Thailand
Thailand, a famous tourist destination and auto-making center, is fast becoming a dominant player in the information technology industry. It ranks sixth among the top outsourcing countries this year alone, despite limited or lacking infrastructure, government support, privacy regulations/security, and ICT research facilities in the country today.
As a strategy to focus on building information infrastructure, good governance, and technological policy, Thailand launched its first information technology policy called the IT 2000 in 1996. The National IT Policy was the second phase of the project. It covers a period of ten years, and its main goals are to increase the number of knowledge workers and knowledge-based industries in five key areas: e-Society, e-Education, e-Industry, e-Commerce, and e-Government.
Thailand’s IT and BPO industries have managed to survive and stay afloat in the economy, despite the obstructions. Most of these industries are concentrated in the fields of database management outsourcing, COBOL programming, animation or digital content sourcing, medical, and biometric-related services.
Thailand is slowly building itself to become one of the world's top three countries for outsourcing by the year 2013. Its government plans to build a four-billion-baht industry led by outsourcing industries, such as the Thai IT Outsourcing Association, or TITO. This association is a collaboration of ten leading international outsourcing companies in the country today.
Despite these actions, Thailand has yet to make a full and dynamic economic recovery to regain the confidence of its consumers and business investors. Although Thailand has admirably held the outsourcing / offshore industry fairly well, its economy hasn’t reached its fullest potential yet due to the continuing political instability that is plaguing the country in the past few years. This political scenario has consequently complicated the country's reaction to the global crisis, further depressing its whole economy down.
Country overview
Thailand is the only Southeast Asian country untouched by European power. This constitutional monarchy is the 50th largest country in total area. It has a population of 66.7 million, making it the twentieth most populated. The major portion of its ethnic group consists of Thais, with several Chinese groups within the region. Its main religion is Buddhism, followed by Muslims, and Christians.
The country has a high level of literacy rate. Since the country has never been colonized, the teaching methods taught to its students are heavily dependent on rote rather than student-centered techniques. This makes education a relatively new term for the country and also a challenge to further improve it standards to improve the educational system. English speaking is also relatively low, with the exception of the well-educated and wealthy class in the society.
Thailand is emerging with a newly industrialized economy. Its gross domestic product, measured by current exchange rates, is $312.6 billion USD. However, its economy is estimated to have $580.3 billion USD when calculated using the purchasing power parity. It is one of the most lucrative automotive, manufacturing, and electronic goods exports in the world. The country mainly relies on exports, which accounts for more than two-thirds of its gross domestic product. However, the global financial crisis of 2008-2009 has significantly impacted its exporting industry, resulting in double digit drops in most sectors. The government is focusing more attention to financing domestic infrastructure projects, foreign business investments, and outsourcing to stimulate and revive the economy, as external trade is still in the process of recovering from the recurring internal political disturbance and investment disagreements happening at the moment.
Thailand is now dedicated to support the national evolution toward a knowledge-based economy. They are now developing their human resources to increase the country's competitiveness in the areas of technology and innovation, worker competencies, and fuel efficiency for its automotive policies.
Source: CIA Factbook, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Cost competitiveness
Employee compensation
A significant component of any outsourcing venture is employee compensation. A typical outsourcing project usually includes several junior resources, experienced senior supervision, and operations management. The most number of cost savings for a company are usually from the junior resources, and Junior Software Engineers or Web Developers with one to four years experience in Thailand are about 18.5% of their American colleagues. The average annual salary is THB 331,470 baht or to $140,935 USD.
IT Project Managers with ten to twenty years of experience are 34.6% in comparable resources to the US. The salary averages to THB 1.08 million, roughly USD $35,000.
The costs for junior resources are crucial for large BPO operations. This is true for Thailand as well, where the salaries in junior non-voice are about 18.7 percent of US resources. Skilled BPO manpower is 35.7% comparable to US resources, while Operations Manager is 61% of US.
Real estate and taxes
Office rent in Bangkok is cheap, and in 2009, CBRE Global Research and Consulting ranked Bangkok 151st among 179 countries with the most expensive office districts worldwide. Bangkok has an occupancy cost of THB 856 or $28.24 USD (per square meter). Corporate taxes are 30% higher than other outsourcing locations, and indirect taxes, such as value added tax, are cheap--averaging only at 7%.
Source: PayScale, SourcingLine, February 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: CB Richard Ellis, Colliers International, SourcingLine, March 2010
Source: KPMG, October 2009
Source: KPMG, October 2009
Source: Doing Business (World Bank), 2010
Resources and skills
Workforce
The total workforce of Thailand is 38.7 million. Many companies find it relatively easy to work with Thai employees, as its people like to become experts at their work, favor concentrated work and value loyalty as a one of the best traits of a good worker.
Its total offshore outsourcing in IT and BPO is $200 million USD, with exports in miscellaneous business services amounting to $6,906.40 million.
Education
Thailand has a high literacy rate, with the education’s private sector performing well compared to its public schools. Its PISA literacy scale in reading and mathematics are average, with Canada, Poland, and Czech Republic getting the highest ranking in reading. However, it is placed below average in science literacy, joining Brazil, Argentina, Indonesia, Mexico, and Romania at the bottom of the list. Its annual university graduates according to a UNESCO report in 2009 are 506,000, while its language speaking population is only 10%. This is relatively small compared to the Philippines. Consequently, the government is presently focusing on raising the country’s rank to make it more attractive to foreign investors.
Technological readiness
Internet access is a good gauge of a country's technological readiness. Thailand, however, needs to improve more on this aspect. A data from the International Telecommunications Union places Thailand near the bottom list, together with the Philippines, India, and Indonesia.
Source: CIA Factbook, 2009
Source: NASSCOM, SourcingLine, 2009
Source: IMF, 2008
Source: UNESCO, 2009
Source: UNESCO, 2009
Source: OECD PISA, 2006
Source: OECD PISA, 2006
Source: OECD PISA, 2006
Source: UNESCO, 2009
Source: UNESCO, NASSCOM, SourcingLine, 2009
Source: International Telecommunications Union, 2009
Source: International Telecommunications Union, 2009
Outsourcing Sector : Thailand does not report at the Misc. Business Services level. Number includes merchant services (i.e. Other Business Services).
Business and economic environment
Thailand's business and development procedures are good, but leave room for improvement. The nation ranks high for ease of doing business, at 19 globally. Thailand offers comparable legal protections for business practices, and some of the lowest costs to enforce contracts, at just 12.4% of claims, Thailand has high costs for laying off employees - with fifty-four weeks, comparable to India which requires 56 weeks of salary to be paid as severance.
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: International Telecommunications Union, 2009
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Transparency International, 2009
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: The Global Competitiveness Report, 2009
Source: BSE-IDC Global Software Piracy Study, 2009