By John Mark V. Tuazon
Computerworld Philippines
January 22, 2010

More companies are betting their budgets on outsourcing their legal processes to Asian providers—particularly Sri Lanka and the Philippines—with 20% of the global market choosing Asia Pacific as prime destinations, a survey on global outsourcing revealed recently.

The 2009 ORN Service Provider Report conducted by Pricewaterhousecoopers also found that software development, IT services, and Finance & Accounting service providers are also poised to expand their services in these areas in the next 18 to 36 months.

Due to the recent economic crisis, the research house said outsourcing providers are competing for a larger share of the market, and are on a bid to take the crown from current outsourcing destination of choice, India.

“The emergence of service providers in emerging markets has transformed the competition into a global race for market share,” explained Judith Lopez, chairman and senior partner, Pricewaterhousecoopers Philippines, during the pre-event news conference of the 10th Global Sourcing Conference and Exhibition.

During the conference, Lopez said emerging markets are attracting investors due to “low wages, high competency, encouragement of foreign investment, and capability-building by new entrants” which raise the bar of outsourcing, pitting them against current industry leaders.

The study says more than 80% of LPO service providers are planning to expand the scale of their operations, while 11% are new providers entering the market. India and other Asia Pacific countries, including the Philippines, also form part of the growing destinations for legal services, at 87% and 13%, respectively.

The Dragon Threat
Yet aside from emerging markets, the study said India faces stiff competition with the rousing giant in China, as its government designates 20 cities as outsourcing hubs that attract more international investment. “The Chinese government has provided investors with tax breaks, labor hour systems, and employment subsidies to raise the cities’ attractiveness,” it added.

Locally, the Philippine government has declared the outsourcing industry a priority industry, backing it with policies to boost foreign investment, the study said, adding that continued government support is yanking India out of its foothold as the only outsourcing hotspot.

Late last year, the local contact center association predicted a continued 17% industry growth rate for 2010, bolstered by around 45,000 additional manpower added to the current labor pool, as revenues grow by 21%, signaling the slow end of the impacts of the global financial crisis.

“For the coming year, the [local] BPO industry projects around US$11 to 13 billion in revenues; 650,000 to 900,000 new jobs; and 10% of the global market share,” claimed Peter Favila, secretary, Department of Trade and Industry (DTI), in a statement during the conference read by DTI undersecretary Elmer Hernandez during the e-Services launch.

The largest ICT/BPO event in the Philippines currently on its decade-long run, e-Services serves as the venue for suppliers, providers, and buyers in the field to meet, network, and learn from each other through various organized events led by the Center for International Trade Expositions and Missions (CITEM). The e-Services conference will be held on February 8 and 9 this year at the SMX Convention Center.

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