CEBU, Philippines - The Philippines’ offshoring and outsourcing industry is expected to close the year with US$7.3 billion or 21.7 percent growth, lower than that 24 percent growth forecast due to the slower growth for IT services and the delay of expansion plans of several players.
According to the latest forecast released by the Canadian-based ICT research and advisory firm XMG Global, foreign direct investments in the Philippines is also expected to slide this year, as investors are streamlining capital.
“The Philippines is expected to post 6.9 percent of the total offshore revenue which is close to the 6.7 percent share last year, said XMG Global senior analyst Vincent Altez
After posting a 19 percent rate last year, the global outsourcing market will end 2009 with total revenue of US$373 billion or 14.4 percent higher than the US$326 billion recorded in 2008.
“We still forecasted double-digit growth exactly one year ago, but there is no doubt the economic turmoil has been the major cloud of the global outsourcing industry in 2009,” Altez said.
Global outsourcing market includes both inshore and offshore services worldwide.
Analyst estimates further predict the performance of the top tree offshore countries, namely India, China and the Philippines.
India and China will remain at the top list with expected revenues amounting to US$48 billion and US$28 billion, respectively.
India, on the other hand, captures 44 percent of the total while China handles 25 percent.
“The market share of India is similar to 2008 and has mostly to do with the Satyam accounting adjustments and the shifting of work to other offshore countries. In other words, we are seeing new levels of normalcy in which the recession has provided the opportunity to rationalize and shift work to other offshore destinations other than India,” Altez stressed.
Looking forward to 2010, the prediction cited factors that will affect both the market value and the dynamics of global sourcing.
Some of the factors mentioned include the economic recovery of the US and Europe which is expected to create a shift for BPO demand over IT services, application development and support being absorbed into BPO deals—the attractiveness of other offshoring countries namely South Africa, Egypt, and Mexico, the continuing agility and commitment of the Chinese and Vietnamese governments to attract foreign investors and build out advance infrastructures, improvements, or a decline in a country’s productivity index, and the rising costs of mature offshore countries such as India.
Demonstrating double digit growth in “no-growth times”, XMG Global asserts a permanent shift on how the new economy will view outsourcing and offshoring.
“In an industry where double-digit growth is not ordinarily seen during a global recession proves that offshoring and outsourcing is part of a natural ongoing economic revolution notwithstanding financial crisis,’ Altez added.Source: The Freeman Cebu
