Philippines seen to remain No. 3 in global outsourcing

The Philippines is seen holding on to the third spot in the global offshoring market, with revenue for the year expected to reach $10.7 billion for a 7.4-percent share of the market.

According to Canada-based research firm XMG Global, India will continue to be the world leader, with an estimated global take of $61.5 billion, or 42.5 percent of offshoring revenue in 2011.

China will come in second with a 31.5-percent share of the pie and $45.7 billion in offshoring revenue.

XMG Global forecasts the global offshoring market to hit $144.8 billion this year. Including onshoring, the overall outsourcing market should register $464 billion in revenue, 9.2 percent better than the $425 billion posted a year ago.

According to XMG Global’s mid-year report on the global outsourcing market, industry players in the Philippines and India had started to feel the adverse effects of the weak dollar. Both countries were highly dependent on their United States-based clients for their revenues.

“The US economy, which remains to be a large market for offshoring, is still on the road to recovery with a forecasted 2011 (gross domestic product) growth rate of 2.6 percent, slowing down from last year’s 2.9 percent,” said XMG Global chief analyst Lauro Vives.

Chinese outsourcing service providers, meanwhile, were hardly swayed, as most of them relied more on East Asian clients such as Korea and Japan. Even the Japan crisis had little effect on China’s outsourcing revenue, despite the temporary halt in the implementation of some outsourcing contracts from Japan.

“The disaster may, in fact, open more opportunities, as Japanese companies consider increasing offshoring contracts for non-core operations to reduce business risk,” XMG Global said.

According to the Business Processing Association of the Philippines’ Road Map 2011-2016, revenues from information technology and business process outsourcing in the country could hit at least $20 billion by 2016 and even as high as $25 billion with stronger public-private partnership.

A $20-billion industry could provide employment to as many as 900,000 individuals. A $25-billion industry, on the other hand, could give jobs to as many as 1.3 million people.