Outsourcing Statistics in Asia 2020: Fast Facts and Highlights on Top Countries for Outsourcing Services

June 22, 2020

Global outsourcing has been an integral part of business operations and management over the past three decades. When it comes to choosing the best outsourcing destination, there are many considerations such as the country’s labor laws and overall business environment, workforce competitiveness and competence, the status of its tech and software industry, among many other factors.

According to Grand View Research, the market size for global outsourcing will reach $405.6 Billion by 2027. Cost efficiency, increased diversity of skills, and better quality and performance are among the top reasons why companies outsource their business functions. The most commonly outsourced tasks are accounting, digital marketing, and IT-related services

There is a strong tendency towards hiring a remote team in Asia for delivering various business processes, infrastructure solutions, and application services in big and small firms in various industries worldwide. What makes the countries in Asia an attractive outsourcing destination? Here is a brief summary of pros and cons of the top ten outsourcing service destinations in Asia.

COUNTRY

Ease of Doing Business Index 2019*

Global Competitiveness Index 2019**

Digital Transformation Index 2019***

China

77.9 (#31/190)

73.9 (#28/141)

84.292 (#30/63)

India

71.0 (#63/190)

61.4 (#68/141)

64.952 (#48/63)

Indonesia

67.6 (#73/190)

64.6 (#50/141)

58.011 (#62/63)

Malaysia

81.5 (#12/190)

74.6 (#27/141)

82.390 (#27/63)

Nepal

63.2 (#94/190)

51.6 (#108/141)

No Record

Philippines

62.8 (#95/190)

61.9 (#64/141)

59.439 (#56/63)

Singapore

86.2 (#2/190)

84.8 (#1/141)

99.373 (#2/63)

Taiwan

80.9 (#15/190)

80.2 (#12/141)

90.194 (#16/63)

Thailand

80.1 (#21/190)

68.1 (#40/141)

68.434 (#39/63)

Vietnam

69.8 (#70/190)

61.5 (#67/141)

No Record

*The Ease of Doing Business Index is a benchmark of the conduciveness of a country’s regulatory requirements for conducting business operations.

**The Global Competitiveness Index is a benchmark of a country’s ability to use its resources productively for providing sustained economic growth and prosperity for its citizens.

***The Digital Transformation Index is a benchmark of a country’s capacity and readiness for digital technology adoption towards business competitiveness and overall economic transformation.

At A Glance

Outsourcing Highlights

$223.7 billion worth of outsourcing contracts
10.97 million outsourcing professionals
6,600 outsourcing service providers for foreign clients

The country’s technology expenditure will hit $250 billion by 2020 despite geopolitical tensions.
The Chinese government has eased up on foreign access restrictions in major parts of the local financial industry.
Growth opportunities to the outsourced service industry will be made possible through implementation of some regulatory reforms.

There is no single, comprehensive, law addressing data privacy protection.
Foreign firms are understandably concerned by the ambiguities of the current data privacy regulatory regulations and lack thereof.
Though China asserts that they plan to pattern their yet to be created data privacy laws after Europe’s GDPR, no such rules are yet in place.

At A Glance

Outsourcing Highlights

$177 billion outsourcing revenue
4 million employees in the IT and outsourcing industry
17,000 IT-BPM companies

There are government initiatives in place that remove trade barriers in the services sector to drive growth and gain new markets in the outsourcing industry.
Many Indian business leaders believe that the government is not doing enough in terms of taking advantage of rapid technological advances to build a robust digital economy.
There is a commitment to prioritize policies and programs for the IT sector.

There is no dedicated data protection legislation.
India repeatedly been the source of serious of data leaks and digital breaches for three consecutive years (2017, 2018, 2019).
The country is in the process of enacting into law a proposed Personal Data Protection Bill; however, no such protections are in place as of this writing.

At A Glance

Outsourcing Highlights

$2.2 billion outsourced facilities management (FM) market
$248.6 million total revenue from BPO services
$3.8 billion in enterprise software expenditure

History of harsh working conditions and rigid labor laws have cast a negative light within the industry
Questionable outsourcing practices and regulations have caused many in the industry to think twice before investing here
Implemented a Manpower Law in 2019 in an attempt to simplify outsourcing requirements

It has a weak legal framework on personal data protection.
It was compelled to submit a data protection bill as a response to an accountability call by Southeast Asian governments on content regulation.
Consumers are vulnerable to cyber-attacks until data privacy law is in effect.

At A Glance

Outsourcing Highlights

$1.4 billion estimated BPO revenue by 2021
$499 million revenue from Global Business Services (previously called Shared Services & Outsourcing Industry)
$25 billion worth of revenue from the ICT market by 2023 due to the adoption of cloud services

While there is government support to techno-preneurship and innovation, little attention is given to global business services (GBS).
Local companies within the outsourcing and shared services (OSS) industry in the process of consolidation to be at par with competition in the global market.
There are limited players and opportunities within the outsourcing industry but government is keen on strengthening its workforce to keep up with the demands.

The Personal Data Protection Act 2010 (PDPA) does little to protect customer data from exploitation.
Malaysia ranks as the fifth worst-performing country in protecting the privacy of its citizens.
There is an urgent need to amend the current legislation for data privacy.

At A Glance

Outsourcing Highlights

6,000 BPO companies
$653 million total stock of FDI (foreign direct investment)
The services sector (financial, consultancy services, IT and communication, foreign employment services, etc.) contributed to 51% of GDP for 2018

There is no clear data on the impact of the BPO industry in the country.
There are few, if any, robust learning programs in place to improve skills and ability of its outsourcing workforce.
Limited regional connectivity, lack of competitiveness, and poor transport infrastructure are bottlenecks in harnessing economic benefits of the outsourcing industry.

Data breach is a serious risk due to weak cyber security regulations.
Government’s unlimited surveillance powers put citizens’ privacy at risk.
The Privacy Act 2018 is in effect but there are overlapping provisions found on its existing Criminal Code that raise many other concerns.

At A Glance

Outsourcing Highlights

$50 billion worth of revenue from the IT-BPO industry
1.35 million outsourcing professionals
Covers 10-15% of global market share for the IT-BPO industry

The IT-BPO is identified as a priority sector under the Philippine Development Plan 2017-2022 due to its job generating capabilities that can bring at least $48 billion in revenue by 2020.
Various government programs are being implemented to attract investors in the local BPO industry.
The Department of Trade and Industry (DTI) recognizes the competence of service-type businesses such as software development and back office services among others, hailing the industry as a ‘vital economic lifeline’.
The government shows its support for the outsourcing industry by putting enacting generous tax incentives and tax breaks as well as educational grants and simplified import/export procedures for local and foreign investors.
There is strong government support for globally-competitive software companies and IT outsourcing (ITO) service providers in a bid to strengthen foothold in the global ITO market.

Its Data Privacy Act 2012 ensures the highest degree of protection and secure flow of personal information being processed by public and private entities.
Currently, it is one of the only three ASEAN countries with existing data protection laws in place.
Global trade players with outsourcing partners in the country are given assurance that they can ‘conduct business in a safe manner here’.

At A Glance

Outsourcing Highlights

98% of Singapore companies rely on outsourced IT infrastructure services
$829.7 million total revenues from BPO services
$1.9 billion worth of government-funded ICT contracts in 2020
$2.5 billion worth of government ICT expenditure to ramp up digitalization investment
21,000 IT professionals have benefited from TechSkills Accelerator program to up-skill and re-skill themselves for various outsourcing work opportunities

Tax rates are one of the lowest in the world for individuals (maximum tax rate of 22%) and corporations (17%) alike.
Widespread pro-business policies in effect to bolster Singapore’s reputation as a global business hub for companies in any industry.
Its outsourcing workforce is driven to provide service to its clients.

Given its position as a regional financial hub in Asia, the city-state is a target of relentless cyber-attacks that have had a negative impact on its economic growth.
Data breach in big companies is attributed to careless handling and storage of sensitive information in local servers.
There is a call to make significant changes to its existing Personal Data Protection Act (PDPA) to keep pace with the evolving business landscape whilst strengthening data privacy in the digital economy.

At A Glance

Outsourcing Highlights

$88.4 million production value of Taiwan’s IT service and software industry
$8 billion worth of FDI (foreign direct investment)
$73.56 billion revenue from the ICT sector which contributes to around 15 percent of Taiwan’s GDP

At least $3 billion worth of government support for entrepreneurs within the technology sector to attract foreign investors and talent.
Government-subsidized educational programs to better equip its young workforce with the skill sets needed to succeed in the industrial age.
Taiwan’s internet speed is the fastest in the world thanks to the government’s heavy investment in its digital infrastructure.

The country experiences at least 10 million cyber-attacks every month from China.
Weak enforcement of the Personal Data Protection Act makes it impossible to verify the extent of data breach even in its government units.
The government bans use of Chinese technology products such as those from Huawei due to potential security threats.

At A Glance

Outsourcing Highlights

$1.8 billion worth of in-house and outsourced facilities management (FM) market
$223.7 billion worth of outsourcing contracts
$1 billion worth of investment in the software market

There is commitment to become a leader in the IT outsourcing industry through its provision of superior business climate for foreign investors and through infrastructure improvements.
Skills shortages have become the biggest obstacle to workforce competitiveness.

It is considered as 4th worst country in cybercrime detection in the Asia Pacific region.
Many Thai companies are unprepared to deal with cyber-attacks and data breaches.
Its data privacy act just came into effect May, 2020.

At A Glance

Outsourcing Highlights

$2 billion total revenue from the BPO industry
$7.8 billion total revenue from the fintech industry
$103 billion total revenue from the ICT industry
900,000 employees in the ICT sector
40,000 ICT graduates every year

There are government-supported legal and financial incentive packages for the IT workforce.
Heavy investment in education are done to ensure at least one million highly-skilled IT workers by 2020.
Key reforms in labor outsourcing laws is a win-win situation for foreign companies and local workers.
Infrastructure development projects such as the Eastern Economic Special Development Zone is underway in a bid to attract more foreign investments.

There is no unified act to protect personal data and privacy.
Current cyber-security law requires companies to take down any form of information that is critical to the government.
Increasing cases of identity theft and other cybercrimes has forced the government to draft rules and regulations for personal data protection.
Cyber-criminals are getting better and becoming more aggressive at what they do in order to gain leverage against competition in their industries.
High downtime is rampant in businesses due to lack of trained cyber-security personnel.

Sources:

https://data.worldbank.org/indicator/SE.ADT.LITR.ZS

https://openknowledge.worldbank.org/bitstream/handle/10986/32436/9781464814402.pdf

https://www.doingbusiness.org/content/dam/doingBusiness/pdf/db2020/Doing-Business-2020_rankings.pdf

http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf

http://connectedfuture.economist.com/wp-content/uploads/2018/12/ADTI-whitepaper.pdf

https://www.imd.org/wcc/world-competitiveness-center-rankings/world-digital-competitiveness-rankings-2019/

https://worldpopulationreview.com/countries/literacy-rate-by-country/

https://www.ef.edu/__/~/media/centralefcom/epi/downloads/full-reports/v8/ef-epi-2018-english.pdf

https://s3.amazonaws.com/sustainabledevelopment.report/2018/2018_sdg_index_and_dashboards_country_profiles.pdf

https://unctad.org/en/PublicationsLibrary/ier2017_en.pdf

https://www.worldbank.org/en/data/interactive/2018/10/18/human-capital-index-and-components-2018

https://www.worlddata.info/average-income.php

https://www.numbeo.com/cost-of-living/country_price_rankings?itemId=105

https://data.worldbank.org/indicator/SE.ADT.LITR.ZS

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Outsourcing Statistics in Asia 2020: Fast Facts and Highlights on Top Countries for Outsourcing Services

COUNTRY

Ease of Doing Business Index 2019*

Global Competitiveness Index 2019**

Digital Transformation Index 2019***

China

At A Glance

1.4 billion

$14.14 trillion

0.67

96.8%

53.44(8th in Asia)

Outsourcing Highlights

Outsourcing Market Size

Government Response

Data Privacy

India

At A Glance

1.3 billion

$1.11 trillion

0.53

96%

50.06 (13th in Asia)

Outsourcing Highlights

Outsourcing Market Size

Government Response

Data Privacy

Indonesia

At A Glance

270 million

$3.20 trillion

0.44

74.4%

55.49 (5th in Asia)

Outsourcing Highlights

Outsourcing Market Size

Government Response

Data Privacy

Malaysia

At A Glance

32 million

$365.30 billion

0.62

95%

55.85 (3rd in Asia)

Outsourcing Highlights

Outsourcing Market Size

Government Response

Data Privacy

Nepal

At A Glance

28 million

$29.81 billion

0.49

68%

49.00 (14th in Asia)

Outsourcing Highlights

Outsourcing Market Size

Government Response

Data Privacy

Philippines

At A Glance

108 million

$356.81 billion

0.55

98%

60.14 (2nd in Asia)

Outsourcing Highlights

Outsourcing Market Size

Government Response

Data Privacy

Singapore

At A Glance

5.8 million

$362.82 billion

0.88

97%

66.82 (1st in Asia)

Outsourcing Highlights

Outsourcing Market Size

53.44
(8th in Asia)

50.06
(13th in Asia)

55.49
(5th in Asia)

55.85
(3rd in Asia)

49.00
(14th in Asia)

60.14
(2nd in Asia)

66.82
(1st in Asia)

54.18
(7th in Asia)

47.61
(17th in Asia)

51.57
(10th in Asia)