Outsourcing industry

June 29, 2010Outsourcing Industryby EconomyWatch

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Outsourcing industry has been playing a major role in the economic growth of developing countries like India, China, and Philippines.

Outsourcing refers to a process by which an organization subcontracts its work to a third-party service provider. This work can be done by the parent company itself, but is “outsourced” primarily to cut costs. Work is also outsourced to save time and energy. Investment consultancy firm McKinsey & Co. predicted that global outsourcing industry would be worth more than $180 billion by 2010.

Outsourcing industry in India

India is a market leader when it comes to global outsourcing. Outsourcing industry in India has been experiencing growth for more than 20 years. A study carried out in 2008 revealed that as many as 6 of the world's top outsourcing destinations are located in India. As of 2007-08, Indian outsourcing industry is estimated to be worth nearly $52 billion.

Banking and financial services account for about 40 percent of India's outsourcing business. Global financial meltdown and banking crisis is expected to adversely affect India's outsourcing industry.

Outsourcing industry in China

Shanghai, Beijing, Shenzhen, and Dalian are some of the top outsourcing destinations in China. Chinese outsourcing industry has been giving stiff competition to India. As per Ministry of Industry and Information, about $15.2 billion worth of services was outsourced to China in 2007. Chinese outsourcing industry employs over 30 million people. In 2007, information technology services accounted for nearly 60 percent of China's outsourcing business. Outsourcing industry in Philippines

Philippines also figures prominently in the list of world's top outsourcing destinations. In 2006, Philippines generated about $2.1 billion in revenues. By year 2010, it's predicted that Philippines' outsourcing industry would be worth more than $11 billion and provide employment to about 900,000 people.

Outsourcing industry in Malaysia

Malaysia has also been able to establish itself as a premier outsourcing destination. Malaysian outsourcing industry is predicted to be worth $2 billion by 2012. Malaysia is likely to overtake Philippines as a favored destination for outsourcing work to other countries. Low cost advantage and quality of work continues to propel Malaysia's outsourcing industry.

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