Present IT Situation in Davao

The Japan External Trade Organization (JETRO), an independent administrative agency tasked to promote trade and investment between Japan and other countries, commissioned a research about the IT situation in Davao, and published a report in the January 2008 issue of their monthly Philippine IT Industry Report.

In this entry, I will discuss about and quote some portion of the report. The research was conducted at the later part of 2007, so it is possible more up-to-date data and information may be available today. To access the whole report, kindly visit the JETRO website at http://www.jetro.go.jp/

For me, the focus on Davao is a welcome development as it is my aspiration that Davao has the same level of exposure, attention and investment opportunities in IT as Manila and Cebu. I have always believed that Davao has a rich pool of technically capable and well-rounded (in terms of attitude and personality) potential IT engineers. But unless we have more investors, both local and multinational, Davao would be relegated to sending their best IT graduates to Manila, Cebu or to other countries like Japan. This seems to be confirmed by the report as it says “IT Services/IT Enabled Services (ITS/ITES) industry-related activities among Japanese firms in Davao are currently very limited beyond the hiring of graduates from Davao universities by Cebu- and Manila-based Japanese companies.”
ITS/ITES Companies in Davao
The biggest contributors in terms of IT-related job creation are coming from call center companies. There are 15 companies engaged in Software Development, but most are operating in very small scale, with the largest one not even having 100 employees. “Some of the well-known software development houses based in Davao are Lane Systems (http://www.lanesystems.com/) and Hubport Interactive (http://www.hubportinteractive.com/) – both are home-grown companies. At the end of 2007, there are as yet no foreign-funded software firms in Davao.”, the report says.

Industry Data
As the ITS/ITES industry in Davao is still very young, there is not much statistical data available. Such data would be very useful for potential investors, planners, and other IT stakeholders. The Department of Trade and Industry Region 11 (DTI-XI) data shows the number of Davao-based companies for the following : Call Centers = 6; Animation, Web Development = 5; Software Development = 15; Medical Transcription=5; Engineering Design=1. In terms of salary, the minimum wage in Davao is 250/day, while Call Center agents may get between P11,000 to P13,000 per month. Software developers on the other hand may receive from P7,500 to P12,000 monthly salary.

Infrastructure
“In terms of Davao’s communications infrastructure, it is safe to assume that it will further improve over time as major telecommunication operators are already present in Davao. And, increased supply of office spaces are to be expected as real estate developments in addition to the Damosa IT Park are being planned by SM and Ayala, among others. With regards to power supply, an executive of Nakayama Technology Corp. told JETRO there is a 5 to 10-minute outage per week, or none at all. Power supply does not seem to pose a serious problem here.”

Major Challenges
Based on the report, there are two major challenges in the promotion of the IT industry in Davao. The first is the concern about Davao’s seeming poor public safety, mainly because it is part of Mindanao. “Davao’s crime rate is low, the widespread image about the poor public safety in Mindanao in general is unfortunately also applied to Davao,…”, the report says.
The second challenge is how to meet the increasing demand for more IT professionals. According to the report, “Region 11, which includes Davao City, sees an average of 16,600 college graduates each year, but the number of graduates from IT-related courses does not reach 1,000 per year.”

Conclusion
The report concludes that “The reporter’s honest impression of the state of Davao’s ICT industry is that, the maturity level of the private sector industry, and the public sector that supports it, is still low.”