| |
|
|
Analyst Firm Issues 2007 Year End Performance Estimates for Global Outsourcing Market
Better than expected performance of offshore; strong growth but turbulence times ahead. Philippines considered ‘darling’ of the global outsourcing industry with 68% growth (2006/07).
Victoria, Canada (October 27, 2007) – Independent forecast study conducted by leading ICT research and advisory firm XMG announced today that the global outsourcing market for IT, BPO and Call center services will finish 2007 at US$297 billion with an estimated growth rate of 19.31%. This projected revenue estimate is up from its 2006 figure of US$249 billion. The report revealed analyst expectations of the total outsourcing market to hit US$450 billion by 2010. The scope of the global market in this study includes both the onshore and offshore delivery of outsourcing services. The study is part of its year-to-end forecast conducted in the fourth quarter to estimate year-end performance of the global outsourcing market.
The crux of the study centered on the performance of the 4 top Asian offshore countries namely: India, China, Malaysia and the Philippines. India is estimated to corner US$34.1B in total revenue by year end 2007 at 29.5% CAGR and settling in with 11.5% share of the global market. XMG estimates India will continue to lead the offshore segment through 2010 with at least 15% share. China is estimated to have 4.4% share of the global market with 2007 total revenue figures forecasted to hit US$13.1B while growing at 47.9% CAGR. “While it is no surprise that India and China continues to lead amongst the offshore countries, our study also showed a noteworthy insight to those following the growth of other offshore countries in Asia”, commented Lauro Vives, Founding President and Chief Analyst of XMG. “The Philippines is experiencing an unprecedented growth rate of 62% CAGR and will surpass Malaysia in 2007”. According to the XMG intelligence report, the Philippines’ revenue is expected to grow to almost US$4.1B and thereby achieving 1.4% of the global market share. “The Philippine industry has far exceeded all analyst expectations”, added Vives. In comparison, Malaysia’s revenue forecast by year end is estimated at US$3.6B achieving 1.2% of the global market share. In 2006, Malaysia and the Philippines was neck-and-neck with 1.04% and 1.02% respectively of the share of the global revenue pie.
Even with Malaysia’s 38% growth, the report showed that other countries are outpacing Malaysia primarily due to the country’s lack of available manpower to sustain the growth of its offshore and outsourcing industry. “Locators are turning to other countries where there is headroom for further growth and expansion”, added Vives. “This continues to show that the strategy for expanding offshore rests on the availability of manpower in that country. Our competitor intelligence report shows that the typical profile of offshore locators, whether service providers or captives, is to have the foresight that they can grow anywhere from 60% to 90% year on year unabated over the next two to three years”. The report also cited that Malaysia recognizes its limited manpower size and have been steadfastly focusing on increasing revenue share through higher value services.
Looking forward to 2008, the study showed turbulence but continued strong growth in the offshore markets citing the rising cost of operations and the continuing depreciation of the US dollar. Other than China and Malaysia, the cost of operations in India and the Philippines is increasing due to wage rate hikes to retain people and the rise in real estate prices. Both India and the Philippines are estimated to experience continuing general wage increases of 11% and 8% respectively due to talent supply problems. The spiraling effect of the US dollar and the accelerated appreciation of Asian domestic currencies such as the India Rupee and Philippine Peso is also a factor. “For every percentage point these currencies appreciate relative to the US dollar, we typically see the cost advantages affected by 20 to 30 basis points”, Vives continued.
International Business Wire
For more information on XMG's Service Focus and Knowledge Center, visit http://www.xmg-global.com
About XMG
Headquartered in Victoria, Canada XMG provides unbiased and highly actionable ICT research, advisory and research-based consulting services to help companies become agile, adaptive and efficient in the use or marketing of information technology and information technology services. XMG’s extensive research and insights help end-users, service providers and captives develop the appropriate strategic response, market penetration strategies and the development of operations excellence.
Completely vendor independent and not aligned with any hardware, software or consulting vendors, XMG ensures an objective fulfillment to solely operate in the best interests of our Customers. Whether Customers are end-user clients, vendors or service providers, the ultimate goal of XMG is to become our Customers long-term trusted ICT Advisor.
|
