Thursday, November 5, 2009 |
During the height of the economic crisis, outsourcing industry experts, analysts, and service providers projected a boost in outsourcing and offshoring activity; and with good reason. An offshore worker can be hired 24/7 for the equivalent of barely a living wage in Western countries. The difference was simply too great to ignore and the global outsourcing market became littered with large BPO buyers that were willing to sacrifice a bit of quality (arguably) for the cost-effective offers that so many service providers flaunted. However, almost a year since the beginning of the crisis, the global outsourcing and offshoring industry does not seem to be growing any faster than experts predicted. Where is the growth that so many anticipated?
Top Indian outsourcing body, Nasscom (National Association of Software and Service Companies), predicted 4 to 7 percent growth this year – far below the initially predicted 16% from last year, and the 30% rise it posted regularly in the past. According to CIO analyst, Aprit Kaushik, 20 to 40% of the revenues of offshore outsourcing firms are tied to the financial services industry. Following its demise, companies have had to look for alternate vertical markets. Furthermore, buyers must now, more than ever, focus on not just output (e.g. large BPO deals highly reliant on process expertise), but the quality of that output and the “hidden costs” factor involved in each deal.
The shift towards downsizing traditional BPO deals such as IT and contact center work that revolve around large production volumes is one of the factors causing the slowdown of the outsourcing industry. Buyers have begun considering higher-end services like finance and accounting, and outsourcing smaller projects with lower risks; but require quality domain expertise. This is perhaps one of the main reasons, if not the reason that amid “no growth” times, the Philippines is posting double digit growth.
On a survey conducted by the Business Process Outsourcing Association of the Philippines (BPA/P), 65% of outsourcing clients indicated that prospects for their non-voice operations in the Philippines for 2009 are excellent to outstanding. A total of 188 respondents answered the survey. XMG Global predicts that the Philippines will close out the year at 21.7% growth; due mainly to the growth of the Philippines' Knowledge Process Outsourcing industry; which currently encompasses animation and graphics, finance and accounting, and HR-related services.