The Philippine business process outsourcing industry’s target to generate $12 billion in annual revenue will be pushed to 2011 as a result of the global economic downturn, a senior industry executive said Tuesday.
“We made a little adjustment to our growth target. We now expect 20%-23% growth this year, from 26% to 30% (as previously forecast). So industry revenue would be around $7.3 billion-$7.5 billion,” said Oscar Sanez, president and chief executive of the Business Processing Association of the Philippines.
“We will be back to 26% (growth rate) next year, then hitting $12 billion in revenue by 2011 instead of 2010,” Sanez told reporters on the sidelines of the two-day International Outsourcing Summit in Manila.
But a weaker U.S. dollar and the large labor overhang in the U.S.–source of around 60% of offshore jobs–pose the biggest risks to the future growth of the BPO industry not just in the Philippines but elsewhere in the world, said Peter Schmitt, chief executive and chairman of DPC Data Inc.
Schmitt noted a Rutgers University estimate that the U.S. jobs deficit should reach 9.4 million by the end of this year. Factoring in annual employment growth of 920,000 in the private sector, the deficit will only disappear by August 2017, Schmitt said. “It’s a terrible labor overhang,” he said, noting this could stoke some form of protectionism in the U.S.
He said the continued depreciation of the U.S. dollar could also undermine the attractiveness of offshoring jobs as well as undermine profitability of BPO companies around the world.
On the bright side, Schmitt said he estimates that only 1 million of the 30 million “exportable” jobs from the U.S. are now offshore.
Ganesh Natarajan, vice chairman and chief executive of Zensar Technologies of India, said the global BPO industry, now worth around $600 billion, could grow to $1.2 trillion by 2020. The Philippines could secure around 10% of that future market if its industry tracks the growth experienced by its Indian counterpart over the last two decades. India’s BPO industry is now worth $71 billion compared with only $70 million during its fledgling years when it served mainly the domestic market, he said.
Source: http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=200910200546dowjonesdjonline000174&title=philippines-bpo-industry-expects-slower-growth-in-2009
