Computer Whizzes at Philippine Pay: Technologically Literate People Service and Supply U.S. Business

By Wayne Arnold, The New York Times, 19 May 2000

MANILA, May 18—Maybe it was a couple of 20-something Filipinos who created the rogue e-mail program that disabled computer systems on May 4. Maybe it wasn't. But there is no doubt that a couple of other young Filipinos played a big part in rubbing the bug out.

The two—Richard Cheng, 24, and Maricel Soriano, 23—were on duty at the Manila office of an antivirus software company, Trend Micro Inc., when the company was first notified of the problem shortly after lunch that day. As the scourge spread across time zones from Australia to Europe, Mr. Cheng was already writing an antidote, and by the end of the day, Ms. Soriano was disseminating instructions to afflicted Trend Micro customers around the world on how to apply it.

My parents told me I was a hero, said Ms. Soriano, who joined Trend Micro after earning her computer engineering degree from a local college.

Granted, the Philippines' image has not been helped much by its failure to charge any suspects for the destruction or, indeed, to pass a law against what they did. But the Love Bug episode may have a positive side. This virus, if anything, brings a necessary spotlight to the tech scene in the Philippines, said Pindar Wong, chairman of the Asia Pacific Internet Association in Hong Kong.

Mr. Cheng and Ms. Soriano are part of a growing pool of high-technology Philippine talent that is attractive to employers in Europe and the United States, and is increasingly drawing multinationals like Trend Micro, America Online and Motorola to move some of their operations here.

That same computer-literate population is now feeding a surprisingly lively Internet start-up scene, in a country where many annual incomes are typically around $1,000 and less than 1 percent of the population uses the Internet.

The Philippines may be a poor country, but part of it is English-speaking and educated, said Fernando D. Contreras, vice president-elect of the Philippine Internet Service Organization. That's what we're trying to emphasize for the Internet.

Nearly 50 years of United States rule, from the end of the Spanish-American War in 1898 until World War II, gave the Philippines an American-style educational system in which English is taught to almost all of the country's 76 million people—95 percent of whom are literate. Its government and judiciary are modeled on those of the United States. And the Philippines retains a distinctly American feel. People here don't follow soccer, they follow the N.B.A.

Filipinos have two cultures, said Max Cheng, Trend Micro's vice president for global support in Taipei, Taiwan. One is Western, the other is Oriental.

That is a big part of why Trend Micro decided to open an office here two years ago. Founded on Taiwan but based in Japan, the company now has 124 employees in Manila, all of them Filipinos. Some, like Richard Cheng (no relation to Max Cheng) and Ms. Soriano, are engineers who dissect new computer viruses—most of which originate in the United States—and write solutions. Others field questions by e-mail from customers worldwide.

By October, the company plans to make the Philippines its global call center. Trend Micro customers in the United States who phone the company's toll-free help line may find themselves talking not to a technician in America, but to one here in Manila.

The Philippines long ago attracted its fair share of high-technology hardware makers: Intel, Acer, Texas Instruments, NEC and Toshiba have all established production here. But as new networking technologies made it possible to create corporate telephone networks around the world, more and more companies began moving their software development and behind-the-scenes processes like accounting, data entry and payrolls to nations like the Philippines and India, whose own English heritage makes it a leading competitor for business and investment.

The battle of these two has been going on since the late 1980's, but the Internet is turning up the tempo and the Philippines appears to be keeping pace.

Andersen Consulting, which first set up a data center in the Philippines in 1986, now has 450 employees in the country developing software and offering 24-hour customer support. Fujitsu develops software here. Citibank does its Southeast Asian accounting here.

And on the former United States air base north of Manila, America Online operates a nondescript installation where 830 employees field questions from the company's American clients. Even Motorola plans to begin routing some inquiries from the United States to the Philippines later this year.

Of course, cheap labor is a big part of this country's attractiveness to corporations abroad. But in high-technology industries, labor is only part of the cost of doing business. The Philippines' real advantage, Mr. Cheng of Trend Micro says, is in the quality and dedication of its people.

In the beginning, I thought it would be hard to find good engineers in the Philippines, Mr. Cheng said. With training, though, he says his engineers are as qualified as those in Taiwan. He even sends them sometimes to train their counterparts in the United States. Trend Micro plans to double its staff of Philippine engineers over the next year.

Despite a seemingly ample supply—there are more than 200,000 students enrolled in computer-related courses at Philippine universities—Mr. Cheng said that finding engineers is getting tougher as more and more companies move in.

The allure of living in the affluent West is another source of competition—and a persistent drain of Philippine talent. President Clinton's recent moves to raise immigration limits on skilled foreign workers, for instance, could make talent here even scarcer. This country already provides some 3,200 such employees to the United States each year.

The brain drain notwithstanding, does the Philippines have what it takes to make the jump from subcontracting for multinationals to creating innovative Internet ventures? Absolutely, said Rey A. Buzon, a Filipino-American who left the San Francisco Bay area this year to become the president of a local venture capital firm, AJOnet Holdings.

I've discovered that Filipinos are a lot more creative than what I'm used to in Silicon Valley, Mr. Buzon said. His firm now receives as many as 15 inquiries a day from Philippine Internet-related start-ups looking for financing, he said.

One that impressed Mr. Buzon with its youthful initiative was Mp3Manila, a start-up that allows its Web site visitors to download songs by more than 70 Philippine performers. Unlike many ventures that come knocking with nothing more than a business concept, Mp3Manila's five founders had their site up and running on $1,000 of their own savings—all while juggling classes at their university.

Mark K. Escueta, who is 22, got the idea for Mp3Manila two years ago while surfing in vain for digital recordings of his favorite Philippine hip-hop groups. Last October, he and four classmates established a site where local acts with no recording label could get their music out to Filipinos around the world, with advertisers paying the costs.

The friends opened the Web site at a popular downtown bar in January and within a month were getting up to 600 visitors a day. But by March, the pressures of final exams and of financial realities were setting in. The ad model was a failure. We told ourselves we had to come up with a new model, said Rufino H. Felipe, Mp3Manila's 22-year-old chief executive.

They resolved to become an online record label, using their site to sell Philippine artists' compact discs, downloadable music files and the equipment to play them. To do that, they are now receiving four million pesos in financing—about $96,000 —from AJOnet.

The five founders have agreed that anyone who drops out of school before graduating next March forfeits his stake in the venture.

Mp3Manila is counting on the appeal of home-grown music to the roughly more than two million Philippine citizens living in the United States, 80 percent of whom AJONet estimates use the Internet, to overcome the reality that the Philippines remains a minuscule market for online business. Although there are nearly 200 Internet services, there are less than a million Internet subscribers.

Most Filipinos do not have a phone and cannot afford a personal computer. High prices for Internet access, moreover, make downloading large amounts of data, as in music, prohibitively expensive for many people.

The Philippines becomes exciting as an Internet market, industry executives say, when new wireless technologies put the Net into the palms of people's hands.

The Philippines already has more mobile phone users than personal computers. Filipinos are such avid users of digital mobile phone short-messaging that they have turned this texting into a telecommunications subculture, sending more messages a day than all of Europe combined.

Cellular phone executives hope that new services using the Wireless Application Protocol, which shrinks Web pages onto mobile phone screens, will find a fast following and help bring e-commerce to more and more people.

But skeptics say that politics, not technology, may be the biggest factor in determining whether the Philippines can bridge the digital divide.

Sure, we're a very literate country, but there's graft and corruption, said Josefina Trinidad Lichauco, who resigned as under secretary for transportation and communications in January. Our democracy is not working. The most valuable resource of the Philippines is its people. But they haven't been harnessed in the right direction.