Outsourcing industry sees consolidation as AI concerns loom: expert
MANILA, PHILIPPINES — The outsourcing industry is experiencing notable consolidation, with larger firms expanding their market share.
Industry consolidation accelerates among OA500 firms
In a recent interview with ANC, Outsource Accelerator Founder and CEO Derek Gallimore cited data from the newly released OA500 2025 Global Outsourcing Firm Index report, which found 77 outsourcing companies now employ over 10,000 workers each, reflecting a trend where “the bigger firms [are] getting bigger, eating up some of the smaller firms.”
This year’s index shows a leadership change at the top, with Teleperformance displacing Accenture, which had held the number one position for the previous two years. The report also documented an average growth of 11.6% year-on-year across the industry.
A striking contrast exists between public and private business process outsourcing (BPO) companies, with public firms showing 48.1% revenue growth while private firms experienced a 16.1% decline—further evidence that “the winners keep winning” in this consolidating market.
Tariff threats and AI disruption present new challenges
Potential tariffs from the Trump administration represent a significant uncertainty for the global outsourcing landscape. Gallimore noted that while outsourcing has been “very hard to police up until now,” broad tariffs on foreign economies could put the industry “in the crosshairs.”
The industry is also adapting to changing work models, with physical office locations declining by approximately 15-20% — from 12,800 in 2023 to 10,900 in the latest report. This shift reflects the sector’s adjustment to hybrid work arrangements.
Artificial intelligence and automation pose particular threats to traditional call centers performing “high repetition, high volume kind of work.” The Philippines’ Central Bank has already flagged these concerns, projecting slower BPO export revenue growth of 5% for 2025 and 2026, down from 6% in 2024 and 7.7% in 2023.
However, Gallimore notes, “This industry is not collapsing. There is greater opportunity from staff augmentation and the broader narrative is global employment as opposed to localized employment.”
“That is not confining it to just the call centers and the basic functions, but it’s just the fundamental principle that instead of hiring in local expensive markets, you can hire globally. And from a global talent pool where there’s potential also to save money where there’s lower costs of living. So that is the bigger, broader narrative, and that is very protected from AI,” he added.
Philippines positioned for higher-value services
Gallimore is also optimistic about the Philippines’ outsourcing future, particularly in higher-value services. He emphasized that the real opportunity lies beyond traditional call centers in “high complexity, high technical, skilled areas” of professional services.
The Philippine outsourcing industry targets $59 billion by 2028, according to the Information Technology and Business Process Association of the Philippines (IBPAP).
“There is no reason why the Philippines cannot move into that position,” Gallimore stated, noting that Filipino professionals have “been entrusted for many decades now with a lot of the operational activities of the Fortune 500.”
Gallimore framed the broader industry narrative as one of “global employment as opposed to localized employment,” suggesting that the fundamental principle of hiring from a global talent pool remains strong. While call centers may be vulnerable, he believes “global employment is going to continue to rocket forward” with the Philippines in “a very strong position alongside India.”
