TECH SUPPLIER Oct 2020 - Market Presentation - Doc # AP46288820

2H19 Country Report on IT Services — Philippines

By: Roger Ling

On-line Presentation

Abstract

The growth slowdown for the 2H19 cycle is aligned to the Philippines' weaker gross domestic product (GDP) performance. Although the eight-year decline was pinned on the 2019 government budget's delayed passage, the COVID-19 pandemic is expected to also adversely affect the country's 2020 economy. Although the IT services market's growth is lower compared with previous cycles, it remained steady at over 10%. Additionally, IDC expects accelerated decline in 2020 because of the pandemic.

The public sector will play a critical role in sustaining IT services spend in 2020 and beyond. IDC views flagship projects under the "Build, Build, Build" program to be essential in sustaining the growth forecast of the IT services market as it will create a spill over to adjacent industries. For 2H19, government spending attributed to several large contract awards.

The public sector is also driving the digital transformation (DX) agenda. On one hand, it is spearheading transformative blueprints shaping digital adoption throughout different sectors; on the other hand, it is investing in technologies to achieve its digital aspirations. For example, the Government Service Insurance System (GSIS) has shifted the development of the Electronic GSIS Member Online (eGSISMO) and Motor Vehicle Claims Processing System (MVCPS) applications to a low-code platform, compared with procuring traditional custom application development (CAD) services.

Enterprise workloads' cloud migration is a common theme this cycle, with numerous companies, such as Metro Retail Stores Group, JG Summit Holdings, and Ayala Land, among others, driving increased cloud usage. IDC sees cloud adoption as the more pronounced of requirements forming IT services engagements. Hence, enterprises are looking for IT services vendors to not only ramp up their capabilities but also to diversify partner ecosystems and remain relevant.

Opportunities throughout sectors remain robust and diverse during this cycle. In the financial service sector, key trends around digital banking and Islamic banking continue to be areas of growth for both traditional IT services vendors and financial technologies (fintechs). In the public sector, the Department of Information and Communications Technology (DICT) continues to increase its IT budget, showcasing its level of technology/digital entrenchment. Meanwhile, the distribution and services sector is driving integration services through the proliferation of digital wallets and cashless options.


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