Outsourcing: Where India, China and Vietnam Are Going

BusinessWeek published an article dated 25th September, 2009 about the world’s outsourcing market being worth $373 billion.

The new Canadian research firm, XMB Global, predicts India and China as the leading outsourcing countries with a growing market of 14.4% this year, with India generating revenues of US$48 billion and China at US$28 billion.

Vincent Altez, a senior analyst at XMG says that the dynamics of global sourcing will undergo a sea change in 2010 because of various factors.

In his report he says that India will snag 44.8 percent of the global market with China following closely behind with 25.9 percent. But the growth is expected to remain more or less the same as that of 2008 with no significant growth because of Satyam Computer Services’ financial debacle and demand paving the way for other offshore countries. Altez in his report said that recession “has provided the opportunity to rationalize and shift work to other offshore destinations other than India”.

According to the XMG report, the Philippines is responsible for 6.9 percent of the total offshore revenue which is more than its 6.7 percent revenue generated in 2008. The Philippines has registered revenue of US$7.3 billion at the end of the year which makes it the third-best performing destination with revenue growing at 21.7 percent. The figure is perhaps less than the expected 24 percent because of indifferent demand due to slow growth for IT services and with key players like India and China delaying their expansion plans.

Though the worldwide growth graph this year at 14.4 percent will be lesser than last year’s 19 percent, it is still seen as positive because the expansion in the industry is in spite of the recession. Altez in his report noted that offshoring and outsourcing is “part of a natural ongoing economic revolution notwithstanding a financial crisis”.

Altez says that the economic recovery of Europe and the United States, as well as the Chinese and Vietnamese governments’ determination to attract foreign investors, will have a hand in changing the dynamics of global sourcing in 2010.