Weaving the Web

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.