BPO industry hikes revenue, jobs targets

MANILA - The country's business process outsourcing (BPO) industry increased its revenue target for this year, citing greater interest in the Philippines as an outsourcing destination.

On the sidelines of the International Outsourcing Summit, Jose Mari P. Mercado, who is president of the Information Technology and Business Process Association of the Philippines (IBPAP), told reporters that the group hiked its 2013 revenue goal to $16 billion from the earlier forecast of $15.7 billion. The revised target is 21 percent higher than the $13.2 billion earned last year.



Mercado said employment will hit 960,000, higher than the earlier forecast of 925,000. The new jobs target is 23 percent more than last year's 777,000.

He cited strong partnerships among the private sector, the government and academe as among the drivers of industry growth.

Despite the upward adjustment in its 2013 revenue and employment projections, IBPAP is keeping its 2016 targets of $25 billion in revenues and 1.3 million jobs.

IBPAP chairman Danilo Sebastian Reyes told a press conference that the Philippines continues to attract BPO investments because the country can serve a wide range of requirements of different companies across different geographies, ranging from voice, call center services to non-voice, back office operations.

Citing a recent trip to the US, Reyes said, "There are pinpointed requests for the Philippines not only for contact centers but also high-value back office services."

"We've been quite successful at making the Philippines not only a call center but also a full-service IT-BPM provider," Reyes said.

"A lot of companies are now saying 'I want to outsource' and particularly 'I want to outsource in the Philippines,'" said Asheesh Mehra, head for Asia Pacific, Japan and the Middle East of Infosys.

Citing the efficiency of outsourcing work here, Mehra said the company has increased to 97 percent the share of locals in its Philippine workforce from 70 percent previously.

Mercado said new markets such as Japan are looking at Filipino animators and software developers.

A delegation of Philippine software developers that visited Tokyo last April was welcomed by a record 150 Japanese firms that showed interest in outsourcing work.

"One of the challenges for Japan is it's running out of people. We in the Philippines have these [human] resources," Mercado said.

source: interaksyon.com

Little First-Quarter Growth Seen for India Outsourcers, Recovery Hopes Fade

BANGALORE (Reuters) - Uncertainty about spending by U.S. and European clients in a weak global economy will likely weigh on the earnings of Indian outsourcers, dampening hopes that demand will pick up in the second half of the year.

India's $100 billion-a-year information technology and back-office outsourcing industry earns about three-quarters of its revenues from customers in the United States and Europe.

Analysts expect No.2 ranked Infosys Ltd., the only top-three vendor to provide a full-year forecast, to pare its revenue growth estimate for the current fiscal year to as low as 5 percent when it posts quarterly earnings on July 12.

The company in April had forecast 8-10 percent growth for the fiscal year ending March 2013, already disappointing investors enough to cut 13 percent of its market value on the day. It has gained about 2 percent since.

The National Association of Software and Service Companies, or NASSCOM, an industry lobby, expects the industry to grow exports by 11-14 percent in the current fiscal year that ends in March.

Customers continue to hold back discretionary spending due to the extended euro-zone crisis and the absence of unequivocal data that an economic recovery is under way in the United States, the Indian providers' biggest market.

"Hopes of a recovery in the second half are just that, hopes," said Apurva Shah, head of research at BNP Paribas Mutual Fund, which manages investments of about $750 million, including in the top Indian IT companies.

Due to the continued uncertainty in the demand environment and discretionary spending not coming through, the fund was "underweight" on the sector, Shah said.

FADING FAST

The sluggish global economy is prompting clients to demand more for every dollar spent. This adds to the pressure on billing rates on a commoditized set of services that Indian firms, competing with Accenture and IBM, rely on for the bulk of their revenues.

"The depressed situation in the west appears to continue to be of concern, but the hope is that they will recover slowly," Tata Consultancy Services Chairman Ratan Tata said at the company's annual shareholder meeting on June 29.

Shares of Infosys, which has a market value of about $25 billion, are down about 11.5 percent this year, while those of top-ranked TCS are up about 8.7 percent. By comparison, the main 30-share Bombay index has gained about 13 percent.

A weaker first half may have been factored in by the street, but "hopes for recovery in 2HFY13 are fading fast," Bhavin Shah, chief executive of Equirus Securities, said in a July 2 report. He has an "underweight" rating on the IT sector.

For the June quarter, analysts expect little or no sequential dollar-term sales growth for Infosys. The company may say sales grew 0.5 percent, Deutsche Bank analyst Aniruddha Bhosale said in a note. Bhosale, who advises clients pick TCS, expects it to report sequential growth of 2.6 percent.

Infosys is seen posting a profit of 23 billion Indian rupees ($413.71 million), compared with 17.2 billion rupees a year ago, while TCS is seen coming in at 29.7 billion rupees, 23.3 percent more than the year-earlier period, according to Thomson Reuters I/B/E/S.

The companies are expected to benefit from an 8.5 percent fall in the rupee during the quarter. However, analysts see some negative cross-currency effect due to the move in the euro and British pound versus the U.S. dollar.

"The rupee depreciating is not a reason good enough to play these stocks, as the outlook in terms of overall demand remains weak," Apurva Shah said.

($1 = 55.5950 Indian rupees)

source: nytimes.com