Money in technology ventures

WITH SAFE bets for your hard-earned money viewed as close to nonexistent going into the New Year, Information Technology, or IT, may be one of the budding entrepreneurs’ remaining options.

AN artist works on digital animation artwork during the BPO Summit Philippines. — Photo By Jonathan L. Cellona

As credit gets tighter as a result of the US-led financial crisis, people may want to reconsider decisions to keep their entire life savings under pillows, thanks to distrust towards the world’s financial institutions.

But it’s not software programming or building Web sites that will pay dividends in these uncertain times, industry players say.

In the recession, money will be made in cheap but vital services like photocopying, printing and even online gaming.

While hardware sales may post flat growth this year, Mon Ibrahim, Commission on Information and Communications Technology (CICT) commissioner for cyber services, said IT-related services would fare better.

"If you look at [businesses that provide] IT-related services, like Internet cafes, there are a lot of people using them," he said.

Mr. Ibrahim said as companies cut costs, having other people do some of the office’s little tasks will be more prevalent.

He said this year, owners of shops offering simple services like photocopying and printing services, to name a few, can take comfort in the fact that their offerings will remain sought-after, if not more so, this year.

Another sector that is looking at better times compared to other industries is small-size outsourcing.

Mr. Ibrahim said Internet cafe owners looking to make the most out of their facilities during off-peak hours may want to consider turning their Internet stations into call center seats.

He said industry projections by groups like the Business Processing Association of the Philippines (BPA/P) of about 30% growth, even as the world goes into recession, will also apply to small size operations, not just to multinationals.

"If I were to retire from my government job and start my own business, I would most likely put up my own call center," Mr. Ibrahim said.

The Philippine Call Center Alliance, Inc. (PhilCall), a group of call center companies with less than 500 seats, said growth is expected to hit around 20% this year.

This is twice as fast as the growth that small call centers, which outnumber bigger BPO firms two-to-one, experienced in 2008, at around 8% to 10%.

"The advantage of small call centers is that they are very flexible," PhilCall President Joji Bian said in a recent interview.

She added it would be easier for small call centers to attract clients than bigger call centers since the former could offer cheaper rates.

The biggest challenge is raising awareness among the clients of small call centers, which are mostly small to medium businesses in the US.

"There are still [small companies] in the US that do not know they can outsource," Ms. Bian said.

Notably, however, PhilCall’s growth projection for 2009 is much lower than that of the rest of the industry, according to the BPA/P.

The industry group, which is the official consolidated marketing arm of the country’s BPO industry, is projecting a growth of around 20% to 30% in terms of revenues and number of full-time employees.

This entails employing more than 100,000 new employees, and posting more than $2 billion in increase in export revenues, all in the span of one year.

The BPA/P says at the end of 2009, the local BPO sector will have more than 600,000 employees, and would have raked in over $9 billion for the year.

Meanwhile, another source of income, which seems to have become a staple for most Internet cafe owners in the past decade, is computer gaming.

"I think online games will still be a growing business. We are still at infancy [stage]," said Gil Edeza, chief operating officer of local computer game publishing company, IP-eGames, a subsidiary of listed IT firm, IPVG Corp.

Industry players have claimed that the country’s online gaming industry may be worth up to $1 billion.

The IPVG unit expects its online gaming business to grow by as much as a fifth this year, owing to the introduction of new games in several genres.

This should come as good news to Internet cafe owners, whose shops are patronized mainly by elementary school and elementary school-at-heart gamers.

"Online gaming is one of the cheapest forms of entertainment," he said in a recent interview.

"The Filipino youth is one of the most technology-savvy markets in Asia. We are not afraid of technology. This is validated by our early adoption of mobile applications and online games," Mr. Edeza said.

He said the Filipino youth’s barkada culture also fits for the sector since, unlike console-based video games played in other countries like the US, online gaming is a way by meeting new people, albeit virtually at first.