WHILE the total outsourcing services revenues in the Philippines grew by 8.2 percent to $300 million in 2017, the information-technology (IT) outsourcing market in the Philippines saw earnings slip by 3.5 percent last year due to the lack of development in local tech deployment and skills.
Alon Anthony D. Rejano, a senior market analyst at research firm International Data Corp. (IDC), said while cloud is the way to go—offering enterprises benefits such as massive scalability, low cost and increased agility—there still exists a reluctance to shift to cloud-based models.
“From a market perspective, cloud continues to grow in the country, but the overall market value remains muted due to the lack of scale for ICT deployment and availability of advanced skills in application migration in the Philippines,” he said.
Rejano said his group sees the IT outsourcing landscape in the Philippines will continue to evolve, as players are now looking into employing different strategies ranging from cloud-centric initiatives to hybrid IT approach.
“Although this shift is seen as a positive sign for the overall IT outsourcing market, we believe it will also impact traditional outsourcers negatively,” he noted.
The evolving demand of the market was radicalized due to the cannibalization of cloud-based models of outsourcing involving infrastructure as a service (IaaS) and software as a service (SaaS), a changing cost structure, and fundamental shifts in the competitor environment, Rejano said.
“Currently, the traditional outsourcing service providers have been pressured because of the increased shift to cloud providers. More traditional service providers are expected to include new delivery structures to accommodate end-users that require services such as cloud, automation and security solutions,” he said.