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Philippines Outsourcing Growth May Slow as Industry Faces Challenges

Philippines Outsourcing Growth May Slow as Industry Faces Challenges

(Bloomberg) -- The Philippines largest group of outsourcing companies has cut its revenue forecast through 2022 as risks from automation to higher taxes rise.

The IT & Business Process Association of the Philippines forecasts outsourcing revenue within $29 billion to $32 billion by 2022, down from an earlier projection of $38.9 billion.

The outsourcing industry, which has been a key economic pillar in the Southeast Asian nation for more than a decade, continues to face challenges both locally and globally, the group’s President Rey Untal told a forum in Manila.

Highlights

  • Direct jobs will likely reach 1.42-1.57 million by 2022, down from a forecast of 1.8 million in an earlier road map.
  • Compound annual growth rate in revenue for 2019-2022 will now be likely 3.5%-7.5% by 2022 instead of about 9% expansion seen previously.

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  • Sluggish growth in major markets, talent shortage, increase in automation, and regulatory changes are some of the factors that disrupt the industry’s growth, H. Karthik, managing partner at research and consultancy Everest Group, said in the same forum.
  • Newer business models and evolving customer needs create demand for onshore services, Karthik also said.
  • Most of the leading locations, including India, are witnessing near decade low growth.
  • Revenue expansion is likely to be faster than jobs growth amid a shift to high-value services, Contact Center Association of the Philippines President Benedict Hernandez told reporters, noting increasing revenue per employee.

Philippine Tax Shift May Halve Outsourcing Growth, Industry Says

To contact the reporter on this story: Ditas Lopez in Manila at dlopez55@bloomberg.net

To contact the editors responsible for this story: Cecilia Yap at cyap19@bloomberg.net, Siegfrid Alegado, Clarissa Batino

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