The digital transformation journey of companies in the country will lead to spending on outsourcing totaling $500 million (P25.5 billion) by 2021, data from research firm International Data Corporation (IDC) showed.
“Enterprises’ digital transformation initiatives, as well as changing patterns of IT procurement and rapidly evolving service delivery models, will drive the Philippines outsourcing market to continue growing,” IDC said.
With digital transformation taking place, companies will have to outsource and address business challenges such as growing complexity of information communication technology (ICT), lack of ICT, and the need for proper governance.
“The Philippines outsourcing market is undergoing a dramatic transformation propelled by the increasing adoption of disruptive technologies. CIOs (chief information officers) and technology leaders tap external capabilities to support their DX (digital transformation) initiatives, meet ever-changing customer demands, implement solutions faster, and reduce cost,” said Alon Anthony Rejano, IDC Philippines market analyst.
“In the age of greater automation, standardization, and modernization, external providers need to keep up and redefine their value proposition, offering new delivery and consumption models,” he said.
However, IDC sees a decline in demand for multiyear and multimillion-peso outsourcing transactions as end users cut cost in favor of cloud infrastructures.
“This, in turn, is adding price pressure on providers, which drives vendor consolidation. IDC recommends that end users must understand where each outsourcing deal fits in the sourcing spectrum so that appropriate governance mechanisms can be created and managed,” it said.
Rejano said the future of the Philippine outsourcing market remains stable for competition as consumers continually demand for strong offering. But he stressed that while they want a partner for the long term, “they are also willing to consider new partners that offer innovation.”|
“Providers need to demonstrate thought leadership throughout the lifetime of the contract and provide high-quality service to help transform customers with DX agenda.”