A day before the release of the 4^th quarter financial results of outsourcing company Convergys Corporation (NYSE:CVG), they announced plans to lay off many of its employees, without disclosing how many and which locations would be affected.

Reading the Indian mainstream news yesterday about India Inc.’s strategy to expand operations in Eastern Europe and hire multilinguals to serve the European finance and accounting sector does not surprise me anymore. In my April article, I talked about how Europe is becoming more comfortable with outsourcing not just to its neighboring countries but also to Asia particularly to the Philippines. The following month, I wrote an article on Philippine Outsourcing re-focusing its efforts to the European market instead in anticipation of US political and trade condition changes.

The first quarter results show the trends the companies will take in the succeeding quarters. Companies will continually lower costs through divestitures and workforce reduction and pay cut. Revenue generation strategies will be consolidation through mergers and acquisition and outsourcing.

With the Philippines continually betting on revenues and jobs from the global outsourcing market, forecasting a growth rate for this year of 20 to 30 percent, the country then needs to refocus its promotion direction to new markets like Europe especially with its main client, the United States’ increasing protectionist moves.

Even before the global economic downturn, many organizations had already begun re-examining their offshore outsourcing strategies. Some companies are cutting back spending on their outsourced operations, while others are expanding their offshore operations in Asia. Given the companies’ different take on outsourcing and current market conditions, it is crucial for offshore service providers to know which industry or sector they should focus on for business expansion or acquisition of new accounts.

News abounds on the effects of the U.S. recession to the offshore community. Some reports say that the number of work to be outsourced this year is likely to fall, while others believe the recession would only fuel a company’s need to outsource to bring down cost.

The U.S. financial environment still appears to be bleak especially with more sectors coming out in need of bailout. From the banking sector, the world has now witnessed it spread to other industries. Those remaining companies which are merely surviving or will be receiving government aid will naturally restructure themselves to be leaner by selling off their non-core businesses, shutting down non-profitable divisions or transferring operations elsewhere to lower costs. The latter is seen as a good business opportunity for the Philippines to boost its outsourcing industry.