sector. The primary focus of the Philippines software development firms is on systems and application development and maintenance of legacy applications. Its strength, lies on cultural affinity with the US. The Philippines, with its high westernized culture and third largest English speaking population makes it an excellent destination for cheap transition, low-level maintenance work to an offshore location. Another aspect that favors the Philippines as an offshore outsource services location is that it is seen as a safety valve against possible service disruptions due to political tensions in larger locations such as India or Russia.
The downside for the Philippines software services sector is that it lacks the size and scale of its primary competitor, the Indian software industry. The main problem for the industry is that the Philippines need more software development companies. Currently, there are only about 30 software companies focusing on software development for the offshore market. This compares unfavorably to the almost 800 software companies currently focusing on the software services sector in India. Also, none of the Philippine software companies possesses major certification such as Carnegie Mellon Universities Capability Maturity Model (CMM) certification, while most of the Indian firms are CMM-a certified at level 5.
According to the Philippine Software Industry Association (PSIA) the Philippine software industry is growing rapidly at an annual rate of over 30%. That target will translate into an increase of US$1 billion in annual revenue and 60,000 new jobs by 2010.
Business Process Outstanding (BPO) continues to be a bright spot in the Philippine Economy. Built on the strength of the Philippines’ skilled and trainable human resources and the presence of good communications infrastructure, the country has established itself as a competitively priced provider of quality services. BPO includes several sub sectors such as contact centers, software development, transcription services, business services (such as finance, Human Resources and Information Technology), and animation.
Thai Companies and Investors can invest in the Philippines under the Software Services Sectors since it is very viable and the return of investments are very high. Likewise, the Philippine Government is extending incentives to the foreign investors in the Software Services investment sectors. Philippine initiatives are being accomplished such as the (1) adoption of the policy environment to promote investment in IT related areas; (2) enhancement of the physical infrastructure with a view to improving access, especially in the areas which are currently underserved; (3) the development of an IT manpower base; and (4) the implementation of a government-wide computerization program.
Source : http://www.depthai.go.th