IT, offshoring prospects still bright
Posted October 15, 2008MANILA, Philippines—Amid fears of job cuts and investment pullouts, the information technology and offshoring industries — of which the Philippines is a big beneficiary — will continue to grow albeit at a slower pace, a Canadian research firm said.
Canada’s XMG said the Philippines and India would continue to get offshoring jobs and dollars in the next two years, and even well into the next decade, even in the midst of the global economic crisis.
The crisis might even open new doors for the country, as affected firms may depend more on offshoring to reduce expenses and to focus on their core competencies, XMG said. Expected market consolidation should also present new opportunities.
“Industries such as the financial, insurance and manufacturing, which will all take a direct hit by the slowing economy, will slash jobs. This increases the potential talent pool for larger and upbeat business process third-party vendors with healthy sales pipelines for business process services,” the research firm said in a statement.
XMG said financial institutions and insurance companies were also likely to sell their IT and business process service units to third-party providers to monetize their assets.
“[There will be] further consolidation in the market, as deep-pocketed and larger technology service vendors focus on increasing size, scale and market share through next-wave acquisitions in late 2009. Unlike the bubble burst in the earlier decade, these companies have a stronger balance sheet and the liquidity that can hold strong throughout the economic upheaval,” it added.
In the meantime, companies already in the IT and business process services space, such as Dell, will infuse more cash into their offshore delivery centers to improve their client satisfaction levels, it said, adding this would ensure client retention and new customer attraction.
Philippine-based delivery centers should keep client satisfaction ratings up and talent attrition down to ascertain that they will get a big chunk of these expected investments.
While prospects remained upbeat, XMG slashed its offshoring growth forecasts, in light of the economic downturn.
From the 31.2-percent growth through 2010 that the group projected in 2007, the Philippines’ offshoring industry growth was now seen reaching only 25.6 percent.
“The global financial upheaval will have a deleterious effect across most industries, but the IT industry and offshoring will still experience double digit growths,” XMG chief analyst Lauro Vives said. “These numbers are rare bright spot during tough times.”
Source: Philippine Daily Inquirer, October 10, 2008
by Abigail L. Ho
