At the beginning of 2009, fDi Magazine reported on the decline of FDI projects in customer contact, shared services and technical support centres, collectively known as business process outsourcing (BPO) activities.

This decline followed the boom which occurred between 2003 and 2006, when FDI in BPO activities increased by 29%.

Advertisement

Further to the reported decline in 2007 when FDI projects in BPO activities fell 26% from a peak of 353 projects in 2006, the latest figures released by fDi Markets indicate that the number of FDI projects involved in BPO activities has remained steady since 2007, even reporting a slight increase in project numbers in 2009. Initial figures for 2010 indicate a relatively positive year for BPO activities as more FDI projects were recorded in January and February 2010 than in the first two months of 2009.

Despite stable FDI project numbers in BPO activities since 2007, there has been a definite shift in the type of project set up in 2009. Between 2003 and 2008, an average of 84% of all FDI projects set up in BPO activities were ‘new’ projects, whereas 15% were made up of ‘expansions’ of existing facilities.

In contrast to this, only 66% of all projects set up in 2009 were ‘new’ projects, whereas 29% projects were ‘expansions’, with the actual number of expansions more than doubling when compared with 2008. This may indicate a more careful strategy by companies, expanding where operations have been successful in the past.

By the numbers

Between January 2009 and February 2010, fDi Markets recorded a total of 327 FDI projects involved in business process outsourcing (BPO) activities. These projects consisted of a combined $4.24m of capital investment and the creation of 123,093 jobs. Within this period, fDi Markets recorded the highest number of projects in May 2009. One of the largest projects recorded in the 14-month period was by US company Convergys, which announced that it intends to hire at least 6000 new staff in the Philippines.

fDi Magazine had previously reported that between 2003 and 2006, India was the main recipient of FDI in BPO activities, only to be overtaken by the Philippines in 2007. This trend has continued as the Philippines remained the top destination country for FDI in BPO activities in 2009.

Companies based in the US still account for the vast majority of FDI in BPO activities, with US companies creating 41% of all projects between January 2009 and February 2010. During this period, SR Teleperformance of France was the most active investing company in BPO activities, setting up 14 FDI projects. IBM is in second position, creating eight FDI projects, along with Stream Global Services.

The top sectors which are accommodated by BPO activities remain similar to 2008. Business services account for 40% of all BPO FDI, with software and IT services accounting for 21%, and communications for 12%. In 2008, only 14% of all BPO projects were regarded as expansions. This figure has risen dramatically, with only 66% of the total 327 FDI projects between January 2009 and February 2010 being regarded as new projects, 29% expansions and 5% co-locations.

The most popular motive stated by companies to invest in BPO activities in particular locations was skilled workforce availability, accounting for 31% of all reasons stated, whereas language skills made up 11% of responses, followed by domestic market growth potential at 10%.

Click here to view the charts

For more information contact fdiintelligence@ft.com or +44 (0)207 775 6667.