First, it’s Scarborough Shoal. Now, it’s our jobs. This news was published in the Manila Bulletin on August 25.
Overtaking India In Three Years
By Emmie V. Abadilla
August 25, 2012, 11:06pm
Manila, Philippines — China, not India, is emerging as the Philippines biggest rival in the outsourcing sector, according to ICT research and advisory firm XMG Global’s 2012 Year-end Forecast released over the weekend.
Based on its growth trend, XMG said, China would overtake India within the next two to three years in the huge global outsourcing industry because it has actively sought out customers in the Asian market unlike the pre-eminent power player India and new favorite Philippines, which are historically focused on gaining share of the US outsourcing industry.
“If current trends continue, China is on target to overtake India as the dominant BPO player, potentially within the next two to three years,” XMG said.
This year, the Philippines’ outsourcing industry revenues will grow from $11 billion in 2011 to $12.7-billion, XMG predicted.
However, the top rung still belongs to India, whose revenues are expected to grow from $59 billion to $63.2 billion in the same period. China ranks as a close second, with revenues increasing from $45.7 billion to $53.8 billion.
Nevertheless, at this point, China and the Philippines are each showing “real growth,” in terms of total market share, as compared to India’s current dominant position.
To put that in perspective, the last three years (2010 to 2012 projections) have seen annual revenue growth of 25.4%, 23.6%, and 15.7% in the Philippines.
In the same time frame, India showed a declining trend, with 13.2%, 8.6%, and 7.1% revenue growth versus China’s increasing numbers of 43.5%, 63.6%, and 33.0%.
Collectively, these statistics showed a gradual chipping away of India’s stronger historical dominance, though time will tell if it will be significant, XMG pointed out.
In billions of dollars, India’s last three-year growth cycle was, 54.33, 59.0, and 63.2. China’s market share was 35.76, 45.7, and 53.8.
In 2010, India’s revenues were $18.6 billion more than China, but by 2012 the difference was down to $9.4; a significant reduction.
On the other hand, the Philippines modest contribution rose from $8.9 to 12.7 billion; a not-so-insignificant 43% increase in revenue. That is only slightly lower than China’s 50% revenue increase.
“This trend suggests new opportunities for other players to gain market share as well since the growth of the outsourcing industry will remain relentless,” XMG undescrored.
The bottom-line is, the offshoring outsourcing market is positioned to continue to thrive and grow, but the relative positions, of the respective players, is changing.
This shifting paradigm would also indicate room for new players like the Philippines to gain a share of an industry which continues to show growth potential.
XMG also projected that the BPO industry growth this year is expected to grow at marginally lower rate than the previous year or a revenue increase of 13.9 percent to $425 billion from a higher 2011 percent growth of 14.4 percent over the previous year to a total of $373 billion. The slower growth was projected despite the rejection of the US Senate of the anti-outsourcing bill.
A tangible example of this dynamic is reflected in the growth of China’s share of the global market. Current year growth for China showed the largest growth share, compared to the next two largest players (India and the Philippines).
“This reflects how political instability in the U.S. has a smaller impact on China, which has actively sought out customers in the Asian market. Industry volume for India and the Philippines has historically focused on gaining share of U.S. outsourcing,” said XMG research manager Anna Juanillo.
While the industry continues to grow, XMG said it would always be vulnerable to the ebb and flow of political like the US anti-outsourcing bill and the capability of host countries to continue operating this 24×7 orientation of this industry.
Earlier, XMG raised concern over the capability of the Philippines to continue providing seamless 24×7 operations in light of the recent massive flooding that paralyzed most industry operations in the National Capital Region and nearby provinces in Luzon.
The long-term impact, of this new political dynamic, remains to be seen; but for now, it would suggest a change in U.S. political control and preferences could affect industry growth, every bit as much as recent floods in Manila affected the industry and its perception in its ability to deliver.
The second concern addresses where the respective players fit into the recipient list of that global outsourcing. For example, the top beneficiaries of outsourcing include: The BRIC (Brazil, Russia, India and China) Countries, Indonesia, and the Philippines; however the lion’s share is clearly dominated by India remaining the pre-eminent power.
You can read the Manila Bulletin article.