China closing ranks with India as globally favored BPO destination

Even as the Indian IT majors are seen to be optimistic about resuming outsourcing business as usual with the United States following President Barak Obama’s recent visit to the country, findings of a recent research by a Canadian firm says that the Chinese outsourcing industry is stealthily, but steadily bridging the space with India to become the top BPO destination worldwide.

The findings of a study undertaken by XMG Global, a Canada-based Information and Communication Technology (ICT) research and consultancy organization reveal that by the end of 2010, China will have a 28.7 per cent share of the outsourcing industry globally. In other words, it will end the year with revenues worth $35.76 billion from the BPO sector alone. On the other hand, India has been maintaining a slender lead with around 43.7 per cent share of the total global outsourcing market earning around $54.33 billion in revenues during the current year.

According to online news, Lauro Vives, XMG chief analyst, has issued a statement to a Chinese media saying that with a massive 30 per cent annual growth, China has been steadily closing its revenue gap with India, which has been currently witnessing around 14 per cent annual growth in this sector. Reviewing the slow growth of the Indian BPO industry, Vives said that the considerable endeavors of China, the Philippines as well as other offshoring nations to develop their competence in drawing noteworthy sums of investments to the BPO sector has been responsible for the narrowing of the gap between India and these outsourcing countries.

Elaborating further, Vives pointed out that the Philippines, which is currently ranked as the third most favored BPO destination globally, holds 7.1 per cent of the market share of the global outsourcing industry with a total revenue of $8.85 billion by the end of 2010. Compared to the 20 per cent annual growth rate of the BPO industry in the Philippines, this year the sector has improved its performance to achieve a 23 per cent growth rate.

Stating that by the end of 2010, globally the outsourcing market is projected to earn a total revenue worth $425 billion, a 13.9 per cent increase compared to 2009, Vives said that although India still continues to be the frontrunner in the global outsourcing business, other offshoring destinations are also maturing now and this has helped them to narrow the gap with the leader.