Global Outsourcing Still Growing

The global outsourcing market for information technology, business process outsourcing and call center services this year will be worth $297 billion, growing more than 19 percent, according to Victoria, Canada-based XMG, an independent communications technology research and advisory firm.

XMG analysts expect the total outsourcing market for these services to hit $450 billion by 2010 with India, China, Malaysia and the Philippines as the top outsourcing markets.

India’s outsourcing is expected to generate $34.1 billion in revenues this year, a 29.5 percent annual growth rate. XMG estimates India will continue to lead the offshore segment through 2010 with at least a 15 percent share of the market.

China is next with a 4.4 percent share of the global market. The Asian giant remains a smaller player but outsourcing services are growing at a 48 percent pace. That still trails the Philippines with its blistering 62 percent growth rate. The Philippines has about 1 percent of the global market, right behind Malaysia with an incrementally higher piece.

Looking forward to 2008, XMG predicts turbulence but continued strong growth in the offshore market, due to the rising cost of operations and the depreciation of the U.S. dollar. 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 those India and the Philippines experience continuing general wage increases of 11 percent and 8 percent respectively due to talent supply problems, XMG found.

The decline of the U.S. dollar and the accelerated appreciation of Asian currencies such as the India Rupee and Philippine Peso will also drive prices higher.