Growth forecast for local BPO sector this year cut

A global information and communication technology (ICT) research and advisory firm has downgraded its growth forecast for the Philippine business process outsourcing (BPO) sector in light of the economic downturn. In a statement, XMG Global Inc. said the local BPO sector may close the year with a 21.7-percent to $7.3-billion growth—lower than its previous forecast of 24 percent—because of the slower growth for IT services while several captive players delayed their expansion plans.

Foreign direct investments are also expected to slide this year as investors are streamlining capital, the research firm said.

“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,” Vincent Altez, XMG Global senior analyst, said.

“[As] double-digit growth is not ordinarily seen during a global recession, [the sector] proves that offshoring and outsourcing is part of a natural ongoing economic revolution notwithstanding a financial crisis,” Altez added.

BPO industry officials earlier said they expect revenues this year to grow between 20 percent and 30 percent. Last year, the sector posted a 26-percent growth, with revenues reaching about $6 billion.

The Contact Center Association of the Philippines (CCAP) has projected that call centers would grow between 15 percent and 20 percent this year, while the Business Processing Association of the Philippines (BPAP) expects nonvoice services—such as animation, back office operations and knowledge process outsourcing (KPO)—to grow by more than 100 percent this year.

This sunshine industry targets to employ over 450,000 people by yearend.

For this year, the Philippines is expected to account for 6.9 percent of the total global offshore revenue, which is close to its 6.7-percent share last year, the research firm said.

XMG said the Philippines would remain the third-largest offshoring market, behind India and China, whose revenues this year are projected to reach $48 billion and $28 billion, respectively.

It added that India would corner 44.8 percent—about the same as last year—of global offshoring and outsourcing activities this year, while China’s market share will reach 25.9 percent.

XMG said the global out-sourcing market will gain total revenues of $373 billion by end-2009, up by 14.4 percent from last year’s $326 billion. Last year, the global outsourcing market growth was higher at 19 percent. –Ben Arnold O. de Vera, Reporter, Manila Times