INCREASING geographic diversification is threatening the Philippines’ share of the global business process outsourcing (BPO) market, a report issued by a United Nations agency said.

Local industry players, however, claim outsourcing is growing just as fast and that no business is being taken away from the country.

Several states, according to the United Nations Conference on Trade and Development’s (UNCTAD) 2009 Information Economy Report, are emerging as new and attractive offshoring sites.

Following jumps since 2004, the Philippines’ market share has remained steady at 15%. Five years ago it was just 9%, rising to 12% the following year and 14% in 2006.

“According to market analyses, the global market for the offshoring of IT (information technology) and ICT- (information and communications technology) enabled services was estimated to be worth around $90 billion in 2008, of which IT services accounted for 60%,” the report said.

“A closer examination of these data confirms a trend towards geographical diversification, at least in the case of ICT-enabled services. In 2004, five countries — Canada, China, India, Ireland and the Philippines — accounted for as much as 95% of the total market for business process offshoring; by 2008, their combined share had shrunk to 80% as new attractive locations emerged.”

These new destinations include Malaysia, Singapore, Czech Republic, Hungary, Poland, Romania, Argentina, Brazil and Mexico.

The Business Processing Association of the Philippines (BPAP), however, said that country’s market share would continue growing, stressing the gains made since 2004.

“[T]he market has increased so much since then. The entrance of new players just shows how vibrant the industry is,” BPAP president and chief executive officer Oscar R. Sanez said.

The UNCTAD report, however, noted that the Philippines was one of the countries which recorded a decline in the trading of ICT goods. In value terms this was at $14.6 million in 2007, down from $24.2 million in 2003 and even lower than 1998’s $19.4 million.

The report also noted that digital inequality was decreasing but said the gap in terms of broadband access was growing between developing and developed countries. The Philippines was cited being the middle of the pack in the Asia-Pacific in terms of broadband speed.

The UNCTAD suggested that operators “be encouraged to share backbone infrastructure to avoid duplicative and fragmented low bandwidth networks. To ensure sufficient supply at reasonable prices, governments also need to ensure that operators are exposed to competition.”

“To achieve more widespread deployment of broadband backbones and access networks in remote and sparsely populated areas, governments can make use of universal access service funds and can promote the establishment of public Internet access points.”

Edgardo V. Cabarios, director of the common carriers authorization department of the National Telecommunications Commission, said the government was encouraging broadband providers to provide fiberoptic connections to homes.

“Our providers are very aggressive and competition is very high with the many players in the market. In fact we now have almost two million broadband subscribers and by next year that number could triple or even quadruple,” Mr. Cabarios said.

The UNCTAD report said there were around 1.11 million broadband subscribers in the country, accounting for a broadband penetration rate of 1.17%.