BPO expansion seen slower this year

THE Philippines’ business process outsourcing (BPO) sector would slightly miss its yearend growth target, according to Canada-based XMG Global Inc. In a statement, XMG said the Philippine BPO industry would end the year with a 23-percent growth to $8.85-billion in revenues, or 7.1 percent of the global pie.

The Business Processing Association of the Philippines (BPAP) had projected revenues this year to reach $9 billion, for a 26-percent year-on-year expansion.

While XMG forecast slightly lower revenues than BPAP, the growth is still faster than the 20-percent expansion in 2009.

XMG said global outsourcing revenues by end-2010 would hit about $425 billion, up 13.9 percent from $373.1 billion last year.

However, “this year’s accomplishment is relatively low as compared to last year’s 14.4-percent growth, indicative of slow investment expansion in off shoring destinations and conservative increase in outsourcing demand from the US and European region,” said Lauro Vives, XMG chief analyst.

Vives said the slower revenue growth “is expected as most of the outsourcing opportunities, pending due to recession, are just starting to obtain green lights this year.”

India, China, and the Philippines remain the three biggest offshore destinations, Vives said, adding that the three countries would corner more than three-fourths of the estimated $124.41-billion revenues that the off shoring segment would generate by yearend.

India would have a 43.7-percent share of 2010 global outsourcing revenues, while China would capture 28.7 percent, Vives said.

“China is gradually narrowing its revenue gap from India with a huge 30-percent growth compared to 14 percent of India . . . [whose] weakening lead is due to the substantial efforts of China, the Philippines, and other off shoring destinations in building their capacity to attract significant amount of investment.

While India continues to remain the leader, the rest of the offshore countries are now beginning to mature,” the XMG analyst said. –BEN ARNOLD O. DE VERA REPORTER, Manila Times