Republic of the Philippines: Strengthening Knowledge-Based Economic and Social Development (Financed by the Republic of Korea E-Asia and Knowledge Partnership Fund)
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Technical Assistance Consultant’s Report Project Number: 46234-001 September 2016 Republic of the Philippines: Strengthening Knowledge-Based Economic and Social Development (Financed by the Republic of Korea e-Asia and Knowledge Partnership Fund) Prepared by Information Technology and Business Process Association of the Philippines Taguig City, Philippines For Department of Finance This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. Asian Development Bank Department of Finance Republic of the Philippines COMPLETION REPORT IT-BPM Ind ustry Knowledge Hub Proje c t TA-8164 PHI: Strengthening Knowledge-Based Economic and Social Development – 1 BPAP (46234-001) Prepared by Information Technology and Business Process Association of the Philippines Consultant (September 2016) Information Technology and Business Asian Institute of Management University of the Philippines Process Association of the Philippines Open University Table of Contents I. Description 1.1 Rationale . 1 1.2 Background . 2 II. Expected Result and Outputs 2.1 Expected Result . 3 2.2 Output 1 (Outcome, Output, Activities) . 3 2.3 Output 2 (Outcome, Output, Activities) . 3 2.4 Output 3 (Outcome, Output, Activities) . 4 III. Delivery of Inputs and Conduct of Activities 3.1 Terms of Reference of Consultants . 4 3.2 Detailed Accomplishments . 4 3.2.1 Quarter 1 (Sep to Dec 2013) . 4 3.2.2 Quarter 2 (Jan to Mar 2014) . 7 3.2.3 Quarter 3 (Apr to Jun 2014) . 11 3.2.4 Quarter 4 (Jul to Sep 2014) . 14 3.2.5 Quarter 5 (Oct to Dec 2014) . 16 3.2.6 Quarter 6 and 7 (Jan to Jun 2015) . 18 3.2.7 Quarter 7 and 8 (Jul to Dec 2015) . 19 3.2.8 Quarter 9, 10, and 11 (Jan to Sep 2016) . 20 3.3 Changes Made During Implementation . 21 3.3.1 Variation No. 1 . 21 3.3.2 Variation No. 2 . 22 3.3.3 Variation No. 3 . 22 IV. Evaluation of Outputs and Achievement of Outcome 4.1 Evaluation of Outputs . 22 4.2 Reports and Deliverables of IBPAP . 24 4.3 Monitoring and Evaluation Framework . 25 V. Overall Assessment and Rating . 30 VI. Challenges Encountered. 30 VII. Recommendations and Follow-Up Actions. 31 Annexes Annex 1 : ADB and IBPAP Contract Annex 2 : Terms of Reference for Consultants Annex 3 : IBPAP Inception Report Annex 4 : AIM Thought Paper Annex 5 : TOR - Deployment and Pilot of Knowledge Hubs Annex 6 : TOR - Development and Implementation of MIS and Project Portal Annex 7 : TOR - Design and Implementation of eSMP Courseware Annex 8 : DOF Endorsement Letter to ADB Annex 9 : AIM Case Studies Annex 10-a : Contract Variation No. 1 Annex 10-b : Contract Variation No. 2 Annex 10-c : Contract Variation No. 3 Annex 11 : IBPAP Deliverable 1 Criteria for locating knowledge hubs and selecting beneficiary HEIs/SUCs Annex 12 : IBPAP Deliverable 2 Overall strategy and roadmap for enhancing curriculum and instruction in HEIs including incentives and management systems design for the continuous improvement of curriculum and instruction in HEIs Annex 13 : IBPAP Deliverables 3 and 4 Deliverable 3: Models and best practices for university-industry linkages including recommendations to address constraints for improving quality of services and achieving closer university and industry linkage Deliverable 4: List of HEIs and international/regional institutions for twinning arrangements including a draft twinning arrangement or partnership agreement document Anne 14 : IBPAP Deliverable 5 KH Business Case & Financial Model which was a deep dive of Deliverable 2 Acronyms and Abbreviations ADB Asian Development Bank AdEPT Advanced English Proficiency Training AIM Asian Institute of Management BEST Basic English Skills Training BPO Business Process Outsourcing CEO Chief Executive Officer DOF Department of Finance DOST Department of Science and Technology GDP Gross Domestic Product HEI Higher Educational Institution HR Human Resource IBPAP Information Technology and Business Process Association of the Philippines ICT Information and Communications Technology ICTO Information and Communications Technology Office IT-BPM Information Technology and Business Process Management KH Knowledge Hub LMS Learning Management System M&E Monitoring and Evaluation NEDA National Economic Development Authority PDP Philippine Development Plan PDS Philippine Digital Strategy PSC Project Steering Committee SMP Service Management Program SUC State University and College TA Technical Assistance TOR Terms of Reference UPOU University of the Philippines Open University I. PROJECT DESCRIPTION 1.1 Rationale The Information Technology and Business Process Management (IT-BPM) industry in the Philippines has attained leadership in establishing a sizeable business process outsourcing (BPO) presence in Southeast Asia. Over the last ten years, the Philippine IT–BPM industry has grown at an impressive annual rate of about 30%. It is a major generator of jobs for skilled Filipinos contributing approximately 5% of GDP in 2011 and it is the Philippines’ third largest foreign exchange earner after tourism and remittances. In 2010, it has emerged as the number one provider of voice and the number two in non-voice related outsourced work in the BPM industry worldwide. In its Roadmap, the Information Technology–Business Process Association of the Philippines (IBPAP) is targeting to achieve revenues of $25 billion or about 10% of the global IT–BPM 1 market .This revenue figure is projected to account for about 8% of GDP, potentially making it the second largest source of foreign exchange for the country. Collectively, this goal translates to about 1.3 million direct employees by 2016 and approximately 3.2 million indirect jobs that include a sizeable number in the informal sector. Industry leaders are confident that its 2016 targets are within reach. The industry is embarking on a wide range of initiatives and strategies to sustain its competitiveness and success in the voice segment and consider expanding into non-voice services. To further drive the leadership, it will seriously consider diversifying in portfolio services and markets by focusing on higher value and more complex services including: software development and IT services, animation, game development, health care information management outsourcing, legal, financial and accounting services, and HR among others. The government continues to give high priority to the development of the IT–BPM industry. The Philippine Development Plan (PDP) 2011–20162 and the Philippine Digital Strategy (PDS) 2011–20163 have identified major strategies to support the industry including: (i) developing public-private partnerships to promote both backward and forward linkages in the Next Wave Cities, (ii) enhancing investment promotion and ICT policy, (iii) harmonizing the educational system to the needs of the industry, and (iv) infrastructure support to address connectivity deficit and increase broadband coverage. Government invested heavily to address the skills–job mismatch and is putting attention to developing and sustaining the growth of a quality talent pool. One of the key drivers for growth in the outsourcing industry, whether global or national is talent. It is acknowledged that the Philippine IT–BPM industry has been able to aggressively establish a solid position in the global IT–BPM market because of its service-oriented, English-speaking talent pool. The Philippines has the third largest talent availability among the world’s top IT-BPM centers, next to India and China, and leading Poland, Mexico, Egypt and Malaysia in annual tertiary graduates. _______________________ 1Philippine IT–BPM Roadmap 2012–2016, © 2013 Information Technology Business Process Association of the Philippines and TeamAsia, published by the Department of Science and Technology–Information and Communications Technology Office (DOST–ICTO). 2 http://devplan.neda.gov.ph/index.php 3 http://www.icto.dost.gov.ph/index.php/philippine digital-strategy 1 | P a g e Major education reform measures are being instituted and supported including the K-12 program. While these educational reforms are designed to benefit the industry in the long run, it is expected that these will impact on the supply of talent in the short to medium term. The industry hires only an average of 5% to 10% of applicants largely because of inadequate education and training that is suitable to a career in the IT–BPM industry. The problem in recruitment continues to increase further as the global BPM composition is now evolving dramatically. New and more lucrative market settings such as health information management are bringing opportunities for expansion in voice—and more complex and emerging services are being required in non-voice that is putting additional pressure on availability of quality talent. Many small and medium BPO firms who wish to participate in the IT–BPM sector are constrained by their ability to invest in training programs that will allow them to scale-up and compete with the multinational BPOs who already have established training programs and a well-developed talent pool. 1.2 Background The Government of the Philippines requested through its Department of Finance (DOF) that the Asian Development Bank (ADB) provide capacity development technical assistance (TA) to address skills shortages in high growth industries such as the information technology – business processing management (IT-BPM) industry by aligning higher education curricula with international standards and labor market, while building on public and private initiatives.