Thursday, March 09, 2006

Outsourcing seen surging ahead despite political turmoil

AMID recent political troubles, the Philippine outsourcing industry is expected to surge ahead, a Canadian-based information technology research firm said.

"The administration of President [Gloria] Macapagal-Arroyo has seen its share of political instability over the last five years. The most significant of these was the Oakwood Mutiny of July 2003. Like most social movements manifesting unrest towards government policy, the Oakwood Mutiny was originally perceived to have long-term drastic effects in the economy. This was eventually proven to be untrue for the local and offshoring IT industry in this country as the resilience of Philippine society prevailed in succeeding years. Our analysis showed renewed growth for the remainder of 2003 and the event being relegated to being a mere nuisance," said XMG Inc. in a statement.

The IT research firm added that the recent declaration of "state of emergency"--since lifted--and a standoff at the Philippine marine headquarters has "no fundamental negative effects to economic growth" of the country.

Short-term business sentiment, however, will be moderately severe but would recover swiftly in less than a year, barring further political unrest under the Arroyo government, the IT firm said.

XMG noted that some business contracts may be suspended or cancelled in light of the negative sentiment.

"Most significant among these contracts are offshore contracts served by outsourcing and shared service companies. However, the decision to suspend or cancel contracts is more due to insufficient understanding of the real meaning behind events of social unrest in Philippine society," it said.

"Despite fear, uncertainty and doubt becoming top of mind for outside investors during distressing events, the country will continue to surge as one of the top IT offshoring destinations for outsourcing and captive operations," XMG added.

President Gloria Macapagal-Arroyo decided to lift the "state of emergency" on Friday, creating mixed reactions from lawmakers, businessmen, and lawyer groups.

She had declared the emergency to counter what she said was a plot to oust her.

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The article is sponsored by A-1 Technology Inc which is an established Software Development Company and is one of the best Software Development Companies in the era dealing in offshore outsourcing including services offshore website development and software development.