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China Emerging as PHs Toughest Outsourcing Competitor

by: Sarah Joson

Monday, September 3, 2012 | Outsourcing News |

At www.MB.com.ph, Emmie V. Abadilla discussed the highlights of the 2012 Year-end Forecast of XMG Global, a research and consultancy firm. Based on the article, XMG sees China as the Philippines’ up and coming competitor in the business process outsourcing (BPO) arena.

According to XMG, one of China’s key strengths which could further propel its position in the BPO space is landing clients within the Asian market, unlike the outsourcing pioneer, India, which concentrated on Western markets specifically the US. XMG added that there’s a huge possibility that China will best India as the leader in the BPO industry within the next three years.


China’s outsourcing industry continues to grow

According to Anna Juanillo, Research Manager at XMG, China’s outsourcing industry continues to grow since it is focusing mostly on Asian markets. It is likewise unaffected by political challenges in Western regions which are predominantly covered by India and the Philippines. XMG added that politics and the capability of providers to meet the requirements of clients and keep up with the market trends will always play a defining role on the growth of the outsourcing industry.

Revenues of the Philippine outsourcing industry will increase from $11 billion in 2011 to $12.7 billion by the end of this year. However, when it comes to the overall position in the BPO segment, India remains at the top with revenues that will grow from $59 billion in 2011 to $63.2 billion this year - followed closely by China, with revenues from $45.7 billion to $53.8 billion.

Meanwhile, ‘real growth’ is seen for China and India where the Philippines posted annual revenue growth at 25.4%, 23.6%, and 15.7% for 2010-2012 and China with 43.5%, 63.6%, and 33.0%. India showed that its revenue growth was deteriorating over the same period with 13.2%, 8.6%, and 7.1%

The increase in China’s market share during the last three years’ (2010-2012) growth cycle was more prominent with 35.76, 45.7, and 53.8 (US$ billion), compared to India’s 54.33, 59.0, and 63.2.

In 2010, India’s revenue was $18.6 billion more than China’s, but in 2012, the difference was down to $9.4 billion. The Philippines, on the other hand, also posted increasing figures from $8.9 to 12.7 billion, a 43% increase and marginally smaller than China’s 50% revenue increase.

Nevertheless, India still has the upper-hand as it was the first to dominate the services export or business process outsourcing space.

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