World's outsourcing revenue worth $373B

Global market will grow 14.4 percent by year-end, led by top performers India, China and the Philippines, which will account for 77.6 percent of total revenue.
Written by Eileen Yu, Senior Contributing Editor

The global outsourcing market is projected to clock US$373 billion in total revenue by the end of 2009, growing 14.4 percent over 2008, according to a report released Wednesday.

In the report by Canada-based research firm XMG Global, India and China were singled out as the market's top revenue generators, pulling in revenues worth US$48 billion and US$28 billion, respectively.

According to Vincent Altez, senior analyst at XMG, India will account for 44.8 percent of the global market, while China will hold at 25.9 percent. India's market share is expected to remain similar over 2008, due in large to accounting adjustments following Satyam's financial scandal and demand moving to other offshore countries.

Altez said in the report: "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.

XMG named the Philippines as the third-best performing destination, growing an estimated of 21.7 percent to register US$7.3 billion in revenues by year-end. The figure is still lower than the initial forecast of 24 percent, the research firm noted, where demand has been sluggish due to slower growth for IT services and delay in expansion plans by major market players in the country.

The Philippines is projected to account for 6.9 percent of total offshore revenue, compared to 6.7 percent in 2008.

While the global market's overall growth will slide from last year's 19 percent, the double-digit 14.4 percent expansion amid a recession still bodes well for the industry, Altez noted, indicating that offshoring and outsourcing is "part of a natural ongoing economic revolution notwithstanding a financial crisis".

According to XMG, several factors will impact the industry's market value and "dynamics of global sourcing" in 2010. These include the economic recovery of Europe and the United States, which will create business process outsourcing (BPO) demand over IT services, as well as the continuing agility and commitment of governments in China and Vietnam to attract foreign investors and improve infrastructures.

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