Global outsourcing revenue forecast to grow 9.2% in 2011

MANILA -- The global outsourcing industry, including offshoring and onshoring, is forecast to close the year with revenues reaching US$464 billion, up 9.2 percent from the US$425 billion revenue for 2010.

The outsourcing year-end revenue forecast was released by research firm XMG Global also estimates total revenue of the offshoring segment to reach US$144.8 billion, with India capturing 42.5 percent of the offshore market or US$61.5 billion in revenues. China is seen still lagging behind India with revenues reaching only US$45.7 billion, or 31.5 percent market share, while the Philippines will remain in the third spot with estimated revenue of US$10.7 billion, or 7.4 percent market share.

"The US economy, which remains to be a large market for offshoring, is still on the road to recovery with a forecast 2011 GDP growth rate of 2.6 percent, slowing down from last year's 2.9 percent," said XMG Global Chief Analyst Lauro Vives, adding that Indian and Philippine providers, which are highly dependent on the US market, feel the effects of the US dollar depreciation.

China, with a strong East Asian client base like Korea and Japan, is less affected. It also has a stronger hold in the domestic BPO market. In 2010, more than 75% of service outsourcing revenue is from the domestic market. Chinese companies are looking at outsourcing locally as an option to compete globally.

"Given the continued growth of competition and increasing demand from other countries besides the US and Europe, XMG Global expects a sustained displacement and redistribution of market share not only between India and China but in other emerging outsourcing destinations such as Brazil, Mexico and Malaysia," Vives said.