IT Outsourcing - Philippines

Philippines

The IT Outsourcing market in the Philippines is anticipated to witness a significant surge in revenue, reaching a staggering amount of €656.60m by the year 2024.
This projection highlights the country's potential in the IT Outsourcing market sector.
Moreover, it is expected that the market will exhibit a robust compound annual growth rate (CAGR) of 12.21% between 2024 and 2029, ultimately resulting in a market volume of €1,168.00m by 2029.
Furthermore, an important metric to consider is the average Spend per Employee in the IT Outsourcing market.
It is estimated that by 2024, this figure will reach €13.66, further illustrating the country's ability to deliver cost-effective solutions within the industry.
In terms of global comparison, United States is projected to generate the highest revenue in the IT Outsourcing market, amounting to a staggering €181.10bn in 2024.
This indicates the dominance of the US market in the IT Outsourcing market sector, while also emphasizing the potential for growth and development in the Philippines.
The Philippines has emerged as a top destination for IT outsourcing due to its highly skilled workforce and cost-effective solutions.

Key regions: Brazil, Italy, United States, China, Germany

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Analyst Opinion

The Philippines has become a major player in the IT outsourcing market, attracting many companies to outsource their IT services to the country.

Customer preferences: One of the main reasons for this is the Philippines’ highly skilled workforce, particularly in the IT sector. The country has a large pool of young, educated, and English-speaking workers who are able to provide high-quality IT services at a relatively low cost. Additionally, the country’s cultural affinity with Western countries, combined with its timezone, makes it an attractive location for companies looking to outsource their IT services.

Trends in the market: The IT outsourcing market in the Philippines has been growing steadily over the past few years, with many companies choosing to outsource their IT services to the country. One of the trends in the market is the increasing demand for cloud-based services, which has led to the growth of cloud-based outsourcing in the country. Another trend is the increasing demand for artificial intelligence (AI) and machine learning (ML) services, which has led to the growth of AI and ML outsourcing in the country.

Local special circumstances: The Philippines has a number of special circumstances that make it an attractive location for IT outsourcing. One of these is the country’s strong government support for the IT industry, which has led to the development of a number of IT parks and special economic zones. Additionally, the country has a large pool of young, educated, and English-speaking workers who are able to provide high-quality IT services at a relatively low cost.

Underlying macroeconomic factors: The Philippines’ strong economic growth and stable political environment have also contributed to the growth of the IT outsourcing market in the country. The country’s GDP has been growing at a steady rate over the past few years, and its government has been implementing policies aimed at attracting foreign investment, including in the IT sector. Additionally, the country’s stable political environment has helped to create a favorable business climate for foreign investors.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.