The business-process outsourcing (BPO) industry will undergo further consolidation as the United States economy entered its 13th month of economic recession.

“It has been consolidating in the past months but we can expect more in the first half,” Business Processing Association of the Philippines (BPAP) chief executive Oscar Sañez told the BusinessMirror on Monday.

Sañez pointed out the recent acquisition by Ayala Corp. of eTelecare Global Solutions Inc. last month as example.

He cited the recently released Tholons Inc. paper titled, “Top 10 Trends in Services Globalization,” as correct in this forecast.

In that paper, Tholons described consolidation for small BPO players as “imminent.”

“On the M&A [merger and acquisition] front, large deals will slow due to a more tepid market. Challenges related to integration and maintaining liquidity (as opposed to acquisition), will also be primary concerns for 2009,” Tholons’s paper said.

The Falls Church, Virgina-headquartered firm also noted that companies will focus more on smaller deals.

“The average deal size has almost halved in 2008 compared with 2007 numbers, and we anticipate the deal sizes to be depressed due to lack of fresh capital coming from the PE [private equity] route.”

Sañez said consolidation doesn’t only mean M&A as “some companies will consolidate their operations in their Philippine base.

He added M&A may also involve companies with more than a thousand workers, contradicting Tholons’s view.

Tholons based its forecast trends on the continuous downturn of the global economy, mainly because of the recession in the US.

Aside from consolidation, the company said it expects revenue in the first half and up to the third quarter of this year to be impacted by the market downturn.

“We expect most large firms will see a decline in QOQ [quarter-on-quarter] earnings.”

The Philippines, which also hosts a Tholons office, is touted as one of the “service delivery locations” that companies seeking to “increase geographic diversity” may find attractive.

Tholons Philippines country manager Jo-An Darlene Chua was quoted as saying that with the country’s BPO export value aggregating close to 50 percent of India’s, companies may well find the Philippines as a good alternative.

Tholons said the same for Vietnam “as a solid alternative to India on the IT side.”

Sañez said he can’t see any backlash yet on the US government’s move to generate domestic jobs that may impact the BPO industry.

“It doesn’t matter whether the policy of President-elect [Barack] Obama may rein in offshore activities because outsourcing and offshoring are business decisions.”

At the end of the day, Sañez added, companies will measure the Philippines, according to the business model the local BPO industry, could offer “to help them lower costs and enhance efficiency.”