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Research Shows Conflicting Projections for Philippine Contact Center Industry

October 30, 2007

In the process of studying the worldwide contact center industry, the Philippines is often included in research as the country has risen to be a formidable competitor in the race to attract overseas investors. While the country continues to offer significant benefits for investment, increased competition and rising costs appear to be in its future.

According to Canada-based IT research firm XM, Inc., revenues of the Philippines outsourcing industry, including onshore and offshore services, are expected to grow to $4.1 billion by the end of the year, for a 62 percent growth rate and a 1.4 percent global market share.

Lauro Vives, XMG founding president and chief analyst, said in a company statement that the Philippines is "the best performing country in 2006/07... The size of the Philippine outsourced ICT [information and communication technologies] services is also growing, but at a much faster rate than the global market. The Philippine industry has far exceeded all analyst expectations."

XMG highlights that other Asian countries appear to be faring much better or close to the Philippines’ performance. India, for one, corners the biggest global market share for outsourcing among Asian countries at 11.5 percent. China is a far second at 4.4 percent, with the Philippines in third.

The country’s closest competitor is Malaysia with 1.2 percent of the market share. According to XMG data, in 2006 the Philippines and Malaysia each claimed a global market share of 1.02 percent and 1.04 percent respectively.

Examining the worldwide outsourcing market, including onshore and offshore services for information technology, business process outsourcing and call center, the XMG study found that the total market is projected to finish the year at $297 billion and $450 billion by 2010.

XMG also highlighted obstacles that both India and the Philippines will face in 2008. The primary challenges include wages increases in order to retain quality employees and real estate prices. The company projected the wage increases for the Philippines to be at 8 percent.

This research by XMG seems to be in contrast to that completed by the Business Process Association of the Philippines (BPA/P). According to research by the BPA/P, China is a close competitor, but Malaysia is nowhere near the Philippines.

The data from this research also showed that the local off-shoring and outsourcing industry increased its revenue by 48 percent to $3.3 billion in 2006 from $1.5 billion in 2004. These revenues are expected to increase to $13 billion by 2010 as the Philippines aims to corner 10 percent of the global outsourcing market which is expected to reach $130 billion.


Susan J. Campbell is a contributing editor for TMC (News - Alert) and has also written for eastbiz.com. To see more of her articles, please visit Susan J. Campbell’s columnist page.

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