A special report on the local Web development industry
By Heinz Bulos November 200J
eb deelopment is a paradox o sorts. It`s as simple as one college girl working rom her dorm room designing \eb sites or small businesses and as complex as a 30-person solutions proider` doing Internet consulting and \eb deelopment work or 1op 500 corporations. It works like the adertising industry but not quite. It`s like business consulting but not really. Companies large and small claim it`s a priority but most gic it a meager allocation in their I1 or marketing budget.
Small fish in a big pond
ne can`t quite put his inger on the industry, or more appropriately, this sector o the I1 serices industry. lor one, there are no ormal studies. 1he igures are diicult to een extrapolate. Like statistics on Internet users, the target is elusie. \ho are \eb deelopers in the irst place \hen ISPs, Internet caes, ad agencies, dot-coms, and your neighbor oer \eb design, one just has to rely on rough estimates.
Asia Online, K2 Interactie, and 25by8 - arguably the top three companies inoled in \eb deelopment - together most likely hae the largest piece o the pie, in terms o reenues. Acmad Moti, chie operating oicer o 25by8 igures the entire pie is between P200 to P300 million. 1he head honchos o k2ia - Jon 1inga, group managing director, Reuben Reago, managing director, and Daid Drilon, executie director - see it also within that icinity.
1he sister companies - co-ounder and ormer president o Smart Communications Orlando Vea being the common denominator - conirmed they are already proitable and are in the tens o millions in terms o annual reenues. lor a conseratie estimate, each o the top three could be in the low tens o millions. Assuming that each make P25 million on aerage, that gies them a P5 million share o the market. Add a range o P25 to P5 million that is earned by the army o reelancers, boutiques, and other companies doing \eb design as a side business, that makes \eb deelopment at least a P100 to P150 million industry sector, or roughly >2 to >3 million. Nothing to sneeze at but that pales in comparison to other related industries. 1he local ad industry generated >1.2 bittiov in 2000 and >632 million in the irst hal o 2001. 1he entire I1 industry did around >3 bittiov in 1999.
1he number o \eb deelopers is much harder to estimate. Unlike sotware programmers, one can`t simply count the number o computer science graduates eery year to get an estimate. Local directories generate a hundred plus entries or \eb deelopers. Most o these are one-man operations, a ew boutiques with less than 15 people, and a handul o the bigger agencies, which has less than 100 personnel in their payroll. Philweaers, the country`s largest online community o \ O \eb deelopers, number more than 200. A look at the database o the Philippine \eb Awards reeals seeral hundred webmasters, een ater disregarding personal sites.
Lasily, the number o people working in the \eb deelopment industry are in the high hundreds or een a bit more than a thousand. And we`re just talking about \eb designers and programmers, which make up the bulk. 1he rest are other \eb proessionals such as project managers, system administrators, QA specialists, editors, writers, community moderators, multimedia designers, account managers, inormation architects, marketers, consultants, and general managers. 1hen there are I1 proessionals, either hired ull-time or doing double duty as webmasters, working in companies` in- house I1 departments handling their corporate sites. In total, there could be a ew thousand proessionals working in \eb deelopment.
In the industry`s hierarchy o players in terms o size, the solutions proiders such as Asia Online, k2ia, and 25by8 are at the top. 1hese companies dislike being called \eb deelopment companies, as they do more than that. 1hey position themseles as Internet consultants ater the mold o Sapient and Razorish. 1hey`e cornered the most lucratie segment o the market - large local and multinational companies, especially in the entertainment, media, and inancial industries.
Asia Online is one o the major players in the Asia Paciic region, with oices in Australia, China, long Kong, India, Malaysia, New Zealand, and the Philippines. laing started as a \eb deelopment company, it has reinented itsel as an integrated Internet business solutions proider. Jay Lstaris, e-strategy consultant, explaines that they re-ealuated their ocus, now taking a more consultatie approach.` It has a deliery arm, which includes its application deelopers, \eb designers, and project managers, and an e-strategy arm, which is composed o its Internet business consultants. It has an eniable list o clients, including PLD1, Globe 1elecom, Siemens, UCPB, lord, San Miguel Corporation, and Unileer.
K2 Interactie likewise has ashioned itsel as an integrated e-solutions and cross-media serices company - an ad agency, business consultancy, and sotware house under one roo. Lxecutie director Daid Drilon lists its three components - Internet, design, and motion. le adds, Design is a combination o print, 1V, radio, and the \eb. \e`re a quad-media company.` Managing director Reuben Reago says, \e compete in our ronts, with Internet proiders, graphic design irms, ad agencies, and traditional consulting irms.` k2ia, which traces its roots to luel Media, which in turn descended rom pioneering \eb studio NuBook Interactie, has grown into a regional player, with marketing oices in long Kong, Malaysia, and Singapore. 1he Manila oice, which seres as the production center in the region, has around 60 people. 1argeting 1op 500 corporations, it has an A-list clientele, including San Miguel Corporation, lort Boniacio, Ayala Corporation, Pureoods, and De La Salle Uniersity.
25by8 is the most junior among the three, haing started only in April 2000 as AP1 Solutions. Surprisingly, it has quickly reached the big leagues with strong inancial backing and a deep talent bench. COO Acmad Moti lists the company`s three diisions - new media, enterprise, and web,mobile solutions. 1he irst two are already proitable, and will mostly likely be spun o as separate companies.` 25by8 employs 35 ull-time employees and taps some 15 consultants as the need arises. It counts the likes o Nestle, 1 st e- Bank, Zurich, and Laguna Properties as clients. \e like to think we`re the design studio o design studios, the \eb deelopment company o \eb deelopment companies,` quips Moti, with k2ia, Big Dipper Digital, and Jimenez D`arcy passing o projects to them.
1his kind o identity crisis is not restricted to the big players. Boutiques, the smaller studios, hae expanded their serices as well. Big Dipper Digital proides strategy, branding, and multimedia serices aside rom its core \eb deelopment business. Slingshot Interactie oers consulting, multimedia, and \eb deelopment.
Old hats hae joined the ray. Alchemy Solutions throws in wireless applications, healthcare applications, usability analysis, among other things. Digital Strategists has branched out to what they call I- Consulting, I-Marketing, I-Serices, and I- Collaboration. luzzyworks does consultancy, technology and market research, technology transer, and knowledge management. MegPac, which has a strong print design background, now proides consulting, e-business solutions, B2B and B2C applications.
1hen there are the relatiely new outits like \eb Lmpire, GetAsia, Adobo Interactie, Lggshell Media, and Sotrigger Interactie oering arying kinds o Internet serices.
Some studios such as Ininiteino, iDcreations, and Morningplanet hae a more aggressie ocus in getting oshore outsourcing projects. Others, such as ids- media, DoubleSlash Media, Spinweb, Viper 1echnologies, and Lmagin lean more towards multimedia deelopment.
A growing number o ad agencies and post-production outits are also getting into the act. J. \alter 1hompson, DDB, lCB, Ogily, and Road Runner Network are some examples. loweer, with the slim margins, the general practice is to outsource \eb projects to \eb studios. Lxplains Moti, lor them, it`s not that proitable. lor example, or a 30-page \eb design, i we`re charging P100 to P150 thousand, and it will be done in 10 days, it`s too much or them a cost. A isual designer o an ad agency can easily produce one ad campaign that costs around P300 thousand. So they`re not going into this because it`s too slim a margin. lor us it`s ok, een i the margin is small, as long as there`s olume.`
Next in the totem pole are the hundreds o reelancers and one- to three-man outits, many o which are as good as the big players, that hae decided or one reason or another to work or themseles. 1hey target SMLs and the more proitable outsourced projects rom abroad.
At the bottom are smaller companies like some ISPs, cybercaes, desktop publishers, and the like that added \eb design as a side business or their clients.
Development of Web development
eb deelopment in the country started almost as soon as the \eb was introduced to lilipinos, as early as 1995. As ISPs mushroomed, the more competitie ones oered \eb design as part o their serices. 1ridel, Sequel.net, Portal Inc., Mosaic Communications, Virtual Asia, Mindgate, Losere, etc. were at the oreront o \eb deelopment.
Not long ater, small outits like Binary Soup, NuBook Interactie, \3C, and CPU Phil appeared. \ebby Award winner Dino Ignacio recalls, Binary Soup was not the irst \eb studio but we were the irst to do guerilla marketing. \e made design accessible to people beyond the oice,corporate scenario. \e went out there to the clubs and parties and promoted \eb design and graphic design. 1his was a ery sweet opportunity, around 96-9, there weren't many big design studios yet. All o us were small. None o the agencies were willing to bank on the \eb yet. 1hey were still ery much concerned with the tri- media.`
Binary Soup has since eoled into \eae Creaties, leaing a ew originals like Aid Liongeren and JJ \ulo, with many o its alumni striking out elsewhere. Neil Galang and Gerry Isaac are now the creatie director and media designer, respectiely, at Big Dipper Digital. 1he rest hae gone reelancing or hae migrated in the U.S.
NuBook turned to luel Media then to k2ia. Alchemy spun o rom 1ridel and then Alchemy original 1aj Deluria started Slingshot Interactie.
Many o the talented \eb designers had ine arts and graphic design backgrounds. Up until early 1999, almost all lilipino sites were brochureware and personal sites. \ith such low expectations and requirements rom businesses, reelancers and small shops thried. Bids were ought largely on price and isual design was paramount. Rates were charged on a per page basis, a practice which is now almost laughable, as today`s ees are charged on a more proessional per hour or package basis.
\ith plenty o creatie designers, easily accessible l1ML source codes, wide aailability o tutorials on the \eb, and oten pirated sotware tools such as Dreamweaer, lrontpage, PhotoShop, and llash, to go around, there were ery low barriers to entry. Any Dick, 1om, and Pedro with minimal knowledge o l1ML and \\SI\\G sotware can make \eb sites, a sort o ae;a rv o the time when desktop publishing became big. \hile this resulted to a lot o mediocre, een terrible, amateurish so-called \eb designers, it also spawned many world-class talents who were largely sel-taught.
\hen e-commerce`s buzz became louder in 1999 and 2000, and competition among dot-coms heated up, the requirements o companies became more complicated. Back-end programming, databases, content management systems, e- commerce unctionality, and the like required real programmers. 1hat need was illed by sotware programmers who hae entured into programming or the Internet. And there`s no lacking in supply or talent either. \ith about 50,000 \ sotware programmers, there`s a lot to go around.
1he Philippine \eb Awards seres as a barometer on the progress o \eb deelopment in the country. In 1998 when it started, personal and independent sites like RealPinoy, PhilMusic.com, and UP Mountaineers were big winners. Magoos, which eatured crude e-mail to ax technology, was e-commerce site o the year. 1he \eb, which was still a bit in the ringes o the mainstream here, was gaining more and more attention, but it remained largely non-commercial. In 1999, community sites such 1sinoy.com and Candymag.com and cause-oriented sites like 1he Beggar`s lands, One Ocean did well. llash animation was also becoming more common. 1he local \eb was still about ree content. In 2000, llash, databases, e-commerce, and dot- coms go center stage with wins by iDS linance, ABS-CBN, ClicktheCity, L-Store Lxchange, and ids-media. It was also the year o big business enturing into the Internet in a big way.
2001 is the year o the wireless Internet. 1here`s increasing complexity in wired and wireless \eb deelopment. And since applications programming is not something anyone can learn oer the weekend, it has gien an opportunity or bigger agencies to dierentiate themseles as either a niche \eb applications deelopment company or a total solutions proider. \ith higher expectations rom companies, especially ater the dot-com crash came higher standards and requirements. 1he competition has moed rom which can bid the lowest to which can proide the best solution.
Asia Online`s Lstaris notes that there has now been less RlP ,request or proposal, bidding or projects and the market has become more about relationships. lrom being price- and design-drien, the industry has eoled into something that is more logic- and business-drien.` Lstaris is a strong belieer in \eb deelopment as a science and has helped pushed his company into ocusing on inormation architecture, a discipline that has yet to be taken seriously in the country.
25by8`s Moti obseres, Beore, since they had the budget, clients were willing to pay a premium without een thinking what the delierables are. Right now, they`re more choosy: 1his is what I hae, how much can you do or me.` In that aspect, we`re ery much competitie with the quality o our work and the rates that we hae.`
1he same quality at half the price!
ithout a doubt, the Philippines is considered as one o the best sources o I1 talent, arguably the best in \eb design, at least in Asia. India and Ireland o course are strong competitors in programming and applications deelopment, but most concede that lilipino artistic and creatie talents are oremost compared to our neighbors, with the possible exception o Japan, oten the source o inspiration among graphic designers.
1he talents displayed in such collaboratie digital art sites such as lalproject.com are awesome. But \eb design is o course more than cutting-edge art. It`s also oten about boring structure, naigation, and \ user-riendly interace. \eb deelopment is also about back-end programming. lilipino designers and programmers are capable, but are oten adopters. lew, i any, really push the enelope. No one that has shown inentieness and originality. But perhaps that is because local demand - rom consumers and capitalists - do not proide the incenties.
Drew Luropeo, a reelance \eb designer who co-ounded lalproject.com and Philweaers, the largest online community o lilipino \eb deelopers, says, I know a lot o lilipino \eb deelopers who are really good and can keep up with US, Luropean, or Asian standards, but since the I1 industry is still new here, there's still a big place or lots o deelopment.` Philweaers co-ounder Jose Illenberger, who works or k2ia, agrees, 1here is still space or improement and internationalization o standards.`
\e are not just one o the best, we are also one o the cheapest. Moti says, I`e been to Malaysia, their rates are times ie times our rates, so we`re about 20 o what they`re charging. In the US, it`s more than times ten. So you can see how much pampered our clients in the Philippines.` According to 1inga and Drilon, Manila is cheap. \e`re at least 50 cheaper.`
B2B, the magazine or marketing and e- commerce strategists, lists a \eb Price Index. 1he cost or ull site deelopment in the U.S. ranges rom >65 to >250 thousand. \ith the rates charged by local agencies ranging in the ew hundreds o thousands o pesos to a ew million or ull-blown e-commerce projects, the country`s major players indeed charge at a discount o as much as ten percent.
1hat is both good and bad or the industry. Good because the potential or outsourcing projects is huge. 1here`s an estimated 8,000 local companies engaged in outsourcing actiities. 1he country`s export sales o I1 serices reached an estimated >65 million in 2000. And we`re consistently in the short list o companies and goernments when outsourcing I1 serices is mentioned. 1he Giga Inormation Group tagged the Philippines as the best alternatie to India`. According to IDC, U.S. companies will spend oer >1.6 billion on oshore outsourcing in 2005, more than triple the spending amount in 2000. 1he IDC report notes that e-commerce and \eb-based application deelopment will be the astest-growing oshore outsourcing segment, with spending rising to >5.6 billion in those areas alone. Right now, the Philippines is pushing or sotware deelopment, data entry and conersion, and I1-enabled serices like call center and back oice operations. \eb deelopment has the potential to be a major exporter o I1 serices. \hile it`s not a secret that local \eb deelopers hae been doing projects based abroad or quite some time, the numbers are surprisingly not as signiicant as expected.
Most \eb agencies continue to ocus on the local market, doing minimal oshore outsourcing projects. Moti says, Right now, it`s not that signiicant but we can easily see that it`s something that can become big especially with all those projects we`ll be able to sign. lrom the US, we tend to consider those projects outside the Philippines as gray. \e do not put as bookings unless the money`s there. Our ocus is to be strong in the local market so that when you go out, you`ll hae an impressie list o clients.`
K2ia is already doing regional work but remains ocused on the local market. Lerything else is gray,` notes Drilon. Group managing director Reuben Reago neertheless stresses that any player should hae a iew outside the Philippines.` 1he same is the case with Asia Online. Says Lstaris, the trend is to oursource all I1.` But as o the moment, most o the irm`s clientele are local- based.
Moti obseres, 1he good thing or us is with what`s happening in the US, due to their tightening o their belts, they now tend to consider outsourcing their projects to cheaper companies een i it`s an oshore outsourcing thing. 1hat`s a huge market or us. Because not all US companies can aord to pay the >200,000 aerage cost per project in the US. I they only pay >20 thousand, they can easily sae >180k.`
1o be sure, reelancers still ind projects abroad. \ith reelance sites like Guru.com, lreeAgent.com, and eLance allowing global bidding on all kinds o I1 projects, and oreign companies actiely looking at the Philippines as a prime source or \eb deelopment talent, it`s not diicult or local \eb designers and programmers to compete on quality and price.
Luropeo concurs, \e charge cheaper than the oreign reelancers. Plus they can also get almost the same quality as what oreign designers proide.`
Being cheap can also be bad or the industry as local companies continue to squeeze \eb deelopers o their already thin margins. In an industry where supply ar outweighs demand, it`s a buyers market where clients dictate the price. No wonder traditional adertising agencies opt to arm out \eb design projects. \hy do a ten-page \eb site or a measly ew hundred thousand pesos when you can sell a million-peso print or 1V ad And media placement is much, much more proitable.
Add to that the act that or a long time, companies iew the Internet as a necessary eil. One has to hae a \eb site since they might be let behind, but at the same time, they won't commit to a huge budget as the promise o inancial returns is murky. \ith so many talented \eb designers out there who can churn out the same quality \eb sites, it then becomes a price war.
Jennie Celdran, Big Dipper Digital director, explains, It's always a budget issue, especially since most companies did not include \eb deelopment as part o their marketing budgets. Another is the ery prealent do-it-yoursel` kind o thinking. Some companies who hae an in-house graphic designer or I1 person think that they can deelop their own \eb site. \eb deelopment is a whole dierent discipline altogether. More oten than not, companies who don't inest in a good \eb de company end up with a totally bad \eb site and in the end hire proessionals.` She adds that one major problem are reelancers and companies that underprice, it's bad business or all o us in the long run.`
1inga says the costs or \eb projects eat up companies` below-the-line budgets. Most irms use their adertising or marketing budgets.` As such, it becomes a discretionary expense. Moti sees the problem as` the notion o companies that anything on the Internet is static, meaning to say there`s no engine running behind it. 1hey tend to think it`s a simple click-click. So because o that, you couldn`t charge the way companies outside the Philippines, because they couldn`t see the alue. So it needs some education that they`re asking or an application, not a static design page. So until that happens, it`s still a slim-margin sector.`
Industry problems
n a surey among \eb deelopers conducted by 1he \eb magazine, the top problem listed was low rate,salary. Nothing surprising about that.
Interestingly howeer, unproessional deelopers ,30,, many unskilled and amateur \eb deelopers ,40,, and no standard industry practices and benchmarks ,41.2, also rated high. lor eery highly-talented \eb deeloper, there`s probably ten amateurs who gie \eb deelopment a bad name ,the proportion o course is done in exaggeration, but then again, it could be true,. And it`s not just a terrible sense o design, or sloppy programming work, it`s also unproessional conduct. Agencies that oerpromise but can`t ollow through. Bug-inested code and boneheaded programming. Len big studios which executes well up to launch then coneniently neglects clients during maintenance.
Rumors plagued Asia Online or a time when it became too big or comort, as reported by I1netcentral`s industry rumor monger, Gossip Girl. Neglected clients, migration o clients to rial studios, and assembly-line production were some issues raised. 1hings hae changed when the group o Bobby Reyes and his rag-tag team rom SGV,Andersen Consulting came on board. lor one, he was supportie o such initiaties as the ocus on inormation architecture as espoused by Lstaris.
Not a ew companies hae been burned by reelancers and small outits as well. Celdran notes, 1he thing with reelancers is that as a client you're neer sure that they will see the project through, plus they don't hae an organization that will back them in terms o project management and support. I think in this aspect clients would rather go with a solid company than risk giing the project to a reelancer.`
\hile there are always rotten apples in any industry, there is really no way or a company to gauge the reliability and proessionalism o both reelancers and \eb agencies, until it`s too late.
Part o the problem perhaps is there is no local proessional organization setting standards - quality, business, ethical, and the like - in the same way other proessionals such as doctors, lawyers, accountants, marketers, and inancial analysts hae associations and are accorded licenses or certiicates. But \eb deelopers are not too keen on certiicates and proessional organizations. In the surey, only 20 counted no proessional organization` as a problem. Len Philweaers co-ounders Luropeo I and Illenberger are not keen on a goerning proessional association.
Says Luropeo, I don`t care much about it. I think other deelopers don`t care about it either. \es, there are a lot o gray areas, that`s why we at Philweaers would like to take part in deining these areas or the beneit o \eb deelopers.` She adds, Philweaers is there not to goern \eb deelopers. It`s not all about who's the authority, rather it`s about giing help, inormation, motiation to the local deelopment community.`
Illenberger acknowledges there`s a problem o a lack o standards, such as pay standards and business practices such as standard contracts, methodology, and benchmarks. 1his is why Philweaers was set-up - to encourage the standardization o practices, etc. o the local \eb deelopment industry.` But he doesn`t see it as goerning, but rather encouraging the growth o the local \eb deelopment community.
Currently, there are dozens o webmaster associations based in the States that`s open to international membership. 1here`s l1ML \riter`s Guild, \orldwide Organization o \ebmasters, and the International \ebmasters Organization, among others. 1hese proessional organizations promote networking among members, proide resources, and issue certiication.
Illenberger enisions the same beneits or Philweaers members, Aside rom the prestige, members can hae a place where they can mingle with other designers and deelopers, ask or help and suggestions, etc. So basically, it`s a network where they can discuss a lot o things and hopeully do something worthwhile.` le adds, Lentually, we also want to strengthen the group by haing oline assemblies, holding seminars, maybe establish an awards-giing body or the members.`
Luropeo stresses the dierence o Philweaers rom webmaster organizations, Philweaers - the Philippine \eb designers network. It's in our name. It dierentiates us right away rom the countless orgs that hae been sprouting up recently. \hile most call themseles webmasters - webmasters by the way are site maintainers whereas \eb designers design and produce sites and user interaces - we proudly call ourseles deelopers and designers. Our members are more than just code smiths. \e are artists and designers. And we don`t charge a cent or membership unlike the others, a portolio and a willingness to participate is enough.` In the long term, she adds, we dream o the day when people hear Philweaers`, people rom the industry here and abroad would say he must be a pretty darn good designer to be a member.`
In this sense, Philweaers is on the right track. Its constitution sets standards or its members - quality o serice, ull disclosure, air and reasonable rates, adertising and promotional practices, laws and conduct o business, and the like. \ithout imposing authority, it aims to eleate standards. 1his is both an opportunity and a challenge or this young group.
Certiication is also not considered important among \eb deelopers. Currently, any I1 school can sere as a certiication mill, giing out titles like Certiied Internet Proessional. But are these certiications industry-recognized As with other cratsmen, it`s the portolio that matters. As a Builder.com article on proessional organizations points out, 1he importance o certiication is debatable in Internet industries, when rapidly deeloping technologies ensure that there will always be some kind o on- the-job learning. Many employers will look or a well-deeloped portolio beore anything else. Deelopers beneit most rom certiication when working with clients new to Internet business, who will respond to more traditional credentials.`
1here`s also the problem o the local market, characterized by sti competition in a small domestic market. O course, optimists see this glass as hall-ull. 1he potential or a signiicant increase in the number o projects is there. 1he industry has not scraped the bottom o the barrel, ar rom it. But the present reality is, projects do not all rom the sky.
And this is exacerbated by clients who take adantage o the buyers` market. Many opt or reelancers as they can get them to charge at a third or een a ith o what an agency would charge. lreelancers in dire need or income would agree to rock-bottom rates. 1here are also unethical clients who inite bidders to gie studies, then get the good ones that they subsequently copy. 1his is not unlike the desktop publishing boom in the early nineties when tools like PageMaker and CorelDraw allowed clients to copy studies proided by ad agencies and do the job in- house.
Luropeo relates some client problems encountered by \eb deelopers, 1hey oten ask or a mock up o the project immediately een without signing the contract irst. 1hey want to see how you will work or how you will design their site. Some clients don't want to pay a percentage o the total cost o the project as downpayment beore the project begins. Plus, there`s the neer ending reisions.`
She adds, 1he market is too small or too many \eb design irms being started, plus reelancers are scattered all oer. \hen I started doing reelance ull time, most o my projects were coming rom abroad. I can't get a good deal with the local market. Many companies inquire or my rate and since I'm a reelancer, they are really cutting down the price or my serices.`
Illenberger says, 1hey oten ask or beta sites during project the pitching stage, which is counter productie to the industry when a show o portolio should be enough. It works or the adertising agencies, why shouldn`t it work or the \eb design industry as well. Also, the market is so saturated with mom-and-pop outits that the bigger companies are haing a hard time justiying their prices as compared to super cheap ees o these ,smaller, homegrown companies.`
1here`s also the potential problem o brain drain. O those sureyed, an oerwhelming majority noted they either hae plans o or are deinitely going to work abroad. 1hat is a cause or concern. 1his trend is not new, o course. An Asiaweek article noted an estimated 200,000 lilipino I1 workers who leae the country each year.
Moti explains the diiculty o keeping people, A lot o our programmers hae been getting calls rom Indian companies oering low much are you getting I`ll multiply it two times, three times i you moe to our company.` lortunately or us, our programmers just tell us and hae a good laugh about it. lappiness is not something you can easily get rom the corporate world.` le ascribes employee loyalty to their corporate culture.
Drilon also points at sel-ulillment and sense o accomplishment as better motiators or its employees. 1here`s a sense o empowerment, they hae direct inolement in decision-making, a sense o ownership.` \et, he acknowledges that there are many \eb deelopers who end up working abroad.
Consider the discrepancy in the rates that lilipino \eb deelopers earn compared to their counterparts in the US. Aquent, a specialized talent agency, released its \eb Skill & Salary Guide and reported that a \eb designer in the US earns between >1,500 to >10,000 a month, depending on skills. A \eb programmer makes between >3,50 to >15,000. Internetworld`s 2001 Salary Surey pegs a \eb designers monthy base salary between >3,500 to >9,500 while that o a \eb deeloper ranges rom >3,400 to >10,500.
In contrast, local \eb designers and programmers earn between P15 to P25 thousand a month, roughly >300 to >500, based on a recent Computerworld Philippines study on I1 industry compensation. In the surey o 1he \eb, almost 80 said they earn between P10 to P30 thousand. Still, gien cost o liing dierences and compared to other proessionals, local \eb deelopers salaries are not so bad, just not as good as in more deeloped countries.
Illenberger says, I think most programmers are paid handsomely locally as compared to \eb designers. I think this has got to do with how locals iew design as more o a decoration rather than as an essential part o a \eb site.` 1he typical salary ranges rom around P8 thousand as entry-leel to around P25 thousand or the more experienced. Luropeo estimates the typical salary or experienced \eb designers to around P20k or higher, while programmers earn P40k and aboe.
Considering what they can make i they work abroad or do more projects based abroad, local \eb deelopers are indeed a bargain.
Another problem may be the all talk, little action` situation in the Arroyo goernment. \hile it`s commendable that the President has taken upon hersel the responsibility to push or I1 serices, there`s much to do in projecting the right image or the country. 1here has to be a better promotion and positioning o the Philippines as a haen or \eb deelopment. Moti says the goernment is doing its share through I1 missions abroad. But \eb deelopment is hidden beneath the catch-all phrase I1 serices. 1he Department o 1rade & Industry ,D1I, lumps \eb design and deelopment under Sotware Deelopment.
Lstaris says the goernment should support the enhancement o the quality o education. Vocational schools sere their purpose, but I am a person who is ery much into higher learning. I don`t know o any course in I.A. ,inormation architecture,. I don`t know any course on Internet strategies, which are ery much akin to business strategies. So the goernment should ind ways to deelop such competencies in our educational system.` le also adds that while promotion abroad or \eb deelopment helps, the local sector should also ocus on improing their quality o work.
Like ISPs and cybercaes, there are just too many little players in the market. 1he dot-com crash may hae killed o some studios and scared o some businesses, but the reality is, it was good or the industry.
Luropeo says, I am not sure how long this industry will surie, especially with what is happening right now, some o the major irms already closed down. I hope to see more e-commerce sites, but I don't know i the market has the money to spend oer deelopment. 1here will still be more opportunities but I guess it will be stuck with the deelopment o brochure-type \eb sites or a while.`
Illenberger explains, 1he market is not that big to support the mushroomy sprouting o \eb deelopment irms and other mom- and-pop outits. 1he goernment has to step in and deelop us into another India i all o these companies are to surie.` le adds, \e`ll be seing more brochureware \eb sites or the next one to two years. It'll be a long time beore we will be seing brae souls enturing into e- commerce and dot-com businesses again.`
But the bubble burst also had a positie eect. 1hose who suried beneited rom projects abandoned by agencies that closed shop, such as Asia\orld, Designet, and Latitude \eb. Agencies did some serious rethinking about their business models and strategies. \eb deelopers improed their technical skills. Companies hae become more demanding. And since the Internet and e-commerce isn`t going away, these businesses hae realized this. 1hey hae now more realistic expectations. I anything, the crash will increase the industry to a higher leel.
Moti explains the double-edged sword, Beore, there`s the budget o a certain multinational company that we know o that`s supposedly P15 million or \eb deelopment. \e don`t know how true that is as o now. 1he crisis caused a lot o companies to all down. 1hose companies that had ie or less people were taken out o the picture. 1hose who were let standing were able to pick some projects let by others. It`s a bad thing or the industry. But at the same time, the excess suppliers are gone, and the sector has been rereshed.`
1inga says that while the market last year was larger than this year, they neertheless beneited rom the crash, getting more projects. I anything, the crash has made companies rethink a more realistic iew o Internet business. lor one, the boom in e- commerce sites worldwide only legitimized it. People know that despite the excesses in the late nineties, e- commerce is not a ad. And businesses are starting to realize there`s more to \eb than selling widgets. Drilon points out one o its latest projects, 1he \eb can be a great support mechanism. lor instance, we deeloped Closeup Planet, which now has more than ,000 members.` Internally, k2ia had to scale back its long Kong and Singapore operations to ocus on marketing. Locally, there were no layos, as the irm has consistently practised conseratie spending.
1inga beliees there`s room or three to our major players, more i they`re diersiied, but the competition is tougher in the ront-end area.` le says, 1he big players must learn to diersiy and at the same time, specialize, while smaller players should ind a niche.` Some might want to specialize by industry, looked or ocused audiences and decide which customers beneit the most. At the same time, companies should reine their Internet plans and hae to be more rational. 1hey hae to realize that the correct perspectie ought to be one strategy, many mediums.
Lstaris maintains that the crash was in act necessary. Now, clients are more demanding in knowing the ROI ,return on inestment, o their \eb projects. le notes that it`s diicult to determine the ROI since it`s dierent rom conentional business. \hat we do is irst identiy the alue contributors.`
As to the eect o the crash, he says, 1he most competitie sectors are media, inancial, and telecoms. 1he others are stagnant, not eager to increase their budget. But all still would engage in \eb deelopment in prudent ways.` Asia Online as a result o the crash shited its ocus rom mere \eb deelopment to a more consultatie approach. Lstaris says the crash was the catalyst that prompted the change. Claiming there were no signiicant layos, there was streamlining, or rightsizing, o redundant positions. It wasn`t massie. And this has made us leaner and meaner.`
1rends
ill there be more consolidation Moti replies, I you`re just a \eb design company, it will be ery hard or you to surie nowadays. But as a combination o dierent groups, i a bank wants to go e-banking, we can easily push our \eb and mobile solutions and new media design. So it`s the combination o things. I you just rely on your particular sector, you really need to be really good in what you do to surie. 1he good thing about our scenario now is there`s no other way to go but up. And when that happens, all those who were let behind will be the rontrunners.`
le adds, \e`e been seeing that, not een boutiques, een those companies in existence or two to three years went down. As ar as consolidation is concerned, or smaller ones yes, deinitely they need to merge to surie. By middle o next year, things should be able to recoer. \hen that happens, there`ll be more outsourcing projects, more companies that want to buy smaller companies or certain serices. It can be big ad agencies buying boutiques, small design studios. 1hat would be a trend we eel would happen.`
\hile there`s a place or reelancers and boutiques, they need to rethink their \ business models. Are they going to oer \eb design, back-end programming, consultancy, and the kitchen sink Perhaps they need to ind their niche. Certainly, some agencies are doing such. Specialization is a good strategy. An agency can position itsel as an expert in llash animation, another as a cutting-edge ront-end designer, and then another on wireless applications. Akimbo Design in the US is an excellent example o such.
1he bigger companies hae been wise in diersiying their serices yet at the same time dierentiating themseles rom one another. Asia Online is pushing or inormation architecture as a dierentiator. K2ia is strong in its quad- media serices positioning. 25by8 stands out in enterprise solutions. Big Dipper Digital ocuses on high-end design and interactie adertising.
1he importance o inancial backing and connections cannot be oer-emphasized. Says Moti, Luckily or us, we hae the right principals to gie guidance and support. \e hae the right senior managers down to the programmers. Len i you hae the right inestors, i you don`t hae the right things to sell or proide, nothing will come to you. On the other hand, een i you hae the right ideas, i you don`t hae the right backing, it`s ery hard to penetrate the market i you`re a startup.`
Lstaris says the \eb will now be seen as simply an enabling technology. It`s cheaper to deploy, it`s more centralized, it`s scalable. So I`m seeing more and more business processes will be transported to the \eb. Companies are starting to look at their internal processes and hae seen how the enabling technology o the Internet may be able to streamline these to cause process and cost eiciencies.`
1he \eb deelopment industry is in its growth stage. Growing pains ater the bubble burst has accelerated its maturity. But it`s still in its adolescence - suering identity crisis, doing a hundred things and then some, not wanting to cooperate, asserting its independence and scoing at any orm o authority.
But it`s ar rom being a stagnant, or worse, dead-end sector. In act, it`s a potential growth sector. 1he outsourcing market is a huge untapped market. 1hen there`s wireless deelopment. Despite public cynicism, \eb deelopers are bullish about this trend. Ater \AP, there`s some question whether this is the way to go. But they are optimistic about where wireless will take them.
Moti explains, \AP has been so hyped but unortunately it didn`t happen. But with upcoming technologies like GPRS and all data packet technologies, it`s going to resurace. lor wireless technologies and mobile computing, we really see a big market. lor the banking sector, you would want to do a lot o things while mobile. Mobile computing is the uture.`
Reago is bullish about wireless. \ireless as an enabler will make that happen. \e`re here to grow the market.` Lstaris, on the other hand, is a bit wary. I`m supportie o that, I`m not sure i I should be optimistic.` Neertheless, Asia Online has embarked on wireless projects.
Despite the crash and the onslaught o new technologies, the \eb is not going away. It will take on new orms, though not in the immediate uture. Until such time, there will be an eer growing demand or those who weae the \eb.